Wednesday, November 19, 2008

Spreading the wealth - conservative style (part II)

Part I is here.

Second situation: People tend to view labor differently than other goods, however labor (the use of one's time) is subject to the same laws of supply and demand as any other commodity.

However, that doesn't stop attempts to fix prices on labor. As in the case of gasoline, it is an attempt to tip the scales in favor of individuals over corporations. However, unlike gasoline, the drive is to keep the price artificially high rather than artificially low.

No matter how much legislation is passed, you can't change the laws of supply and demand. You can change prices, but markets respond to higher prices - whether freely set by the seller or by the force of law - by demanding less of it.

In the case of minimum wage or living wage laws, employers respond by purchasing less of others time. This most affects those with less skills or education. After all, if you are forced to pay above market price for something, you want to make sure you get the most bang for your buck. Someone whos only skill is sweeping floors will be left out in the cold. Individuals who are hired (or are already working, but now have a legislated pay raise) will see their hours cut.

In the case of the labor unions, employers don't have the option of cutting employees when they aren't delivering value for the price. They don't have the option of cutting back on hours. Since employers (the purchasers in this case) don't have the option of purchasing less from their existing labor providers, they will most certainly not hire new workers.

The argument that huge corporations can afford to pay workers what they feel they are worth certainly does not hold wait in light of the Big Three's current situation. The UAW has killed the goose laying the golden eggs.

Again - what is better lots of people employed at a lower wage or no jobs at all?

No comments:

Post a Comment