This thinking leads to more poverty and less social mobility.
Factory workers in China get paid less than $5/hour, yet this so-called "exploitation" directly led to a large reduction in poverty[1]. If everyone had accepted your framing and refused to do manufacturing business with China on that basis, the consequence of that would be more poverty and human suffering.
If a person is being paid $4/hour and you come in and offer a $5/hour job, you are making their situation better and you are improving their life.
A wage that just lifted someone out of poverty isn't exploitative by definition, unless we've mangled the definition of exploitation beyond recognition and we're trying to incentivize behavior with our language that literally creates more poverty.
No one is saying it's inherently exploitative. Or at the very least, I'm not. It can be exploitative because if the other jobs in the area are inherently worth $X/hr (because they provide about that value to the company), then you can get away with paying $X/hr in that area even if the job is inherently worth significantly more (because it provides more value to the company).
Despite some weird issues with your post, the problem lies in that companies get to basically engage in a sort of labor arbitrage.
They're paying someone $5/hr to provide them with $10/hr of value. The worker should be entitled to at the very least some of that extra value in the form of wages. Actually, all of it, but you know, get what you can.
That's the issue. There's $5/hr of value being essentially taken by the employer.
And before you come with any "but the business needs to profit", that's already accounted for. We're talking about what the worker provides to the company. The company can impart additional value as well. And that is what the company should be profiting. So if the company's infrastructure and economies of scale allow it to effectively sell the employee's effort at $15/hr, it does get to pocket that $5/hr. That's fair.
But like I said, due to the radical power imbalance, employers often get to engage in labor arbitrage. In which they underpay labor because employees often have no recourse. That doesn't make the labor worth less.
You do realize I made up all of the numbers, right? They're hypothetical numbers to illustrate a point. Because it is really difficult to pinpoint the actual value of labor and whatnot. And I'm not looking to discuss whether any particular job is worth any particular value. So I use a fictional, hypothetical world where I already know the values (because I made them up), to highlight a core point.
Which is why a lot of people want to steer away from the conversation of what labor is worth. Because we may have to admit that companies are short-changing their workers (no matter where they are working).
> $15/hour, then that is the value of the employee to the company.
That's an assertion that I do not grant you. And by definition of the fictional world I created, would not be true. The value they provide is $10/hr.
But let's assume that it is $15/hr for a second. Then, if the company provides no value whatsoever, then why should they get anything?
Why can't the worker just go and sell to whoever the company was selling to and make the money directly?
That reason is the value the company provides. And it is worth something. And I'm completely willing to acknowledge that. Just because something can be sold for $X doesn't mean any single part of the chain to produce that item provided all of the value.
What you are arguing is that employers should never benefit from employee labour i.e. all profits must be passed on to the employee.
If I pay someone $5/hr to provide them with $10/hr of value, the benefit to the employer is $5/hr.
If I pay someone $10/hr to provide them with $10/hr of value, there is no benefit to the employer.
Why would anyone care to employ anyone for no benefit, beyond charity?
Furthermore, "$X/hr of value" is a little suspect - the $ value of something is only determined after a product or service is sold; and there may be many contributing factors to that sale. Determining what % a given action contributes towards a sale is subjective, and usually resolved in the following manner: "How much would this cost me if I bought from someone else" i.e. determined by the market, the exact thing which would be destroyed by your proposal.
If a product is made by several workers on a production line (and assisted by designers, machine maintainers, sales & marketing etc etc) how do you determine the $ value of each contribution, beyond auction-style competition?
On that point: what is the value of drinking water? If you never drank water you would die, so it is arguably worth a lot - so why pay so little? a lifetime of water keeping you alive is worth thousands of dollars, so why ever pay less that $3 a litre?
Of course, I understand the true aim here: If minimum living wage is $LMW pa then no job should pay less than that.
What complicates this is;
1) people can have multiple jobs to meet $LMW, so maybe an hourly rate should be the standard i.e. if you pay 0.5 $LMV then you should only take half the usual working hours (so people can get a second job) and the job should not be so physically or mentally draining that it would disallow this either.
2) jobs based on commission become tricky as profit is not guaranteed. I suppose you could just pay $LMW and grant commission once you're over some quota. That said, invalidating some of these schemes may be beneficial. Maybe self-funded start-ups should be required to pay themselves a token wage from savings?
3) $LMW will differ by area, QOL is hard to determine and this will require a lot of influence in the market by government. That said, a flat national rate might equalise this; giving benefit to poorer areas, and pushing people out of the areas of concentrated wealth. At the same time, this has negative effects; binding people to poorer areas and pushing them out of concentrations of wealth..
This might not address your concern though, if $LMW is $5/hr, your worker bringing $10/hr of value still won't be paid more.
Final point: lower wages, can bootstrap businesses inter high-paying ones, and careers into higher paying ones (e.g. see low/unpaid internships). Even larger established businesses may be more likely to take a gamble on something if they can initially pay lower wages until the project is profitable. All of this has downside too. It's all a question of shuffling debt - arguably a business owner with no obligation to pay higher wages at a later stage should therefore shoulder all debt from unprofitable stages, and should take on a loan rather than pay lower wages; At the same time, smaller business owners might not have the credit for that; Maybe a better option would be some kind of scheme where lower-paid employees are compensated in company bonds?
Factory workers in China get paid less than $5/hour, yet this so-called "exploitation" directly led to a large reduction in poverty[1]. If everyone had accepted your framing and refused to do manufacturing business with China on that basis, the consequence of that would be more poverty and human suffering.
If a person is being paid $4/hour and you come in and offer a $5/hour job, you are making their situation better and you are improving their life.
[1]https://www.macrotrends.net/countries/CHN/china/poverty-rate