Unfair wages

The argument

A free-market economy — one unfettered by government regulation — can promote unfair working wages, and this is offered as one of the clearest drawbacks of Liberalism. The mechanism is a matter of bargaining position rather than of employer character. Without any form of government-enforced minimum wage, employers can pay their employees how they deem fit. Whether that produces a fair wage depends entirely on whether a worker can credibly refuse, and a worker who has no savings and no alternative offer cannot. The wage that results is therefore set by what the weaker party can be made to accept, which need bear no relation to what the work is worth or to what it costs to live. The United States during the Industrial Revolution is the argument's example. Business tycoons of that era, like Andrew Carnegie and John Rockefeller, paid their employees an unlivable wage. They could get away with this because there was no check to guide the market — no floor beneath which pay could not fall, and no counterweight to employers who between them controlled the available work. The response that followed is treated as evidence that the problem was structural. This led to the formation of labor unions, organizations meant to protect the workers from employer mistreatment, which is to say that workers had to construct a countervailing power because the market did not supply one. The entire labor movement in the United States of America came about due to unfair wages that a free market — a major portion of the political philosophy Liberalism — allowed. The point is not that liberal economies intend this outcome, but that removing regulation leaves nothing to prevent it, so the correction has to come from outside the market rather than from within it.

Premises

Counter-arguments

There are many reasons why market-based wages are positive. First, they are not some arbitrary number of acceptable wages across all industries. Market-based wages pay employees fairly for their work, determined by the supply and demand of that industry. Additionally, a one-size-fits-all approach naturally leaves some people underpaid. This would not fix unfair wages. Another argument against a universal minimum wage is that they are costly to taxpayers who have to foot the bill for oversight and enforcement. Market wages do not require such oversight and are, therefore, less costly. Universal minimum wages reduce competition and desire to work hard, leading to an overreliance on the government to solve all problems.

Rejecting the premises

[Rejecting P1] Liberalism is not a single economic programme. The tradition includes social liberals who supported minimum wages, unemployment insurance and collective bargaining, so the premise equates the whole with one economic strand of it. [Rejecting P2] The Gilded Age is real evidence and an incomplete case. Wages and living standards also rose substantially across the same industrialising period, and the conditions cited coexisted with legal regimes that actively restricted union organising — state action shaping the market rather than an absence of it. [Rejecting C] The conclusion generalises from one historical episode to a permanent feature of a political philosophy. It also gives no account of what makes a wage unfair independently of the market, which is what any critique of market-set wages requires.