Wages vs Skill

The real problem is that workers are not so much underpaid as they are under-skilled. And the real task is to help those people become skilled. Congress cannot do this simply by declaring that as of such-and-such a date, everybody’s productive output is now worth $XXX per hour.

Walter Williams

Minimum Wage Laws are Racist

The Davis-Bacon Act of 1931 was the nation's first federally mandated minimum wage law. Its explicit intent was to discriminate against black construction workers. During the legislative debate on the Davis-Bacon Act, quite a few congressmen, along with union leaders, expressed their racist intentions. Rep. Miles Allgood, D-Ala., said: "Reference has been made to a contractor from Alabama who went to New York with bootleg labor. This is a fact. That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country." American Federation of Labor President William Green said, "Colored labor is being sought to demoralize wage rates.”

Walter E. Williams, Stalking Horses

Which Is Really Greed?

If workers struggle for higher wages, this is hailed as “social gains”; if businessmen struggle for higher profits, this is damned as “selfish greed.”

Ayn Rand

Minimum Wage Laws

If you need government to set you a “living wage,” it’s because you have failed to make yourself worth a living wage.  A higher minimum wage is merely a subsidy to ensure you don’t have to put in the effort necessary to earn what you want.  I’m unclear why your failure to work hard, gain skills and not do the stupid things that lead a 30 year old to be making minimum wage morally compels me to give you my money.

Kurt Schlichter, Townhall, March 31, 2014

Most People Move Up From Minimum Wage

We could examine a snapshot of ten Americans struggling to get by on minimum wage. It is not a pretty picture. However, were we to revisit them six months later, most would be earning somewhat more for their work. Government statisticians would have to select another ten Americans to produce a snapshot purporting to show that ten Americans are still on minimum wage. While true that there are still ten Americans on minimum wage, it is surely not irrelevant that they are a different set of ten Americans and that the first ten are moving up the economic escalator.

Rabbi Daniel Lapin, "America's Real War," pg.250

The Rights of Merchants

The man who owns an article of trade or commerce is not obliged to sell it for any particular price, nor is the mechanic obliged to labor for any particular price.  He may say that he will not make coarse boots for less than one dollar per pair, but he has no right to say that no other mechanic shall make them for less.  The cloth merchant may say that he will not sell his goods for less than so much per yard, but has no right to say that any other merchant shall not sell for less price.  If one individual does not possess such a right over the conduct of another, no number of individuals can possess such a right.  All combinations therefore to effect such an object are injurious, not only to the individual particularly oppressed, but to the public at large. . . .

New York court, 1835, in summary of their judgment against a union which was fixing prices and not allowing non-union members to be hired. Cited, by Clarence B. Carson, A Basic History of the United States, Vol. 3: The Sections and the Civil War, 1826-1877, pg.61-62

Comment:  According to this judgment, even the government has no right to fix wages, nor do activists have the right to force people to sell products to them.  Isn’t it interesting how the modern activist judges now rule against private rights of the merchants.

A Living Wage But Wage Equality?

Take Responsibility

Then there are the people making minimum wage who want more money, but don’t want to earn it. Rather than building their skills so they can be promoted or moving on to a better job, their solution is to ask the government to force their employers to pay them more than they’re worth. Why should someone who can be replaced by a 16 year old with two weeks of training get $15 an hour for his work? If you’re dirt poor and you don’t want to do what it takes to earn more money, then you deserve to stay poor – and no matter what the government does, you will probably get exactly what you deserve.

John Hawkins, “Your Screwed Up Life Is Your Own Responsibility.”

Minimum Wage Laws Kill Jobs

The last year in which black unemployment was lower than white unemployment - 1930 - was also the last year in which there was no federal minimum wage law.  The Davis-Bacon Act of 1931 was openly advocated by some members of Congress on grounds that it would stop black construction workers from taking jobs from white construction workers by working for less than the union wages of white workers.  Nor was the use of minimum wage laws to deliberately price competing workers out of labor market unique to the Davis-Bacon Act or to the United States.  Similar arguments were made in Canada in the 1920s, where the object was to price Japanese immigrants out of the labor market, and in South Africa in the era of apartheid, to price non-whites out of the labor market.

Any group whose labor is less in demand, whether for lack of skills or for other reasons, is disproportionately priced out of labor markets when there are minimum wage laws, which are usually established in disregard of differences in skills or experience.  It has not been uncommon in Western Europe, for example, for young people to have unemployment rates above 20 percent.

Thomas Sowell, Intellectuals and Society, pp.450-451

Minimum Wage Hazards

Crusaders for a “living wage” or to end “sweatshop labor” in the Third World, for example, may invest great amounts of time and energy promoting those goals but virtually none in scrutinizing the many studies done in countries around the world to discover the actual consequences of minimum wage laws in general or of “living wage” laws in particular.  These consequences have included periods of unemployment, especially for the least skilled and least experienced segments of the population.  Whether one agrees with or disputes these studies, the crucial question here is whether one bothers to read them at all.

Thomas Sowell, Intellectuals and Society, p.181

Rights and Obligations

If someone has a right, someone else has an obligation.  But the proposed right to a “living wage,” for example, is not based on any obligation agreed to by an employer.  On the contrary, this “right” is cited as a reason why government should force the employer to pay what third parties would like to be paid.

Thomas Sowell, Intellectuals and Society, p.157 

Minimum Wage Harm

Intervention by politicians, judges, or others, in order to impose terms more favorable to one side - minimum wage laws or rent control laws, or example - reduces the overlapping set of mutually agreeable terms and, almost invariably, reduces the number of mutually acceptable transactions, as the party disfavored by the intervention makes fewer transactions subsequently.  Countries with generous minimum wage laws, for example, often have higher unemployment rates and longer periods of unemployment than other countries, as employers offer fewer jobs to inexperienced and low-skilled workers, who are typically the least valued and lowest paid - and who are most often priced out of a job by minimum wage laws.

It is not uncommon in European countries with generous minimum wage laws, as well as other worker benefits that employers are mandated to pay for, to have inexperienced younger workers with unemployment rates of 20 percent or more.  Employers are made slightly worse off by having to rearrange their businesses and perhaps pay for more machinery to replace the low-skilled workers whom it is no longer economic to hire.  But those low-skilled, usually younger, workers may be made much worse off by not being able to get jobs as readily, losing both the wages they could earn otherwise and sustaining the perhaps greater loss of not acquiring the work experience that would lead to better jobs and higher pay.


Thomas Sowell, Intellectuals and Society, p.70