Pressuring vs. coercing higher wages

On April 6, Duke Students and Workers in Solidarity demanded a series of improvements to the treatment of university employees, which include a gradual increase to the minimum wage these employees can be paid. I believe that the members of DSWS do not completely understand the benefits (yes, the benefits) their movement has over other minimum wage movements (such as the Fight for 15) that they support and seek to emulate.

DSWS’s request has many salient differences with the larger movement to increase federal and state minimum wages. The former involves a group of individuals seeking to pressure—with protests and other actions meant to provoke moral indignation—a single institution into voluntarily increasing the wages it pays employees. On the other hand, the latter seeks to give some level of government the power to coercively prevent a category of voluntary transactions, namely, the sale of an individual’s labor services at a price below the minimum wage. Thus, while the former approach recognizes and appeals to freedom of choice, the latter restricts it.

Besides the moral difference between DSWS’s request and movements to increase the government-mandated minimum wage on a deontological level, there are also important consequential differences. Indeed, many of the dangers that arise from an increase in the legal minimum wage are not relevant to DSWS’s approach. For instance, an indiscriminate increase in the minimum wage may threaten the existence of firms who cannot pay their employees the legal wage and operate at a profit. However, deploying social pressure for higher wages rather than government coercion results in greater respect for employers’ specific circumstances. An employer operating at a sizeable profit margin is likely to be willing to accept a profit decrease in order to avoid social costs, while those who are precariously close to being unprofitable will prefer to bear the social costs (as long as these don’t translate into economic costs as individuals refrain from purchasing their goods and services). It is partly for this reason that social norms are often more effective than centralized legislature in dealing with problems such as inequity.

Another concern about increasing the minimum wage is that firms may increase their prices in response. This is particularly troublesome since often the customer base of the companies who employ many minimum-wage employees, such as Wal-Mart, is made up largely of low-income families. However, should Duke need to increase its revenue in response to the higher costs from wages it pays its employees, the burden will fall largely (though not entirely) on wealthy families who pay full tuition and give large donations that allow the university to remain operational. Thus, this particular wage increase could have redistributive effects that most will view as desirable.

Just as an employer should be free to pay any wage that his employees are willing to accept, individuals should be free to protest and threaten to “take their business elsewhere” in order to pressure firms and institutions towards what they judge to be more ethical conduct. Unfortunately, the individuals who choose to exert this power are likely to be the same ones who support large increases to government mandated minimum wages without any consideration of their consequences. I want to urge the members of DSWS—should they be successful in achieving higher wages—to take note of the benefits of selective pressure over indiscriminate coercion.

Julian Keeley is a Trinity junior. This is his last column of the semester.