Minimum Wage Madness


minimum_wage_onpageA survey of American economists found that 90 percent of them regarded minimum wage laws as increasing the rate of unemployment among low-skilled workers. Inexperience is often the problem. Only about 2 percent of Americans over the age of 24 earned the minimum wage.

Advocates of minimum wage laws usually base their support of such laws on their estimate of how much a worker “needs” in order to have “a living wage” — or on some other criterion that pays little or no attention to the worker’s skill level, experience or general productivity. So it is hardly surprising that minimum wage laws set wages that price many a young worker out of a job.

What is surprising is that, despite an accumulation of evidence over the years of the devastating effects of minimum wage laws on black teenage unemployment rates, members of the Congressional Black Caucus continue to vote for such laws.

Once, years ago, during a confidential discussion with a member of the Congressional Black Caucus, I asked how they could possibly vote for minimum wage laws.

The answer I got was that members of the Black Caucus were part of a political coalition and, as such, they were expected to vote for things that other members of that coalition wanted, such as minimum wage laws, in order that other members of the coalition would vote for things that the Black Caucus wanted.

When I asked what could the black members of Congress possibly get in return for supporting minimum wage laws that would be worth sacrificing whole generations of young blacks to huge rates of unemployment, the discussion quickly ended. I may have been vehement when I asked that question.

The same question could be asked of black public officials in general, including Barack Obama, who have taken the side of the teachers’ unions, who oppose vouchers or charter schools that allow black parents (among others) to take their children out of failing public schools.

Minimum wage laws can even affect the level of racial discrimination. In an earlier era, when racial discrimination was both legally and socially accepted, minimum wage laws were often used openly to price minorities out of the job market.

In 1925, a minimum wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry.

A well regarded Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less.

In South Africa during the era of apartheid, white labor unions urged that a minimum wage law be applied to all races, to keep black workers from taking jobs away from white unionized workers by working for less than the union pay scale.

Some supporters of the first federal minimum wage law in the United States — the Davis-Bacon Act of 1931 — used exactly the same rationale, citing the fact that Southern construction companies, using non-union black workers, were able to come north and under-bid construction companies using unionized white labor.

These supporters of minimum wage laws understood long ago something that today’s supporters of such laws seem not to have bothered to think through.

People whose wages are raised by law do not necessarily benefit, because they are often less likely to be hired at the imposed minimum wage rate.

Labor unions have been supporters of minimum wage laws in countries around the world, since these laws price non-union workers out of jobs, leaving more jobs for union members.

People who are content to advocate policies that sound good, whether for political reasons or just to feel good about themselves, often do not bother to think through the consequences beforehand or to check the results afterwards.

If they thought things through, how could they have imagined that having large numbers of idle teenage boys hanging out on the streets together would be good for any community — especially in places where most of these youngsters were raised by single mothers, another unintended consequence, in this case, of well-meaning welfare policies?

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  • 11bravo

    The commies just don’t get it. Or they do, and the consequences are not unintended.
    They are just buying votes baby!

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      • gray_man

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      • ziggy zoggy

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  • Moa

    Another insightful article, Professor Sowell.

    If only the White House actually cared about the people it claims to care about – then they might listen to your voice of reason and historical knowlege.

  • davarino

    McDonalds was never meant to provide a living wage. Its a great place for young people to learn how to work and how the economic system works. Then they move on from there to higher paying jobs. You were never meant to make a career out of working for McDonalds, Burger King, Taco Bell, Walmart…..etc. Its a given, these are low paying jobs, get over it and move on.

    • carpe diem 36

      an employee gets paid according to his value to the employer and to make sure the employer is able to survive.

      • JVR

        If only the world was this simple. Your argument would apply in a closed system where supply and demand are balanced.

        The US economy is not closed, and the millions of unskilled migrants (legal and “undocumented”) come into competition with working class Americans, increasing the supply of workers for unskilled or low skilled jobs (McJobs, construction workers, etc).

        This increase in the supply of workers thus drives down wages. That is why someone like “davarino” can write that “McDonalds was never meant to provide a living wage…”. This is not true. If the supply of workers dry up (eg a freeze on immigration and refugees), then McDonalds and others like them will compete for a smaller pool of workers, and that will drive up wages.

        This will not necessarily drive up prizes of Hamburgers or Pizzas, no these chains and other employers like them will find efficiencies which increase their productivity. This is the true generator of wealth in Western economies, except that the Leftists and motherhood attitude to immigration has disabled it.

        • gray_man

          nonsense

        • Richard Fontaine

          I agree with “”gray_man”, your comment as evidenced below is silly:
          “This will not necessarily drive up prizes of Hamburgers or Pizzas, no these chains and other employers like them will find efficiencies which increase their productivity. This is the true generator of wealth in Western economies, except that the Leftists and motherhood attitude to immigration has disabled it.”
          Don’t get me wrong I think illegal immigration will be the death nell of our American Constitutional Republic, but your comment about finding “efficiencies in fast food, is ridiculous, I think maybe they are pretty efficient already, thus the ability to use unskilled labor and still charge very low prices.

          • ziggy zoggy

            Very low prices? Burger King sells $15.00 hamburgers that taste like $hit. (Laughlin NE.) Dominos and Pizza Hut sell $hit disguised as pizza.

            Efficient yes. Unable to pay higher wages without increasing prices? Bull fucking $hit.

          • Richard Fontaine

            Once again. NONSENSE. If you had any knowledge of business you would realize that the whole fast food industry is very competitive and that any fast food chain that hasn’t squeezed all the inefficency out of their operations is either already out of business or on it’s way out. You appear to be yet another low information liberal with no sense of how a competitive free market works.. AS for your pipe dream about $15 Burger KIng burgers that is a complete fantasy. Would you care to name one? Get a job in the real world and maybe you will learn that workers only earn what they are worth to the enterprise. AS far as low prices, have you not ever heard of the Dollar Menu? IT is where unemployed liberals get their lunch. Check it out. You might like it.

          • ziggy zoggy

            Fast food joints are among the least competitive businesses in the country. They depend on sales volume and low wages to make money. If it weren’t for the laziness and gluttony of fat Americans, most of them would go out of business. Their prices are comparable to those of real restaurants that serve good food and many of them have lousy business models, but there are more fast food joints than any other kind of restaurant. If KFC can make money, any fast food joint can. Americans like crappy fast food. It has nothing to do with quality or competition.

          • AKEK

            So what do you propose to do about the fact that Americans like fast food? Let me guess… make it illegal?

            You have about as much a grasp of economics and facts as our Dear Leader does. KFC, Burger King, McDonalds, etc. are highly competitive with one another, not to mention every other restaurant in town. Your tastes and disdain for your fellow Americans (?) is irrelevant to that fact. Here is another fact. There is no “Laughlin, NE” according to Google Maps. But given your lack of sophistication with the English language, let’s suppose you mean “Laughlin, NV.” Well, in Laughlin, NV there is no Burger King. There is one 10 miles away in Ft. Mohave (again, according to Google Maps). There are lots of restaurants in Laughlin, NV which means lots of competition. One of those restaurants is In-n-Out Burger, an excellent chain in the western U.S. If burgers in Ft. Mohave were $11-15 nobody would eat there — they would instead go to In-n-Out or one of the other stores. Your lie isn’t even a very good one.

            Oh by the way, the In-n-Out in Laughlin, NV is hiring. Starting pay is $10.50.

            Go back to moveOn.org, troll.

          • ziggy zoggy

            A triple Whopper in Laughlin NE costs between 11 and 15 dollars, depending on the franchise owner’s whims. (The price sure as heII isn’t based on market reality.) “The Burger” at a London BK costs $186.00.

            Do you want fries with that, cheesed1€k?

          • JVR

            OK Richard, suppose for the moment that you are correct, and that fast food is as efficient as it can be in an environment with a large supply of cheap labour. Then they should go out of business (their business model does not work, and needs the supply of migrants as cheap labour).

            This is why I reject your argument about efficiencies. Fast food restaurants should be able to make a profit in a climate without cheap immigrant labour. If this dry up, the industry will reorganise (perhaps some marginal places will close down, as they should). In the end this squeezes efficiencies out the remaining, who will compute for workers at a higher wage value but that the volume of sales which makes that affordable.

            The supply of cheap labour distorts entire industries, harm the working class, and cause immense harm by building inefficiencies in the the business models of industry. That is why it is harmful. Sorry, but I have to reject your arguments above.

          • Richard Fontaine

            Trying to enlighten low information liberals is basically a waste of time so rather than pointing out your obvious lack of understanding or knowledge of any business even one as straight forward as the fast food industry I will reply with the same answer I gave your fellow traveler, ziggy zoogy below;
            <>
            “any fast food chain that hasn’t squeezed all the inefficency out of their operations is either already out of business or on it’s way out. You appear to be yet another low information liberal with no sense of how a competitive free market works”

          • Richard Fontaine

            If you can stick in the phrase “or teenagers trying to learn how the world of work is structured and want to succeed”, for the “immigrants” you mentioned and you have answered your own question. The immigrants come from poor parts of rural Mexico and since I speak spanish I love to hear their personal story of escaping from the stagnant and destructive kleptocracy that is modern Mexico. I don’t blame them for wanting to come here and anyone with eyes can see that they are good workers. I just want the boarders sealed so ALL OF MEXICO doesn’t comes here and as newly registered voters makes all OF AMERICA as corrupt and unjust as MEXICO is today. BARRACK HUSSEIN OBAMAS, intends to create a new AMERICA by registering anyone who shows up as an AMERICAN CITIZEN, whether legal or not, and forcing us to bend to his tyranny. I say no.

          • ziggy zoggy

            What, they’re supposed to charge HIGH prices for crappy products made by unskilled laborers?

            Fast food companies make money because Americans are fat, lazy slobs who will put just about anything in their perpetually whining mouths. The fact that people wait in line to buy the garbage most of them sell proves that it’s a seller’s market. Efficiency has nothing to do with it. Can you name a single decent burger chain besides In N’ Out or Johnny Rocket’s? Five brothers may be good. I don’t know, because the cheapest burger on its menu costs more than five dollars and I’m not stupid enough to pay that much for fast food. I can go to Red Robin and get a delicious gourmet burger with bottomless fries for less than ten bucks – and RR serves alcohol like all civilized establishments do.

            How much do you want to bet that Red Robin pays its entry level employees more than McDonald’s or Burger King do – even though McDonald’s pulls in more money every week than RR could if it lasts for a hundred years? And I know for a fact that In N’ Out pays substantially more than its competitors. It also sells a far superior product and makes them fresh – AND SLOWLY.

            YOU ARE COMPLETELY FULL OF $HIT. Conservative dogma may not be as destructive as lefty dogma, but it almost as stupid. The minimum wage is too fucking low. Gas prices are not high because China and India are major market players. (The city of LA has more vehicles on its roads than both countries combined.) the “market” does not correct all its mistakes. Wetbacks will NEVER vote Republican or improve the economy. This insistence on keeping a minimum wage artificially depressed is conservative folly. Sometimes lefties are right to hate us.

            Any PROFESSIONAL AND COMPETENT manager knows that minimum wage produces minimum work. Compensating and developing employees makes them better people and improves society. Exploiting them produces a country

          • ziggy zoggy

            …..as second rate as America has become. This Apple I Pad is a perfect example. What a piece of $hit. And yet Steve Jobs is regaled as a visionary, even though Apple products are incompatible with EVERYTHING.

            Go watch American Idol or Glee and eat a Big Mac, fat boy.

        • davarino

          So the wages go up as the labor pool gets smaller, yes. The workers have more money AND THE PRICE OF EVERYTHING REMAINS THE SAME? The price of hamburger can go down in this environment? You can make the wages of a burger flipper $50 an hour and for a very short while, if the business doesnt go out of business, the workers will enjoy the higher wages. But then everything shifts to account for this imbalance and the $50 an hour wage now feels like the $6 an hour wage I used to make. Sorry, basic economics
          I am with you on the illegal immigrant issue, not good for America

          • Richard Fontaine

            I have been trying to say something similar above, and frankly I think you have said it better. Thanks and congrats. I worked in Burger Chef in Middletown, CT to put myself through college many decades ago, and at least that experience taught me more than the left leaning liberal professors did in my “progressive studies” courses.

    • ziggy zoggy

      The mangers of McDonald’s, Burger King, Taco Bell, Walmart, etC, are well compensated. Except for Walmart, all those companies offer franchises. Successful owners are also well compensated.

      • Richard Fontaine

        Management is a skill. Unlike “gender studies” and other progressive bs masquerading as education in our colleges today.

    • Sheik Yerbouti

      So were paper routes. But these days you nearly never see a kid on a bicycle tossing newspapers. It’s usually an older couple in a beat up van. We’ve seen some very weird shifts in ways to make a buck in the last couple of decades. The very first in line to be scrood are the young.

      • ziggy zoggy

        Yep. I had to wait until I was 13 to qualify for a regular paper route. Before then I used to hook little advertisement papers onto people’s doorknobs for peanuts. Now adults are delivering papers. Never mind that the newspaper business is outdated and needs to die. How fucked up is society when kids can’t deliver papers on your porch and adults have to dump them in your driveways for peanuts?

        Low Minimum wages are obscene.

  • Richard Fontaine

    I hadn’t noticed that Dr Thomas Sowell was the author of this article till I read a comment that mentioned his name. Dr. Sowell can state the most complex and misunderstood with such simplicity that almost anyone can understand it. A man of great common sense, which unfortunately is so rare in our public discourse. Bravo.

    • Stendec

      Common sense is an uncommon virtue, especially in this day and age.

  • Johnny

    The best thing for young, disadvantaged workers is to cut
    immigration; both legal and illegal. I worked minimum wage jobs until I was 23
    years. In the mid to late 70s, I got my pilot’s license on minimum wage jobs. Airplane
    rental was 3 hours of minimum wage per one hour in the airplane without the
    instructor; now it’s about 12 hours. In the 70s, minimum wage was a living wage
    and today it’s not.

    I’m not advocating for minimum wage laws, I’m advocating for
    a tighter job market through reduced immigration. This would be the best thing
    to bring the worker bees of our country back into the middle class and get the youngsters
    in our society off the street corners and into productive work.

    • Richard Fontaine

      I am in complete agreement with this arguement. Illegal immigration AND welfare paying more than working has destroyed the American work ethic.

  • ziggy zoggy

    Areas with high minimum wages have higher employment rates than areas with lower wages.

    This is irrefutable. The only question is whether the higher wages helped cause the higher employment rate. I reckon they did.

    • Richard Fontaine

      This of course is because ziggy is not quite accurate in most of his acertions. How about Texas, North Dakota, Florida, Montanna, Utah, versus Rhode Island, California, New York, Massachusetts, Connecticut, Illinois????? businesses can’t leave these blue states fast enough. with good reason.

      • ziggy zoggy

        You are confusing states with areas, and businesses with employees. Besides, WA just raised its minimum wage to $10. Per hour and it has one of the highest employment rates in the country.

  • Ozzy

    So if you can’t live on a minimum wage what do you do? Stay a teenage boy?
    Think people.

    • Richard Fontaine

      NO get off your A$$ and learn a skill that pays more. Like managment, plumbing, carpentry, mechanics, sales or anything more complex than sweeping the floors and asking “If you would like fries with that?

  • MrUniteUs1

    Plenty of countries with no minimum wage. Not one of them doing nearly as the U.S. Raising the minimum wage will also raise consumer spending which will generate more hiring and consumer spending. It’s good for business.

  • Richard Fontaine

    Look I started out fifty years ago supporting myself by working in minimum wage jobs, since then I have done dozens of things including going to colleges and universities you would be impressed by. I have started and run businesses and failed and succeeded. I had to start with only $20 when I was seventeen for reasons that I won’t bore you with. The only point I am trying to make with you is that work teaches in most cases more than our current public schools. A business man taught me how to sell his “stale” merchandise when I was a stupid 14 year old kid working for him as as a salesman after school. He taught me at fourteen as much as I would later learn at a “well known Eastern business school” some fifteen years later. I now live and have lived in Baltimore,MD and for the last thirty years have watched young kids who except for their skin color are very much like me fifty years ago with no parents and no one to teach them how to earn a living. My boss was an older jewish gentleman who had no children but was willing to teach me how to sell clothes. Why? Because he cared. Who is going to teach the tens of thousands of African American black teenagers in all of our inner cities if your lack of understanding of the basics of how a business survives keeps the minimum wage so high that no businessman or woman in their right mind would ever hirer any black child who doesn’t understand even the basic skills of how to earn a living?