Minimum Wage and Justice?

Opposition to the minimum wage, according to Resident Scholar Oren M. Levin-Waldman,
ultimately rests on a popular political philosophy and a popular economic theory. The popular
version of classical liberal philosophy stresses individualism over the common project and
accordingly puts the employer’s right to pay low wages over the common goal of a high-wage
economy. The predominant economic theory stresses efficiency over any common goal and
presupposes that unregulated markets are naturally efficient.

According to Levin-Waldman, this economic theory views the market as perfectly competitive;
left on its own, it operates efficiently to allocate goods and to pay all factors what they are
worth. Any inefficiency is blamed, without proof, on government interference with the market.
If individuals are dissatisfied with wages, they may look for another job or improve their skills.
A minimum wage, if it is above the wage that would otherwise prevail, artificially increases
wages above the marginal product of labor, reduces employment, and is, therefore, inefficient. In Levin-Waldman’s view, most economists, wanting to focus only on objective criteria,
conclude that consideration of this supposed inefficiency alone ought to drive the public policy
process.