Long, but intelligent and well worth reading post on the minimum wage debate from squashed.

squashed:

I have it on good authority that my previous post contained an implausible hypothetical about tomatoes. I might refer interested parties to recent efforts to boycott fastfood restaraunts due to poor conditions for tomato pickers or argue that an oversupply of unskilled labor is a large part of the reason we have the border tension we. Instead I’ll restate the argument. I haven’t become an economist overnight—and I’d hate to bother any of my actual economist friends over an Internet dispute (but Keith, if you happen to be reading this by RSS anyway, shoot me an email and let me know how I did.) Here is why a minimum wage makes economic sense:

1. In a properly constructed society, everybody should be able to afford their basic needs if they are willing to work. Needs include (at least) food, clothing, housing, medical care, and whatever it takes to secure these. Willing to work means merely willing, not both willing and able.
2. For those who are willing but unable to work enough to meet their needs, we’ll need some sort of wealth transfer. People might be unable to work because of permanent or temporary disability or because there aren’t enough jobs out there. In either case, they’ll need some sort of wealth transfer.
3. Three bucks an hour isn’t enough to meet the conditions in (1), so if you’re paying employees $3/hr to walk behind and fan you or pick up trash behind you or hold a sign for you or whatever sort of labor you’d pay $3/hr for, they will have to find the rest of their needed money somewhere else. You are getting the value of that person working full time, but somebody else has to pay for it. It may be welfare. It may be a charity. Either way, your menial labor is being subsidized by the rest of society.
4. A properly set minimum wage should avoids this by ensuring that full time work leads to enough pay to live off.
5. I’ll save Jakob the time and point out myself that this could leave the $3/hr jobs undone. This is partially true. But there are a lot of jobs worth $3/hr. The real question is who gets to offer them. I would let the government offer these jobs—but instead of $3/hr it will pay minimum wage—because it would have to pay that money out later anyway. Think of the Hoover Dam and the CCC. These are large projects undertaken at times when there weren’t enough jobs to go around. Jobs created for the sake of creating jobs is not the most efficient solution—but it may be more efficient than a straight wealth transfer. And if the government can’t think of enough jobs to create, it can tweak the minimum wage down and allow some people to get sub-subsistence pay somewhere privately. If the economy is working as desired, this shouldn’t be necessary. Everybody should be able to find a paying at least minimum wage. In that case, the law would just be redundant.