Friday, February 11, 2011

Free Labor Markets to the Extreme: A Good Idea?

Now, I think there's a lot of good reason to make fun of this old quote from Michelle Bachmann:
Many teenagers that come in should be paying the employer because of broken dishes or whatever occurs during that period of time. But you know what? After six months, that teenager is going to be a fabulous employee and is going to go on a trajectory where he's going to be making so much money, we'll be borrowing money from him.
Putting aside the rather ridiculous idea that a business owner is going to be borrowing money from his teenage employees, this quote got me thinking - if the labor market were completely unregulated and had no minimum wage, would there be negative-wage jobs, in which the employee pays the employer for the privilege of working?

In many ways, this system already exists - I'm guessing most people reading this probably took an unpaid internship somewhere at some time in the future. In real terms, unpaid internships are negative-wage jobs, if you take into account inflation and opportunity costs, even if the employee is not technically paying the employer.

Furthermore, I seriously doubt that you could get many people to pay for the privilege of working most minimum wage jobs of the kinds teenagers get - dish-washing (as Michelle Bachmann notes), burger-flipping, front-line retail, and the like. Most of these jobs are not extremely pleasant and don't offer much opportunity for direct advancement and career development, so what's the incentive for working in them, if not for monetary compensation?

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