Target has announced that wages in its stores will now have a minimum starting rate of $11 an hour, rising to $15 by 2020. All of which proves that Karl Marx was indeed right.

Not that Marx was right in every instance, of course — killing all the bright people isn't the way to kick start an economy, for example (although his insistence that true communism could only arrive after we'd conquered economic scarcity was spot on, as the robots will soon be showing us). The specific issue is, what is it that raises workers' wages?

Marx said it was full employment — not raucous mobs in the street or union posturing. And as the United States has returned to full employment following that little banking unpleasantness, we're seeing wages rise, just as Marx would have predicted.

Walmart started it off in 2015, saying that it wanted both to motivate the employees it had and also to attract more, something it was having trouble doing. Target soon followed suit, and so has McDonald's and others. Target has now leapt ahead with its $15 minimum wage by 2020.

That Marxist explanation was that the capitalist gets to giggle with glee as they oppress the workers as long as there is unemployment. If productivity rises, or business more generally improves, the oppressors can get more of the labor they desire just by tapping that reserve army of the unemployed. They don't have to share the economic good fortune in the slightest — even if workers start to protest, they could just fire and replace.

This calculation all changes the moment there is no more unemployment. If people decide to leave for some other opportunity, then the capitalist loses the profit to be gained from their exploitation. And given that every other employer is in the same situation, then people will be offered the option of a better time elsewhere. For, given no reserve army, the capitalists are now in competition with each other for the labor they require.

You know, it's just great to be exploiting by not paying the full value of the workers' labour, but that does mean you've got to have some labour to be oppressing. If everyone you were grinding into the dust at $7.25 an hour is now across the street being paid $11, then you're not going to be making the profit to keep your top hat polished, are you?

All of which is what is happening to Target and the other retail chains. Unemployment is down to about 4.4 percent generally and in many markets below 3 percent — which really is very close indeed to there simply not being any unemployed among the employable. Rather a large portion of that last 1 and 2 percent of the people just isn't really suited to the world of work.

Employers all need labor until the robots get much better, and they're all competing with each other for that workforce they desire. Thus they have to keep raising wages as everyone else does, both to gain new labor and also to stop their current staff from high-tailing it for those with a better offer.

All of which is as Marx said it would be, and it is of course nice to find at least one thing he was right about. It's also why, when we do have full employment, wages keep up with labor productivity as they have been this past couple of centuries. Not because employers are nice guys and not because of any sense of fairness or community spirit — but simply because markets work.

It's also why wages rose so strongly in the post-War decades, because we largely had full employment all those years — it was nothing to do with union power, high taxes, or anything else.

As Karl Marx insisted, as Target is proving, full employment is the worker's best friend.

Tim Worstall (@worstall) is a contributor to the Washington Examiner's Beltway Confidential blog. He is a senior fellow at the Adam Smith Institute.

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