Adam Smith Institute

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It’s time to end our exploitative minimum wage laws

As a libertarian student, I was always opposed to minimum wage laws on the grounds that they restricted free choice and would increase unemployment. I was often told that after living in the real world for a while, I would see that a minimum wage is absolutely essential and that living below it would be exploitation. Well, since entering the ‘real world’ last year, my views on the minimum wage remain unchanged.

Firstly, exploitation is subjective. For those who are 21 years old or over, the national minimum wage is currently £6.08 – do we really believe that the moment they earn £6.07 they are being exploited? Why should it be left to government bureaucrats to arbitrarily decide what constitutes exploitation? Payment should be between the employer and employee. If the employee doesn’t like the offer being made they are free to refuse it and if they are willing to accept it, then it’s not for anybody else to label it exploitation.

It’s true that many will receive a low income under such a system. Those who are more fortunate may feel sympathy for them and have a genuine desire to help. Yet by enforcing minimum wage legislation they are in danger of hurting those very people they are intending to save. The workers in question are likely to be young and low skilled, which means an employer is unlikely to hire them if they’re forced to pay a high wage. This principle is already widely accepted and it is why the minimum wage for 16-17 year olds is just £3.68. This gives them one advantage over those who are older and better skilled.

An important factor in this debate that is often overlooked is that those earning less than the minimum wage would be gaining valuable experience and leaning new skills. The importance of this is not to be underestimated – thousands of young people in this country are willing to take on unpaid internships in order to gain these benefits.

Presumably those who believe that earning less than the minimum wage is ‘exploitation’ are also opposed to internships, on the same grounds. Yet I myself was an intern receiving ‘expenses’ that amounted to less than the national minimum wage (whilst living in London). It’s true that I had to be frugal, but it paid off as the experience has now led to full time employment. If the national minimum wage supporting do-gooders had their way, I would never have been able to move to London and I would be worse off.  Well intentioned or not, nobody else should have had the right to stop me from freely choosing to pursue that opportunity and that is why the concept of a national minimum wage is wrong.

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