I've heard it argued by free market economists that an employer won't pay an employee more than the income the employee can generate for the employer. The conclusion being that the minimum wage *guarantees* that people who can't generate income greater than the minimum wage can't find employment. I think I've thought of a case where the employer will actually hire such a person. I think the above characterization of the actions of employers forgets to consider that employers may be forced to invest in currently unprofitable employees in hopes that they can become profitable. Consider the case where all people who can generate value not less than the minimum wage are already employed. An employer faces the choice of limiting growth and thus limiting future profit or taking on the cost of unprofitable employees in hopes they can be trained to become profitable allowing greater future profit. If the employer's time preference is low enough, the prospective employee seems to have potential, and other subjective factors are right, hiring currently unprofitable employees could be an good investment to the employer. BTW, I should probably say I'm an Austrian. I just like playing the "gotcha game" with myself and I've stumped myself this time. I'm not here to troll. There are reasons this is bad, like it increasing risk, but it seems to violate the standard Austrian minimum wage argument nonetheless.
This is already the case though. Depending on the job, a newly hired employee is a drain on resources for the first week, month, or possibly even several months. It takes a while to become productive at a new job, even if that job is working at McDonalds.
- MaunaLoona
link: http://bit.ly/1Ldmnfb