Jobs and the entitlement mentality

After writing the preceding piece about the impending Michigan right to work law I was reading some of the liberal commentaries on this battle, and President Obama’s speech yesterday on the issue, in which he characterized the new law as the “right to work for less” law.  It occurred to me that all of this fuss has embedded in it an unrealistic entitlement attitude.

There is much talk about how companies should pay workers a “living wage”, and about how the government should “create jobs”.  This is simply a departure from the real world.

Companies exist for one reason only, to make money for their owners and/or shareholders.  That is their primary obligation.  If they fail to make money, they go out of business in the “creative destruction” process of capitalism, and are replaced by better-run competitors who do make money.

In this context, an employee of a company is only worth hiring if their activity makes the company more money than the employee costs in direct (wages) and indirect (pensions, management cost, facilities cost, etc) expenses.  That is why minimum wage legislation, however well-intentioned, often simply puts people out of work – some people simply are not worth the minimum wage (ie –even at minimum wage  they cost more than they make for the company), so they aren’t hired, or their job is outsourced or automated or simply eliminated as unnecessary.

In fact in a free society no company, government or individual “owes” anyone else a job, or a particular wage level.   Instead it is incumbent on each member of the society to acquire skills that are in demand in the labor market.   If one wants higher wages, one needs to acquire skills that are more in demand and therefor command a higher wage in the labor market.  If an individual feels they aren’t being paid enough, then it is incumbent on them to upgrade their own skills in order to command a higher wage level in the labor market. It is no one else’s responsibility (despite some liberal arguments) to make them more employable at a higher wage – the responsibility is their own and their own alone.

This of course means some people would need to stop spending the weekend watching reality shows or football games and go back to school if they want to be more employable or make more money.  And lots of young people would have to stay in school rather than drop out, or take night jobs to work through post high school classes or training. . They don’t have to do that, of course, because this is a free society. But if they choose not to do that, then they have to live with the consequences of their own choices, which often means lower wages, or even unemployment.

Capitalism seems like a harsh system, and it is. Nature is harsh. But this very harshness is what drives innovation and progress. We have already lived through a generation seduced by the socialist dream of a benign system in which government “takes care” of everyone.  And we have seen (unless we simply refuse to see the evidence) how dismally such systems fail and stagnate and morph into autocracies or kleptocracies or dictatorships because the incentives are all wrong. In such systems, as the old Soviet joke goes, "they pretend to pay us and we pretend to work".

If liberals were really concerned about improving worker's wages and making more people employable, they would get active on the side of improving our educational system, specifically the K-12 part of the system, instead of defending the obstructionist teacher's unions who are impeding progress in this area.