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What about the employees rights?

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DunklenWurzeln posted on Wed, May 1 2013 1:58 PM

Hi everyone, this is my first thread here, and I created this account to ask the libertarian position about the employees rights. I've been reading and watching a lot of online libertarian content, I've read some Walter Block's books but still I can't seem to discover what would happen if there was no such things as the mininum wage, maximum working period, and many other benefits that workers have.

I know that the minimum wage generates unemployment, because many aren't able or don't want to pay the minimum wage for some of their employees, but the big question is, wouldn't employers abuse the lacking rights? Wouldn't we go back to the times of the first Industrial Revolution where labor conditions were precarious and inhuman? 0,5 a dollar for 18 hour shifts. Would people rather just be unemployed and not eat than work in those conditions? How would that work? 

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Who says they lack 'rights'?

 

And what I would want, compared to what options where available back then, have nothing to do with one another. The IR was harsh, to be sure, but it was an improvement over what came before. What a pity we didn't have benevolent dictators to regulate the 'workers' out of work.

Freedom of markets is positively correlated with the degree of evolution in any society...

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First: Minimum Wage does not just generate unemployment.  It began as a mechanism to keep blacks from competing with whites for critical low skill employment that normally turns into higher skill - higher pay employment.  (You can get the details at this web site.)  It turns a moral contract between a customer, an employer, and a supplier, a laborer, into a crime with punishments ranging from fines and loss (Theft of property) up through prison.  And of course the most hurt are those employers and laborers on the margin who will not maintain the contract at the higher price.  And the true evil is that there are very few truely marginal employees that get harmed by this so people think that as long as these folks are invisible there is no harm in the policy.  Of course it is the same idea only much less in the degree of evil as where as long as people getting killed by drone strikes are invisible then it is a harmless policy.

On to the other so called "Workers Rights".  "Workers Rights" as you call them in reality constraints on a contractual relationship between and employer and employee that absent these laws there would be no such constraints.  These constraints add real cost onto the employer and PROHIBIT the employee from competing with other laborers and negotiating away these constratints.  So you have the same result as Minimum Wage where marginal employees are hurt worst.  Of course there are a small number of these marginal employees as well which makes it hard to find those who are most harmed by such a policy.

The reality is that when third party agents use force or the threat of force on moral contracts then those entering those contracts are necessarily worse off.  This force is immoral and is not made moral by any act of legislation or by any vote of some group of people.

 

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Answered (Not Verified) idol replied on Wed, May 1 2013 2:29 PM
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Hi Dunklen. Right now, according to the BLS, around 1% of workers are paid minimum wage. Around 97% are paid more than minimum wage. Businesses are always competing for workers. If I am worth more than minimum wage, I won't accept a job at minimum wage because I know I can find someone to pay me what I'm worth. People were less productive 100 years ago because they didn't have the technology and capital that makes workers today more productive, and so they were paid much less. 

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I will respond to the OP later, but for the moment...

idol, I am not sure whether those numbers are right:

http://www.bls.gov/cps/minwage2012.htm

I keep a close watch on this every year.

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cab21 replied on Wed, May 1 2013 4:22 PM

employees have the right to negotiate their terms in a contract,  as well as some forms of contracts being illegitmate according to libertarian standards. empoyes have the right to self ownership, the right to seek business elsewhere

if someone wants to work longer and be paid less for it, they are free to do so

different people in different places have different needs and are at different stages of develupment, and that will effect the market accordingly.

from what i read of labor, the best still got paid higher than union rates, and if they worked longer hours, it's because they wanted to.

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idol replied on Wed, May 1 2013 4:52 PM

Wheylous:

I will respond to the OP later, but for the moment...

idol, I am not sure whether those numbers are right:

http://www.bls.gov/cps/minwage2012.htm

I keep a close watch on this every year.

http://www.bls.gov/cps/minwage2012tbls.htm

Full time workers (perhaps I should have clarified) work for minimum wage at a rate of .9% and work for less than minimum wage at a rate of 1.4%, so I think my numbers are right unless I'm missing something..

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@OP: Welcome to the Mises forums! It looks like you're asking the right questions and I wish you the best of luck on your journey. I recommend that you read the following article to get started on this topic:

Outlawing Jobs - Murray Rothbard

The Minimum Wage is simply no such thing. If the government actually intended to keep a price floor on labor, it would have to actually implement a Guaranteed Minimum Income, something that even Progressives are generally too timid to advocate. Since MW obviously does not accomplish its stated purpose, you have to ask yourself what the actual reason is for its existence. I think you will find that honest examination will show that the correct answer is far from what the politicians and pundits say.

(Can someone scare up the link to JJ's beginner meta-thread, I can't seem to find it.)

Clayton -

http://voluntaryistreader.wordpress.com
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It's pinned in the Newbies section.  That's how I always find it.  (One day I'll start bookmarking things)

http://mises.org/community/forums/t/28958.aspx

 

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To understand competition, check out http://thelibertyhq.org/learn/index.php?articleID=257&parentID=32

The logic for workplace safety is similar - safety and comfort are just two attributes of a job, just like wage.

Of course, bosses cannot violate the property rights of the workers by aggressing against them.

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Albert replied on Thu, May 2 2013 11:07 AM

What would happen if there was no such thing as minimum wage, maximum hours or workers rights? (while were at it why don't we take away government unemployment insurance too.)

You would have farm kids getting up at five in the morning and working on the family farm 7 days a week.  How horrible. Or you would have kids needing money at any age get a job sweeping floors at the drug store. Or you would have apprentices working and learning the business from real experts not pie in the sky professors. Oh wait, that really happened once.

There was a time before these laws when there was hardly any unemployment anywhere, there was no limit of opportunities for somebody that  REALLY needed a job and wanted to start at the bottom. If you as a kid could not find work, you were welcome to relieve Mom with house duties so she could find better paying work.(even though the statistics would call you unemployed, pretty much everybody in the USA was employed.

If you had an impediment or a handicap or lack of experience, or just wanted to have a negotiating edge, you could negotiate ANY starting salary you wish in order to get your foot in the door and prove yourself, without risking jail.(I worked my first job for free for two weeks)

If you got fired you would not choose to stay home and starve- because there would be no foodstamps and unemployment, you would rush out and find another job, and you would have an incentive to study, arrive early, leave late, become more valuable than other employees so you could get a raise ASAP!

And what negative effects would this have on these poor exploited children? Would the good old US of A turn into a third world country? Well did it? Did these kids emigrate to China and Korea in droves or was it the opposite?

They would (and did) create the greatest economy in the world. They would grow up to become what we call now "the greatest generation" They would be nose to the grindstone problem solvers, not the generation of whiners we have now. They would not go around complaining about mental depression and needing drugs for their "stress" like todays youth. They would dress respectfully and prepare properly for job interviews, not show up in jeans and chewing gum and texting. They would grow up to be useful and well rounded citizens and become the next generation of the captains of industry, thats what happened.

SURE workers have rights, they have the right to quit and go work for the competitor after they gained enough experience to be better than minimum wage. Or they can open their own factory and pay higher wages and compete with their own ex boss.

It is just propaganda to believe that if there were no laws, all bosses all over the world would pay less than minimum wage. Why does the Mc Donalds in North Dakota have to pay at least $20 per hour or not get any applicants? Because of minimum wage laws, you think?

You obviously have not read enough of Walter Block's opinion on minimum wage.

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Monroe replied on Thu, May 2 2013 12:22 PM

RE: Albert, "You obviously have not read enough of Walter Block's opinion on minimum wage."  - I think your argument could be better off without this last sentence!

RE: Dunklen, welcome and what a great reason to join mises.org. If people give as much effort as you did in joining this community, Keynesian theory wouldn't be nearly as mainstream ;)

Anyways, there have already been some great answers, but I will still paste my thoughts:

Minimum wage is a problem, and in fact it is foolish, for a number of reasons, seen and unseen, which include preventing small businesses from starting, creating a country with less youth with work experience etc.

If you really think about it, but out of the 1-2% of the American workforce that earns minimum wage - meaning almost 98% earn more than minimum wage on the books - a majority of them  earn more money in the form of tips. Think about the kinds of jobs that require minimum wages like bar-tending, waiting etc. Free market is actually very fluid and can react to almost any situation you can think of, and it does this because of well… people. People drive the economy with their expectations and predictions and savings and investments.

Now, I’ll focus on the fact that it actually hurts both the employer as well as the employee. People think that the minimum wage affects the poor and that if you get rid of it, who’s to stop businesses from manipulating the wage to very low price. Neither of these points are true.

Picture this: You own a store. A new worker for you is worth about 6 and a half bucks an hour. I come to you and say I’m willing to work for 6 bucks an hour. Great! However, too bad minimum wage is more than 7 bucks. Because you are smart, you realize that losing money on more expensive employees would put you out of business. In the end, you make less profit, and I am out of a job. 

So we’ve established that minimum wage restricts the number of employees an employer can hire. What does that mean in terms of the rest of the market? Well, less employees —> less productivity (which is the real key in economic growth…not consumer spending) —> less product (supply) —> higher prices —> .

Let’s say there is no minimum wage law:
Well, the opposite effect of more employees —> more productivity —> new market cycle of more products —> prices fall to efficient levels due to the free market —> .

The result of no minimum wage = more people employed (some earning a little bit less) + lower prices + economic surge of new jobs. These low paying jobs will go to the youth, and more higher paying jobs will open up (as businesses respond to an increase in demand for higher skill levels) and go to the high skilled workers. Because more high paying, high skill jobs open up, youth will have an incentive for gaining more skills. (Workers' rights has become an obfuscated term).

We wouldn’t exactly be having this conversation if America wasn’t in such a welfare state, nor would I mind it if the money in your wallet right now was worth a whole lot. As dollar value drops significantly, politicians will use minimum wage to make it seem like they are helping you (by increasing minimum wage), when in reality they are literally doing nothing. It’s a farce. Also, minimum wage laws lead to more government intrusion and enforcement that in turn end up harming the marginal workers.

Well if it's such a good plan to abolish minimum wage, why don't politicians do it?

Even if a politician knew all of this and knew that we need to go into a recession by eliminating a large quantity of government control and federal reserve’s money supply manipulation, he/she would rarely ever win by using these principles as their campaign. Who wants to elect someone who will deliberately cause a recession?

I think I got off topic here... but the logic remains the same for worker rights. It all boils down to incentivizing employers.

"...if there is one thing that stings people just enough to commit violence, it is the feeling of powerlessness." - Monroe "yes, I just quoted myself..." - Monroe
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Blargg replied on Thu, May 2 2013 12:43 PM

If you had an impediment or a handicap or lack of experience, or just wanted to have a negotiating edge, you could negotiate ANY starting salary you wish in order to get your foot in the door and prove yourself, without risking jail.(I worked my first job for free for two weeks)

Oh, but it's fine if you work for free, it's just jail time if you increase your wage by one cent.

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I know that the minimum wage generates unemployment, because many aren't able or don't want to pay the minimum wage for some of their employees, but the big question is, wouldn't employers abuse the lacking rights? Wouldn't we go back to the times of the first Industrial Revolution where labor conditions were precarious and inhuman? 0,5 a dollar for 18 hour shifts. Would people rather just be unemployed and not eat than work in those conditions? How would that work?

That could happen if workforce was an abundant resource, which is generally not the case.

There's a point where all available workers able to perform a given job are occupied (or simply refuse to work in this line of business because they think salaries are low)

And at this point, any new employer will have to bid away these workers from whatever they're doing now, and they do that by offering them better pay packages and/or work hours or conditions.

So salaries would rise to the point where it is no longer so profitable for new employers to keep biding for employees.

"Blood alone moves the wheels of history" - Dwight Schrute
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"I think your argument could be better off without this last sentence!"

Better for who?

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