Lassalle
According to Alexander Gray, Ferdinand Lassalle "gets the credit of having invented" the phrase the "iron law of wages", as Lassalle wrote about "das eherne und grausame Gesetz" (the iron and cruel law).
According to Lassalle, wages cannot fall below subsistence wage level because without subsistence, laborers will be unable to work. However, competition among laborers for employment will drive wages down to this minimal level. This follows from Malthus' demographic theory, according to which population increases when wages are above the "subsistence wage" and falls when wages are below subsistence. Assuming the demand for labor to be a given monotonically decreasing function of the real wage rate, the theory then predicted that, in the long-run equilibrium of the system, labor supply (i.e. population) will be equated to the numbers demanded at the subsistence wage.
The justification for this was that when wages are higher, the supply of labor will increase relative to demand, creating an excess supply and thus depressing market real wages; when wages are lower, labor supply will fall, increasing market real wages. This would create a dynamic convergence towards a subsistence-wage equilibrium with constant population.
As David Ricardo noticed, this prediction would not come true as long as a new investment, technology, or some other factor caused the demand for labor to increase faster than population: in that case, both real wages and population would increase over time. The demographic transition (a transition from high birth and death rates to low birth and death rates as a country industrializes) changed this dynamic in most of the developed world, leading to wages much higher than the subsistence wage. Even in countries which still have rapidly expanding populations, the need for skilled labor causes some wages to rise much faster than others.
To solve the question for why wages often tend towards subsistence, Ricardo put forth the Law of Rent. Ricardo and Malthus debated this in a lengthy personal correspondence.
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