Why the perception that labor should be cheap?

Question

I have a conservative friend that hates unions and feels that the current minimum wage is to high for what he calls "un-skilled" labor. He say's the reason he is deserving of a higher wage and standard of living is that he went to college. While I recognize education as a valuable entity, I question his reasoning for the disparity. If it were not for labor nothing in this great country would get built, transported, maintained or transformed from imagination and paper to the final product. Hell, he can't even change his own oil or perform a simple home repair, yet he still believes he somehow possesses the skills that demand higher compensation. If his time is worth say one hundred and fifty dollars an hour to perform a task for his employer than why is the guy that fixes his car or mows his lawn not worth twenty five dollars an hour? Where does he think consumer spending comes from in this country?

Answer 1

A lot of people have no idea about economics.

These are the idiots who work for nothing, just for the sake of employment.
This will ruin industries in certain markets, quality is sacrificed for price.
So you get this "high volume low price game" going on where you make enough money to keep going to work for nothing.

Answer 2

No matter what's the perception,cost of labor depends on skill levels, demand and supply.In any productive or output(result) related work/job,the cost of labor when added to total cost of production/result,should be such that there is a reasonable profit margin for the entrepreneur.This was the major reason for shifting of most manufacturing activities and information technology related jobs out of America,to the locations and countries which could provide matching labor skills at more competitive/lesser costs.You may tell all this to your friend over a coffee but I don't think it will any difference.

Answer 3

This idea comes from Adam Smith and, more recently, those from the Chicago School of Economics (like Milton Friedman) that advocated an Adam Smith-like laissez-faire approach. It's sensible because when labor is viewed as a commodity, the free market will most accurately price that commodity. Lawn-mowing labor might be only worth $5/hour to the person getting his lawn mowed. If it costs him more, he might opt to mow it less often or mow it himself (thus putting the lawn-mower out of a job). Note that the French have various restrictions on employers and, as a result, have an employment rate twice that of the United States.

If a centralized authority (like government) determines what wage is "adequate" for a particular task, it will be far less efficient in doing so than a free market and will upset the balance of supply and demand, resulting in undesirable results (like high unemployment and lower productivity).

There is also a rarely-considered added benefit to low wages for menial jobs. Namely, low wages tend to lead to higher aspirations and self-betterment (and thus betterment of society). If you remove that incentive for self-betterment, many will choose to live less productive lives and ultimately the economy will stagnate and decline. This phenomenon is directly observable with American welfare, which was largely eliminated in the 1990's. The productivity of inner-city African Americans has since skyrocketted and their unemployment rates have drastically declined.

Answer 4

The market is the best for setting wages and not the gov't.