Why Market Wage?

Why are we called Market Wage Action Alliance? Our primary focus is the market should dictate wages, not artificial government diktats. Only competitive forces in a free-market can accurately reflect the value of a given skill. Hence, all minimum wage and living wage efforts have unintended consequences, which are too often ignored. The most verifiable consequence of all such wage laws is unemployment of anyone whose skills are below the statutory minimum.

In a Seattle Times editorial (Lessons from Dick’s Drive-In on minimum wage, employee benefits) Jim Spady, the Vice President of iconic Seattle fast-food restaurant Dick’s Drive-in, said the following.

“The way to improve the wages of the poorest people is to encourage them to upgrade their skills, not to pass a law that requires we pay X dollars an hour,” … “Governments can pass laws, but they can never repeal the law of supply and demand. So if you force law abiding businesses to pay more, they will — or they will automate their processes so they use way less labor. Or both. And the people they do hire will be the people who are best in that group. So what these high minimum wage laws do is they help a few people get better wages, but a lot of current people will lose their jobs.”

Another recent article describes Applebees “Waiter Terminator” which will replace workers with automation. Many other restaurants are also considering this business model. This article closes with this observation. “In other words, a funny thing happened as fast food workers were striking across the land – they were all just made obsolete courtesy of iPads.”

Some jobs simply go away when the minimum wage increases. For example movie ushers, elevator operators, and gas station attendants. Those services are not worth the cost of minimum wages, yet entry-level jobs like these provide a foot-in-the-door for beginning workers. You can’t make a given set of skills worth more by making it illegal to pay less. Every time the minimum wage goes up, more low-skilled jobs wither away.

So we proudly emphasize the importance of “Warket Wages” in our name because it is a reminder of economic supremacy of the market. Protestors who demand higher wages—wages greater than their skills justify—ignore market reality at their own peril.