Sunday, March 23, 2014

Volunteer Work and the Minimum Wage

A bit of economics today but first let’s talk about altruistic behavior and self-interest behavior.

We are encouraged to volunteer for various jobs in our local community and, for the most part, we respect people that volunteer to “help” their neighbors. In my community I can “work” for free at the Oklahoma City Museum of Art, The Fred Jones Jr. Museum of Art, the Norman Veterans Center, food pantries, homeless shelters, or I can adopt a section of roadway and keep it clean of trash. This type of voluntarism is altruistic behavior.

We also volunteer for self-interest motives. A good example of this is students who take summer internships that pay little or nothing. They do this because it is a good investment in their future. It will increase their “human capital” and they will make contacts that will help them get a full-time, good paying job later on. 

We respect people that volunteer for free because they are helping the community and we applaud those that take internships for free or very little pay because it shows that they have initiative and are going to make something of themselves.

So you ask, what does this have to do with economics? And well you should. 

We live in a free society and the people I have described above have offered their services for $0.0 per hour, or at well below market value, to other people that need their services. Why shouldn't people then be able to offer their services on the labor market at a price determined by the free market and not the government? The example of internships is just that. A person working an internship is gaining on-the-job training, work experience, and the development of the habits of punctuality, motivation, dependability, and the ability to work with others. These are the same values that a young person working at a fast food restaurant will gain if that individual want to continue working very long at that job.
The point is that the government “ALLOWS” a person to give their time for free if the government determines that it is the “RIGHT” thing to do. But if I want to give my time at a fast food place for an amount that the owner and I agree on I can't do that if it is below the legal minimum wage. In many cases that means that the owner will not offer a job because it cost more for him to hire me than I can provide in value to him. I have never worked for anyone that is in the business of going bankrupt. 

Just a note about my experience in the job market. When I was about 12 years old one of the many jobs I had was with the manager of the local drive-in theater. I made a deal with him that I would show up on Sunday afternoon and fix the speakers that people hung on their car windows. I could do any repair work needed in about three or four hours and for this I received 'free' movie tickets for the two theaters in our small town. At the time the tickets were worth about .50 cents each and I would get two each week. What did I learn? I learned to show up at the job every week on time, to work quickly, and to do the job I was asked to do. Not bad for two free movies a week in my opinion...and by the way, I worked my way up to assistant manager of those theaters before I graduated from College.

Another related trend is the do-gooders insisting that all business internships be paid at least the minimum wage.
Interestingly, it is not very easy to get hired into an unpaid business internship because the company might very well invest more in educating the individual than any production that it receives - even at a zero pay rate.
You can be assured that if the minimum wage advocates get their way with internships, we will see fewer college students experiencing today's real work world.


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