Minimum Wage

I was having a familiar argument with one of my socialist friends. He was talking about why we should raise the minimum wage to $15 per hour. The specific number isn't all that important to me, of course. I believe it is simply not the role of government to dictate these types of things and that it will create adverse conditions in the economy (namely higher unemployment.)

But he said something during our talk that was revealing. He was making that familiar argument that the current minimum wage is usually not enough for somebody to support a family. As I was pointing out that wages are set not by how much the worker needs as it is by how much value he brings to the business, he said something about the "guy at the top" deciding what the worker gets paid. And then added that the current system is "failing for millions of workers."

First, I questioned what it was that was failing. Is it the system that is failing, or the worker? While there may indeed be millions who are "failing" there are hundreds of millions who are not, But it is also not true that the boss is the one determining his wages. Wages are determined by the marketplace, Which means that a specific worker's wages are not just determined by his current boss, but by any potential future bosses as well. Any boss has to consider what other people might pay that worker, in particular his competition.