Right, but arbitrarily declaring that a specific wage level is the true one does not make something a cost to the business. We, collectively, decide that people should not make less than X. That does not make each person's labor worth X in a free market, and it does not make X the 'true' cost of paying a person. If we, as a society, decide that people should make at least X, then we, as a society, should subsidize wages below X until it is X.
The gap between the free market value of someone's labor and a 'living wage' is not an externality. It is not a secret cost that businesses are shirking. It is a social obligation that we made up because we want our citizens to have a certain standard of living, and that's fine, but we should all pay that together.
Companies should pay people what their labor is worth, and we should all make up the difference together, if that's what we believe is right.
But when you start forcing wages it’s no longer a free market. Further, we only collectively decide wages by deciding what we will or won’t pay for something. And finally, you cannot escape value. If you arbitrarily say someone’s labor is worth some value, then other labor that is more valuable is still worth more. EX: Burger flipper vs Pharmacist.
The gap between the free market value of someone's labor and a 'living wage' is not an externality. It is not a secret cost that businesses are shirking. It is a social obligation that we made up because we want our citizens to have a certain standard of living, and that's fine, but we should all pay that together.
Companies should pay people what their labor is worth, and we should all make up the difference together, if that's what we believe is right.