Thomas Sowell reacted to Mitt Romney’s advocacy of a strengthened minimum wage law in his editorial, “A Defining Moment”. It clarifies our problem with a “compassionate conservative”.
But I’ll skip over quibbling with Romney; I’d rather take a moment to highlight the meat of Sowell’s statement:
We have gotten so used to seeing unemployment rates of 30 or 40 percent for black teenage males that it might come as a shock to many people to learn that the unemployment rate for sixteen- and seventeen-year-old black males was just under 10 percent back in 1948. Moreover, it was slightly lower than the unemployment rate for white males of the same age.
Really? I had to go look that up. I found this article, “The Minimum Wage: Teen-age Job Killer”, including a chart based on numbers from the Bureau of Labor. It’s an old chart, but it snapshots the era when the unemployment exploded.
Interesting. Sowell explains…
The economic reason is quite plain. The inflation of the 1940s had pushed money wages for even unskilled, entry-level labor above the level specified in the minimum wage law passed ten years earlier. In other words, there was in practical effect no national minimum wage law in the late 1940s.
Liberals were of course appalled that the federal minimum wage law had lagged so far behind inflation — and, in 1950, they began a series of escalations of the minimum wage level over the years.
It was in the wake of these escalations that black teenage unemployment rose to levels that were three or four times the level in 1948. Even in the most prosperous years of later times, the unemployment rate for black teenage males was some multiple of what it was even in the recession year of 1949. And now it was often double the unemployment rate for white males of the same ages.
I was a kid once. I was pretty much of a blockhead, and not worth a lot of money. I bet most of you were in the same boat. But making a few bucks doing a disgusting janitorial job (mopping up in an old folks’ home, if you must know) was quite a fortune for me at the time. It sounds like a cliché to say that doing the trash work improved my character, but it was part of the process.
I’m not arguing, and I’m sure Sowell isn’t arguing, for the return of the sort of oppressive racism of the mid-20th century. But are we better off today, having “protected” people to such an extent that they can’t get jobs? We’ve spent fifty years battling bad racism with “good racism”, and all we have to show for it is a greater misery index and a lot more people depending upon assistance. But we pat ourselves on the back and pledge to keep marching towards a utopia that cannot be reached, and never mind the human cost.
Wow Maynard, spot on as usual..thank you sir
Great food for thought Maynard. Also a trip down memory lane. I was not alive in the 1940’s. Your first job story reminded me of my own first job when I was 15. You all do not care about that, but I bet everyone reading your blog will remember their first job when they were young. Having a pay check as a teenager was a pretty cool thing. The real topic of your article is huge & mufti faceted. I wish I was a financial brain & could see in more detail what should be done about minimum wage.
My understanding is the origin of the minimum wage was a racist measure. The intent of it was to exclude blacks and other minorities from the job market, to provide better job security for whites. Minorities were considered unskilled labor. If more came into the job market, the fear was they’d displace white workers and drive down wages. I think the racist motivations for it have long gone, but the reason we still have minimum wage laws is people fear that if we allow employers to pay whatever the market will bear, that it will put more people into grinding poverty, and liberals now actually use minorities as their poster children to support the minimum wage. Just the opposite is true. Minorities have been the greatest victims of minimum wage laws.
What increases wages is the increase in one’s value to employers. What increases that value? Work experience, work ethic, producing results. How do people develop the prerequisites for this if they don’t have a job? The answer is they don’t. How are young people supposed to gain the skills they need to increase their value if they are priced out of the market? The answer is they can’t, unless employers are desperate for a supply of labor.
The truth of the matter is the minimum wage doesn’t just affect minorities. It affects young people in particular, of all races. I heard a year or two ago an astounding unemployment rate in the age range of 18-34. I forget exactly what it was, but it was above 50%. A large part of that was those between the age of 18 and 24. If you raised the lower end of the age range, the rate dropped dramatically to something like 30%. That’s still really high, but the point is the people who suffered the most were the younger ones.
This is going to strike people as really counter-intuitive, but I think one of the best anti-poverty measures this country could take would be to end the minimum wage altogether. Let people make what the market will bear, give them a job. The idea is they won’t stay with the low paying job. They’ll gain skills and experience, and they’ll move on to a higher paying job, making room for other neophytes to find work.
What they do over here in Denmark is basically tax the hell out of everyone’s income, but to help with these small teenage jobs, they dramatically cut the tax for kids under 18. This way a small restaurant can get the kid for almost half of what they would need to pay the same unskilled 18 year old. It’s funny to see how socialists have to constantly tweek the system to come up with work-arounds for all of their crappy policies that are full of unintended consequences. That said, my private little mental jury is still out on the issue of a federal minimum wage as I need to learn more about the pros and cons.
darn it all to heck;) My comment is stuck in moderation for use of the word “cr” “appy” I know, I have such a foul mouth;) he he
As a teenager I took a summer job at a small animal (dog and cat) boarding kennel. I wanted the job badly enough (I guess) that I agreed to I think it was about 30 to 40 cents/hour below the minimum wage. After all, it was my own job! I’d be earing good money (compared to none)!
So that summer I spent cleaning up dog and cat poop 8 to 9 hours a day, daily cleaning out their overnight cages and daytime runs, and occasionally picking stray ticks off my skin evenings just before bed. I think it was about the worst job I ever had.
A nationally set minimum probably is a bad idea. There are studies showing the minium wage has a detrimental effect on number of jobs. Other studies show none or an insignificant impact. I suspect some political bias in all the studies. The economy is a complex organism. Isolating one set of data doesn’t tell the entire story. It is impossible to see the whole picture, but it is surely more than dollar signs.
The minimum wage controversy serves to remind us employees are a cost of doing business. Employers, according to the capitalist model, endeavor to keep down costs to protect profits. It takes an unbounded idealistic faith in market forces to think the mysterious ‘invisible hand’ described by Adam Smith will work to achieve the best for all without intervention. No need to see workers as people, just labor. Historically employers have had to be compelled to ease the burdens of labor such as wages, hours worked and working conditions. Few were like Henry Ford who voluntarily doubled the going wage and reduced the number of hours worked. Ford acted because he saw how work conditions destroyed morale. “I believe it is a disgrace for a man to die rich,” Ford said. “Good will is about the only fact there is in life.” He saw the human element in economics and his business benefitted.Employers may be more enlightened today, but not enough to count on when it comes to human resources, a term I find revolting.