Draw or imagine a line running from negative infinity dollars to positive infinity dollars. Now draw a point somewhere in the middle of this line and label it “zero dollars” or “$0”. Now draw another point on this line, somewhere to the right of $0, and label it “X dollars” or “$X”.
Now apply the following labels:
A: everything to the left of, but not including, zero dollars.
B: everything between, but not including, zero dollars and X dollars.
C: everything to the right of and including X dollars.
So hopefully we now have something that looks like this:
Got it? Good. The line represents all possible wages that a boss might pay a worker per hour. Point $X is the minimum wage.
It is legal to pay a worker a wage that falls in section (erm… segment? ray? vector?) A. This is usually a college internship or some other form of training, where employees essentially pay to be allowed to work.
It is legal to pay a worker a wage of exactly zero dollars. This is volunteer work.
It is illegal to pay a worker a wage that falls in section B.
It is legal to pay a worker a wage of $X or greater, i.e., a wage that falls in section C.
Can anyone successfully explain to me why section B should be off limits?
VDV'S JOURNAL 
I think paying someone that amount is essentially saying that they deserve less than average for their work, which is unfair.
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So everyone should get paid the average or more?
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Right, unless they’ve explicitly agreed to being paid less.
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I enjoy all three of the above comments for various reasons. -Just thought you’d like to know.
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I suspect I enjoy them for the same reasons.
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“Well, that’s the news from Lake Wobegon, where all the women are strong, all the men are good looking, and all the children are above average.”
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Fool and knave! Section B is reserved by and for Government use. Anyone else using this segment does so illegally. As you know, the government continuously redefines economic concepts. People receiving “free” money from the government essentially get paid based on a 24 hour day. So..if that wage was paid based on an 8 hour day, the wage would fall into Section C. But that implies everyone is making a decent wage. The government simply can’t have that. We need poor people to justify more government. Hence..redefine a working day for government free money as a 24 hour day to make otherwise economically sound free wages fall into the government reserved Section B, hence allowing the government to always push the illusory point C to the right. If this all sounds like babble…..wait a week for the new government ecomic redefinitions.
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Make that “illusory point X.”. Oh my, too much involvement with the government.
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It looks like courts are enforcing the FLSA on “internships.” Unpaid internships (region A on your graph) are illegal unless the position has significant benefit above and beyond normal job training. Courts are ruling that gaining contacts within the industry and academic credit is not sufficiently significant to deny pay.
And it’s about time. In my field (engineering), internships are usually called co-ops, and they are paid positions – usually well above minimum wage. There’s no way an engineering firm would legally get away with not paying its co-ops. Last I checked, equal protection under the law was still a thing.
http://www.forbes.com/sites/deborahljacobs/2013/09/24/unpaid-intern-lawsuits-may-reduce-job-opportunities/
From the article:
“Although requiring interns to work without pay has been illegal since the minimum wage law was enacted in 1938, until recently unpaid interns seldom brought lawsuits.” (emphasis added)
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@DrHmnahmna: it sounds like you’re saying region B doesn’t extend far enough to the left. Also, I’m not sure I’d celebrate (not to suggest that you do) this particular (mis)application of equal protection– after all, re-read the title of your link.
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I’m saying there is no difference between regions A and B, with the exception of volunteer efforts. It’s all a violation of the Fair Labor Standards Act.
And guess what happens if I volunteer my professional services to a qualified charity? I can write off the value of my services as a donation!
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Now where’s the button to Tweet/Facebook/etc this post?
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I’ll have to figure out how to add that tonight.
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Now you’re just a few steps away from selling ad space 😉
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@DrHmnahmna: so should I file a lawsuit against Clemson and/or the schools at which I did my internship? And should I expect lawsuits from our interns? Or can I safely generalize that A is legal and B is not?
(For the record, yes, I grasp the nuances of the FLSA. I just think they’re nonsense.)
Wait, is all this a precursor to a lawsuit about the project you did for me? You asked to be paid in booze! I have it in writing!
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I’m not sure that a generalization about region A being legal is valid. I think it’s more accurate to say that region A is illegal with some exceptions for things such as student teaching, etc. Student teaching and other similar internships offer significant training in the field. The unpaid internships that are subjects of the lawsuits tend to be more gofer type jobs that don’t offer training in the field.
And if I sue you for non-payment, it will be under breach of contract, not FLSA. So send me the booze!
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So Region A is still legal, though there are efforts to reduce the number of people operating in Region A and shift them to Region C.
I’m interested to see which number of unpaid internships (broadly defined) is greatest: those that continue on as usual, those that convert to paid internships, or those that cease to exist altogether.
I’ll also be interested to see the reaction of those people whose current skills correspond to Region A but can no longer be “employed” in Region A. I fear it’ll be the same as too many of those whose current skills correspond to Region B but can’t be employed in Region B, which is to shift Point X to the right. Both groups will have no clue why this happened.
Still waiting on a convincing answer to my original question: what’s the deal with Region B?
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I think we’re still trying to establish how legal region A really is. If regions A and B are essentially the same region, then it’s at least more consistent than the way you posed the question.
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Tell you what: answer the question as if A is generally legal and B is not, and then answer the question as if A and B are the same region, separated only by the volunteer’s wage of $0.
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While it’s not illegal yet, I would say there is definitely political and social sentiment that there exists a boundary in segment C in which it is wrong to pass. The whole idea that some people make too much and we should tax them back to an amount deemed proper.
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I’m sure that certain types of work face maxima in Region C.
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I think the reason you don’t have a valid explanation to your original question is that no reasonable person believes federal minimum wage guidelines are necessary. The free market is the better solution to employment issues.
I suppose a paranoid person may believe that corporations would collude to reduce wages below the current minimum.
However, they can’t even find enough people willing to work for $8.00, so I doubt they’re going to suddenly decide to pay even less.
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I’d like to believe all that, but it’s probably more a function of the fact that only, like, eight people read this blog.
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Because the government set X$ as the minimum wage, section B cannot be paid to an individual that is working a non internship, and non volunteer job.
And other stuff, I got an A in macro if that helps.
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Okay, this is still a half-baked thought experiment, but here goes. This is based on both regions A and B being illegal, with narrow exceptions in region A. I can’t make a good case for why broad exceptions in region A are logical.
I’m going to postulate the following:
1. The welfare state will continue to exist in some form.
2. The goal is to get people working.
3. There are instances where the benefits for an unemployed person under the current welfare state have greater value than the salary from a minimum wage job.
So here’s what I would throw out for discussion.
1. Regions A and B are still illegal, with some narrow exceptions for Region A.
2. The minimum wage is set such that it makes more economic sense to work instead of not working. My idea for what this means would be to set it such that two wage earners at minimum wage would make more than the unemployment benefits available for a family of four.
3. You’ll have to give employers some incentive to hire, since there’s a level of taxation required to support the welfare state. So maybe throw in some tax breaks for hiring. If more people are working, less revenue is needed to support the welfare state.
By the way, there are also some narrow exceptions for Region B for charities to hire physically and mentally challenged people. Goodwill in particular has used (and abused) those provisions.
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A response is coming, but are you (a) giving a rationale for the structure or (b) suggesting a course of action?
The negative income tax (EITC is based on it) is similar to what you discuss; it’s a welfare payment, but you can only increase your total (welfare + nonwelfare) income by working more.
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Probably a bit of both – a semi-coherent rationale and a possible way forward.
I doubt that level of thinking went into the current minimum wage.
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