Thursday, December 11, 2003

Rights & Reason: Death by Living Wage

A New Mexico state court has rejected an antitrust challenge to the city of Santa Fe’s decision to force certain business owners to pay employees a $10.50 minimum wage—a “living wage,” according to supporters. Various business groups, including New Mexicans for Free Enterprise, challenged the ban as an affront to businessmen’s rights. We all know how much courts love those arguments. The antitrust argument—the city was price-fixing by requiring the wage—struck me as particularly innovative. But the judge granted Santa Fe summary judgment on that point.

All was not lost, however. The businessmen’s case will still go to trial to decide whether the law violates the equal protection provisions of New Mexico’s constitution. The judge is concerned that the law may unfairly discriminate against certain business owners, since the “living wage” only applies to businesses with more than 25 nonunion employees, and other businesses may obtain a waiver from city officials, a sure sign that political favoritism will enter into the process.

Santa Fe was represented by lawyers from New York University’s Brennan Center for Justice, a leftist academic group. That should tell you everything you need to know about this case. But just in case you need more direct evidence, consider this statement from one of the Brennan Center lawyers: “The (New Mexico) Legislature specifically granted the city the power to enact the legislation it did. New Mexico gives enormous power to its municipalities. There's no question a living-wage ordinance promotes the health and general welfare of the people of Santa Fe.”

This statement should given even moderate Democrats pause. It says, without qualification, that any law tied to “health and general welfare,” no matter how impractical or repugnant to individual rights, should be treated as axiomatic by the courts. Not only must we have a “living wage ordinance,” we must not be able to question its objective truth or wisdom. If you accept this lawyer’s premise, you’ve effectively abolished the right to think for yourself. After all, what right does any individual have to question a policy that promotes “health and general welfare?”

Those of us who believe in reason and individual rights, however, can easily determine this statement is based on fraudulent premises. For one thing, whatever powers the State of New Mexico grants to its municipalities, those powers must derive in the first instance from the people. There is no divine right of bureaucrats. Granted, New Mexico already imposes a statewide minimum wage, but this practice is unconstitutional. The government may not impose conditions on private contractual relationships; it certainly has no valid authority to fix prices in private commerce.

Furthermore, there is no “living wage.” In theory, the living wage is the minimum amount of money a person must earn to support his family above the poverty line. But each individual has distinct economic needs. One person’s living wage is another person’s second job. Two centuries of economic experiences teaches us that fixing price levels does not stabilize demand or individual economic needs. Quite the opposite: Price controls reek havoc on the economy by destroying the natural connection between supply and demand. The living wage creates more economic uncertainty, not an egalitarian utopia.

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