I agree that if you need to pay them more to keep them and they're worth it, you should. I think the argument that employers pay employees the minimum amount is

I agree that if you need to pay them more to keep them and they're worth it, you should. I think the argument that employers pay employees the minimum amount is true on the surface, but it is too cynical and unrealistic. The firm isn't "getting away" with anything same as you're not "getting away" with a wage/working conditions higher than your next best alternative. You're engaged in a mutually beneficial agreement, although the gains may not be evenly distributed among parties. Economist Ronald Coase had an interesting perspective as to why firms exist: > Mr Coase argued that firms make economic sense because they can reduce or eliminate the “transaction cost” of going to the market by doing things in-house. It is easier to co-ordinate decisions. At the time, when communications were poor and economies of scale could be vast, this justified keeping a lot of things inside a big firm, so carmakers often owned engine-makers and other suppliers. So paying someone no more than you have to would be the model of purchasing contract work rather than decisions made in the firm. In the firm, you accept some inefficiencies in order to minimize transaction cost, including those associated with finding, vetting and hiring a new employee. [0] http://www.economist.com/news/leaders/21584985-anyone-who-cares-about-capitalism-and-economics-should-mourn-death-ronald-coase-man http://www.economist.com/news/leaders/21584985-anyone-who-ca...