Under the title “Target increases minimum wage to $10 an hour,” Reuters reports that Target is increasing its “minimum wage:”
Discount retailer Target Corp has started raising employee wages to a minimum of $10 an hour, its second hike in a year, pressured by a competitive job market and labor groups calling for higher wages at retail chains, sources said. Target management has informed store managers, who in turn have started informing employees about the wage hike and most employees who earn less than $10 per hour should see their base pay go up in May, two sources with direct knowledge of the situation told Reuters.
It is misleading to call this an increase in the “minimum wage.” Or at least, this phrase should not be, but is (especially among an economically illiterate public), confused with the implications of the phrase applied to the “public policy” of the government mandating that wages be increased. The phrase “minimum wage” applied to government policy carries the effectual meaning that government is making it illegal (sometimes with exceptions) to hire someone at a lesser rate than its decreed one.
Stated differently, the minimum wage implies that if a business or person hires someone under the conditions of a voluntary agreement between the employer and the employee, the employer will face some sort of consequence, enforced by the government, if the employee is paid below whatever the legal minimum is declared to be.
There are economic and ethical ramifications of such a policy, of course (all of them negative), but the point is that minimum wages are government-issued and therefore backed by the coercive power of the government.
But what Target did is not a minimum wage; or at least, the definition of minimum wage should be altered if it is going to be applied to Target’s action. The reason for this is that it was not mandated by the government and therefore it is not backed up by the coercive power of the government. Target’s management has simply decided that, for reasons irrelevant to my current point, it is going to increase the amount of pay that it gives its wage earners at the very bottom of Target’s pay structure.
It is true that one can choose to define this phrase in order to satisfy what Target did; but what one should never do is confuse the underlying economic and political reality via rhetorical trickery. And using the phrase “minimum wage” inevitably succeeds in providing exactly this trickery as it seems to communicate to those that are not aware of economic reality that Target has heroically done exactly what, say Bernie Sanders, has been preaching this whole time.
But what the government seeks to force companies to do, and what companies themselves choose to do with their own resources, must never been blurred together as one harmless decision.
Target may have increased wage levels within their company, but only the government can create and enforce a “minimum wage,” as defined with a historically understood meaning.
C.Jay Engel is an entrepreneur who owns several businesses and lives with his wife and four children in northern California. He is an avid reader of the Austro-libertarian literature and a dedicated proponent of private property and sound money. He is the creator and editor of AustroLibertarian.com and its associated new publicationAustro Libertarian Magazine.
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.