We’re often told that businesses should pay their employees a living wage. Why is that? Why do they obligate employers to make sure that their employees are able to achieve some standard of living? Surely, a job is often the means to the end of a certain standard of living for the employee, but the employer has other concerns. His main concern is that his employees are creating more value for him than what he is paying in wages.
In a free market, both parties win. The employer values the labor more than the wages. The employee values the wages more than the labor. An employment agreement can be made when this occurs.
If some circumstance outside of this valuation occurs for either party, it doesn’t negate the fairness of the arrangement. It may, however, cause one or both parties to terminate the employment in search of something else.
Let’s imagine a scenario where you are a homeowner and I am a landscaper. We agree that I will mow your lawn and perform other maintenance work on our property once a week in exchange for $50. It works out great for both of us. You have a well-kept lawn that looks nice and I have money to pay for housing, food, clothing, and the other things I need.
But let’s say my circumstances change. Let’s say I start a family and have children that I need to support. Suddenly, the $50 a week isn’t enough to pay for everything my kids need in addition to everything that I need. Are you obligated to pay me more money for the same job simply because my circumstances changed and I feel that I need more money?
Of course you wouldn’t. I would need to expand my business by performing additional and/or more frequent work. I could also increase the number of clients I serviced. If you can’t support the life you want to live on the wage you earn at your job, why would it be anyone’s obligation but your own to increase your wage?
In other words, how does it make any sense at all to say that your wage is a function of your budget and not a function of your labor?
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