Vail Daily letter: Employer should set wages
March 24, 2014
Mazzuca and LeVine parry on the issue of a minimum wage for the “working” American — will raising labor costs for the employer raise the employee’s standard of living, or create more opportunity and jobs in general, a la LeVine, or will raising the income to the employee from market forces create more demand for the products of the employer, a la Mazzuca? Both Mazzuca and LeVine may be consistent on the effect of market forces, but disparate on how to create prosperity from the market.
Fomenting greater costs reduces investment incentive and has a depressive affect on the sale of goods and services. Increasing wages for the working man allows for more expendable income available to the marketplace as long as costs remain the same or are diminished for the manufacturer. Methinks Mazzuca and LeVine can agree on these principles.
The rub in the equation is what should be impetus or determining factor for setting wages in the market. Here, I believe these named economists may differ and starkly. I opine that LeVine would opt for governmental or statutory intrusion into the market area to set an arbitrary and across-the-board employee wage for all industry and service providers — one size fits all, notwithstanding the difference of skills required to produce the goods and services. Yet LeVine would still maintain that this would be “free enterprise” as he stated in his latest article — he said, “That’s just the way our free enterprise is supposed to work.” Government intrusion into the market is a contradiction to maintaining free enterprise.
What I believe Mazzuca is saying is that those market forces inherent in a free enterprise system should determine the wage scale for employees, while recognizing the fact that there are different job skills and requirements needed to perform the necessary labor to produce the goods and services demanded by the consuming public. Wages paid by an employer are a cost of doing business, and affects not only the price of goods produced, the investment return to the owners, but also the taxes on profits made inuring to the government. Ergo, lower wages mean greater tax revenues owing to greater profits — were these the only factors.
An arbitrary minimum wage set by the government that fits all in the marketplace composed of a myriad of industries with different complexities is not conducive to prosperity for the employer, the employee, the owner or the country. I submit that there are ways to elevate the level of employee wages that are less intrusive and more effective, to wit — tax incentives for the employers and owners of industry such as credits for increases in wages; business ethics and integrity courses through our university law and business schools that would inculcate more compassion for the less fortunate by CEOs an middle management; and, owing to the resultant and greater integrity infused into the market, less governmental regulation with its attendant and stifling costs.
Wages should be set by the employer/owner, since he alone bears the risks of doing business in a supposedly competitive marketplace. Those wages should be set voluntarily with due regard for the job skills involved. Ergo, wages for the engineer in training may be different than for the “new-hire” clerk at a hamburger joint. LeVine’s principle that government has the authority to set a minimum wage also subsumes that it has the authority to set a maximum wage applicable to employees, salaried or hourly, and that is why a set wage for all does not comport with what Mr. Levine calls “free enterprise.” I say the employer/owner of a business knows a bit more about his costs and chances of survival in a competitive market than does a bureaucrat with no “skin in the game.” Empathy for the well-being of an employee is an individual characteristic, and simply cannot be institutionalized into a soulless government such as what we have.