Embed Notice

We can thus reconcile minimum wage laws with no increase in unemployment by understanding that wages in the US are artificially low, by capitalists’ own standards.

Rather than letting workers and firms freely bargain with each other, which in a free market would include labor organizing to create collective bargaining power, the state massively intervenes to distort the market. The result is a wage level far below any kind of idealized equilibrium price, even setting aside all of the violence the state performs to create capitalism in the first place.

So when the state sets minimum wages by law, it is not creating an artificial floor below which wages would otherwise naturally fall. It is setting a ceiling on the amount that employers are allowed to exploit from workers prohibited from freely associating. Using the Danish example, we might calculate that this surplus that employers legally extract from workers amounts to tens of thousands of dollars each year for every full-time worker employer at the federal minimum wage of $7.25 per hour.

6/