[nearbuy]

> Because if they don't, they are externalising the true costs of labour to the government, or the community.

Does this mean anything or is it a circular definition?

If we decide we'd like people to have at least the standard of living of a single person earning $40/hour, does that make $40/hour the "true cost of labor"? Could we just as easily raise our standards and say $50/hour is the true cost?

The living wage is higher than what you would often have with no government intervention or safety net, so it's not a natural cost of labor in that sense.

[SR2Z]

No. Prices are not arbitrary; they're determined by market forces. I don't really agree with the idea that the minimum wage should be intended to support an adult (I think our welfare systems should be reformed to eliminate cliffs), but if you set it to the average price of a bunch of stuff in a region it's gonna be an actual number.

You can change the set of stuff, but it's much harder to cheat if you actually have to say what a living wage should be spent on.

[nearbuy]

I'm not doubting that we can choose a rate for the living wage.

I'm asking about the sentence I quoted. What makes the living wage the "true cost" of labor? Why consider it to be a cost that private industry should rightfully pay, and if they don't, they're "externalising" it to the government?

By the same logic, isn't nearly all government spending just externalized costs? When the government pays for roads or police, are these also externalized costs that private industry should pay for?

It sounds like a minarchist viewpoint, where government spending is kept to a minimum and services are privatized.