There is no market rate until the market has made a trade. If I traded an hour of my time for $10 with you five years ago, and I again traded an hour of my time with you for $10 today, $10 is still the market rate.

> You're ignoring the time element.

It is not ignored. It is in there.

> So in a few years when the market rate is $15, he's making maybe $12.

The market rate for the given person in this scenario is $12. Maybe someone else will pay $15, but they have to prove that for the market rate to adjust. Some drunk guy at the bar saying "Oh yeah, I'd totally pay $15 per hour for that guy" does not establish this person's market rate as actually being $15. Talk is cheap, as they say. An actual trade has to take place to prove it.

Perhaps what you are trying to suggest is that people are fungible? If Joe is paid $15, and his identical in every single way twin is paid $15, then Sue – no relation – must also be worth $15, and paying her only $12 is below what actual sales have shown what the market is paying for a person of her kind? We do often talk about commodities that way.

But my experience with people in general, as a coworker, and as an employer, says people are most absolutely not fungible. Even for the same job, no two people are going to fit in equally. I think we can agree that some workers are better than others. In fact, we agonize over resumes and interviews to try and find the best of the bunch. If people were fungible, you wouldn't need to care. Just pick one at random. They're all as good as each other.

Since people are not fungible, the market value of an individual rests entirely on the trades an individual makes. It cannot be observed any other way. Their pay cannot go below their market rate. Any time their pay drops, their market rate comes along for the ride.