TribLIVE

| Opinion/The Review

 
Larger text Larger text Smaller text Smaller text | Order Photo Reprints

Minimum questions about minimum wage

Email Newsletters

Click here to sign up for one of our email newsletters.

Letters home ...

Traveling abroad for personal, educational or professional reasons?

Why not share your impressions — and those of residents of foreign countries about the United States — with Trib readers in 150 words?

The world's a big place. Bring it home with Letters Home.

Contact Colin McNickle (412-320-7836 or cmcnickle@tribweb.com).

Daily Photo Galleries

'American Coyotes' Series

Traveling by Jeep, boat and foot, Tribune-Review investigative reporter Carl Prine and photojournalist Justin Merriman covered nearly 2,000 miles over two months along the border with Mexico to report on coyotes — the human traffickers who bring illegal immigrants into the United States. Most are Americans working for money and/or drugs. This series reports how their operations have a major impact on life for residents and the environment along the border — and beyond.

Wednesday, Feb. 27, 2013, 9:00 p.m.
 

President Obama wants to raise America's minimum wage to $9 per hour. That's a 24-percent increase from the current minimum wage of $7.25. Mr. Obama believes a higher minimum wage will help poor workers.

Here are some questions to ponder before throwing support behind the president's proposal.

What would you do if the price of your favorite beer rose by 24 percent? Would you buy less of that beer? Would you consider buying some other brand of beer instead? If your answer is “yes,” isn't it also true that employers — forced to pay their low-skilled workers 24 percent more — will hire fewer such workers? Might employers try to get by with fewer workers, perhaps by substituting machines (for example, automatic checkout lanes at supermarkets) for flesh-and-blood workers?

What would you tell a worker who lost her job because of the rise in the minimum wage? Would you tell her that she should be happy because, although she is unemployed, if she could find a job, her hourly wage would be $1.75 higher than she was earning at the job she lost?

The national minimum wage in America was designed, in the 1930s, by Northeastern industrialists to bankrupt upstart factories in the South. These Northeastern industrialists understood that the chief competitive advantage enjoyed by their newly emerging competitors was access to low-wage labor. The Fair Labor Standards Act of 1938 was meant to strip Southern firms of this advantage by forcing Southern factories to pay wages higher than were justified by market conditions in the South.

Do you think a piece of legislation with such unsavory origins — origins that had nothing to do with raising the wages of America's lowest-paid workers and everything to do with protecting from competition the profits of rich Northerners — is a trustworthy foundation to be relied upon today to raise the wages of America's lowest-paid workers?

In the late 1940s, the unemployment rate of black teenagers in America was lower than the unemployment rate of white teenagers. In the 1950s, the minimum wage began to rise steeply and, along with it, so did the unemployment rate of teens. But the unemployment rate of black teens rose much faster than did that of white teens.

Thomas Sowell, Walter Williams and many other economists argue that the minimum wage is to blame. The arbitrarily higher wage creates a surplus of low-skilled workers; there are more people willing to work at the minimum wage than there are jobs at that wage. Because people are prohibited by law from competing for jobs by offering to work at wages lower than the minimum, employers have an overabundance of applicants for each entry-level job that needs to be filled. Employers thus tend over time to make “safe” hires — teens from prosperous suburbs with decent schools, rather than teens from the inner city with lousy schools.

Today, the unemployment rate of white teens is 20.8 percent. That of black teens is 82 percent higher, at 37.8 percent.

Do you think black teens' much higher rate of unemployment today than that of whites is explained by racial discrimination? Is such discrimination worse today than it was in 1948? Or might a better explanation for the changing employment fortunes of black teens be that the minimum wage prices more black teens than white teens out of jobs?

Donald J. Boudreaux is a professor of economics at George Mason University in Fairfax, Va. His column appears twice monthly.

Subscribe today! Click here for our subscription offers.

 

 


Show commenting policy

Most-Read Stories

  1. Pirates acquire pitcher Blanton from Royals for cash
  2. Peduto blasts Wolf’s plan to borrow $3B to shore up pensions
  3. Starkey: Garoppolo baffles Steelers
  4. Tight ends’ role in Steelers passing game continues to lessen but players remain selfless
  5. McCutchen, Pirates cruise to interleague victory over Twins
  6. Steelers notebook: LB Dupree sits out backs-on–backers drill
  7. Inside the Steelers: Williams’ quickness out of backfield evident in drills
  8. Pirates notebook: Melancon bails out Watson with extended outing
  9. Legos, computer programming draw students to Elizabeth Forward summer tech camp
  10. Hempfield man serving life without parole for killing wife tells judge he’ll pay restitution when he’s released
  11. Steelers’ Bell unsure why NFL reduced his suspension