Smith and the Living Wage

Adam Smith would approve of the United States having a federal minimum wage; however, as it is not a living wage, he disapprove of the idea that the federal minimum wage is not enough to cover the cost of living in the U.S. Smith writes that it is the masters of the laborers have an advantage over the laborers, in that they are able to control the extent to which the laborers are paid. On the other hand, Smith does admit that there is a limit to how much an employer can cut wages, “a certain rate which it seems impossible to reduce” (32). Men, thus, must be able to live by the wages they make. Smith goes even further to say that this minimum wage cannot be as low as to support only one person, but that it must be able to support a family. The lowest of all workers must “earn at least double their own maintenance” in order to support a family with two children, or in the case that the both parents work, must at least be more than their own maintenance, if not doubled (33). Therefore, the fact that the lowest laborer in the U.S. cannot fully support themselves on the federal minimum would be seen as a problem to Smith, since these laborers would not be able to support a family with their wages. Smith would urge the federal government to raise the minimum wage to that of a living wage, which some states, such as Maryland, already observe. Furthermore, with the cost of living rising, due to issues such as raises in gas prices, Smith would also judge that the minimum wage should rise with that cost. Overall, Smith seems to feel that even the lowest of the laborers should have a decent life, in which they are able to provide for themselves and their families, if only basically.