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>If you can't afford to pay them a living wage, society would be better off if resources were allocated elsewhere.

Since hiring a person can only increase that person's income, and decrease the amount of welfare they can claim, this is wrong. If there were a better allocation of that person's labor (e.g. a higher paying job) that person would surely take it.

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When you pay less than a living wage you are not reducing the cost to produce whatever you are producing, you are using taxes as an input. If you literally cannot afford to pay your employees a living wage, that means it's real cost (including the taxpayer's assistance) is greater than what people are willing to pay for it and we'd all be better off if our taxes just supported that person instead of supported that person and lined your pockets.

But that is wrong. Suppose I invented a machine that let any person churn out $3 in gold per hour. Now suppose everyone who was currently unemployed started doing this, and collecting slightly less benefits.

Would society be better of banning this machine, because it couldn't produce a "living wage"? Because this is what you are proposing.

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