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3 Am. Lab. Legis. Rev. 81 (1913)
Theory of the Minimum Wage

handle is hein.journals/alablegr3 and id is 81 raw text is: THE THEORY OF THE MINIMUM WAGE HENRY ROGERS SEAGER President, American Association for Labor Legislation From the point of view of economic theory, the proposal that minimum, or living, rates of wages be prescribed by law involves two problems. First, how does it happen that for certain classes of workers in certain employments the wages paid fall below a living level. Second, what results may be expected to follow the enforcement of the requirement that no employer shall in future be permitted to pay less to any employee than the living wages pre- scribed. After considering these theoretical problems, I shall treat briefly of the more important theoretical objections that have been urged against the minimum wage policy. As to the first problem the view of the older economists was well expressed by Adam Smith: A man must always live by his work, he declared, and his wages must at least be sufficient to maintain him. Fuller knowledge of the possibilities of a competitive labor market precludes us from subscribing to this optimistic view. No economist would now deny that starvation wages are sometimes paid to women and children, and even men, in communities which, judged by any other test, are in a highly flourishing and prosperous condition. Nor is there any great difficulty in disposing of the theory that there is a hard and fast economic law, according to which a person's wage must always be at least sufficient to main- tain him. Employers, in their effort to reduce their expenses of production, are not restrained by any such illusion. Speaking gen- erally, they pay the wages that the market conditions require and consider it to be the employee's business to decide whether or not he can afford to accept these wages. On the side of employees, the competition for employment may be so intense as to force wages below the living level, and the conditions which control the number of competitors may be so inflexible that they continue at starvation rates year after year with no tendency toward improve- ment. A consideration of typical examples in the United States of occupations and classes of employees which present the phe-

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