Exploitation or commerce?

Adam Young has a great article at the Mises Institute website about Andre Jehan, a restaurant owner in the Portland area who hired homeless individuals to hold up advertisement signs for the restaurant for 40 minutes in exchange for a slice of pizza, drinks, and a few dollars. In response, others working on behalf of advocate groups like Ralph Nader and Gary Ruskin demanded that they be paid minimum wage.

"If they don't get minimum wage, this is exploitation," [Ruskin] said.

How could it be exploitation? As the participants themselves relate, each sees it as a win-win situation. In Portland, the restaurant chain Pizza Schmizza offered to pay homeless people a slice of pizza, soda and a few dollars in exchange for holding a sign for 40 minutes on downtown sidewalks that read: "Pizza Schmizza paid me to hold this sign instead of asking for money.''

Peter Schoeff, one 20-year-old homeless man employed in this way, said of the offer: "I think it's a fair trade. We're career panhandlers, that's the only other way we can get money.'' As he told Andrew Kramer, a reporter for the Associated Press, he "woke up in an abandoned house and planned to spend his day dumpster diving and asking for spare change."

"We dig in trash, but usually, you can't find anything good in the trash," he said. "Just half-eaten sandwiches, cold french fries, crumbs in a bag of chips."

It sure seems like both parties see this is as a positive exchange.

Of course, just by virtue of it being a voluntary exchange, it must be so. Man takes action to create a more satisfactory state of affairs. The homeless individual, by acting to hold up the sign, demonstrates that he prefers to use his scarce resource of 40 minutes of time for holding the advertisement more than any alternative use of that 40 minutes. The restaurant owner, by acting to exchange the slice of pizza and soda for wages to pay the homeless to hold adversiting signs, demonstrates that he prefers to use those goods to any alternative use of those goods at that time. Like all voluntary exchanges, it only happens with the expectation of benefit from both parties.

What would the likely outcome be if a law was enacted to prevent this 'exploitation' by making Jehan pay minimum wage? Most likely, the exchange will not occur. Schoeff will be out of a job, and Jehan will lose an advertising strategy. In other words, such a price floor will create a surplus of workers. The technical term for such a surplus is 'unemployment'.

In the flawed drive to dictate solutions to perceived injustices, more problems are created, which in turn result in even more calls for top-down remedies. It is one thing to criticize Jehan and Schoeff on ethical grounds, i.e., that they ought not to engage in such activity, and even that proposition stands on a rickety foundation. It is entirely another thing to use coercion to forcibly prevent it. Not only does it lead to adverse outcomes, it disallows the self-determination of the individual.

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not sure if anyone is

not sure if anyone is factoring in the cost of the pizza and soda as part of the wage. That combined with a few bucks probably is above the minimum wage. Especially since they only work 2/3 of an hour!

besides is there a contract between the pizza place and the homeless? what happens if a homeless guy cleans my windsheild and I give him a dollar? is that extortion?

Good point. This is an

Good point.

This is an example of the arbitrary nature of labor laws such as the minimum wage. The idea that anything under a certain fixed amount is automatically "exploitation" per se, is simply absurd. It's an attempt to put a numerical figure on a moral concept; X dollars per hour is ok but X-.01 dollars is a crime against God and man. The hidden premise here is that the state is the ultimate universal arbiter of what is moral, which is hardly a plausible claim.