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Posted: January 11, 2014 10:00 p.m.

Politics and minimum wage laws



If you’re searching for a consensus in a field of study, most of the time you can examine the field’s introductory and intermediate college textbooks. Economics textbooks that mention the minimum wage say that it increases unemployment for the least skilled worker. The only significant debate about the minimum wage is the magnitude of its effect.


How about the politics of the minimum wage? In the political arena, one dumps on people who can’t dump back on him.

Minimum wages have their greatest unemployment impact on the least-skilled workers. After all, who’s going to pay a worker an hourly wage of $10 if that worker is so unfortunate as to have skills that enable him to produce only $5 worth of value per hour?

Who are these workers?




Higher-skilled and union workers are not the only beneficiaries of higher minimum wages. Others include manufacturers who produce substitutes for workers.

A recent example of this is Wawa’s experiment with customers using touch screens as substitutes for counter clerks. A customer at the convenience store selects his order from a touch screen. He takes a printed slip to the cashier to pay for it while it’s being filled. I imagine that soon the customer’s interaction with the cashier will be eliminated with a swipe of a credit card. Raising the minimum wage and other employment costs speeds up the automation process. I’m old enough to remember attendants at gasoline stations and theater ushers, who are virtually absent today. It’s not because today’s Americans like to smell gasoline fumes and stumble down the aisles in the dark to find their seat. The minimum wage law has eliminated such jobs.

Finally, there’s a nastier side to support for minimum wage laws, documented in my book "Race and Economics: How Much Can Be Blamed on Discrimination?" During South Africa’s apartheid era, racist labor unions were the country’s major supporters of minimum wage laws for blacks.

Their stated intention was to protect white workers from having to compete with lower-wage black workers. Our nation’s first minimum wage law, the Davis-Bacon Act of 1931, had racist motivation. Among the widespread racist sentiment was that of American Federation of Labor President William Green, who complained, "Colored labor is being sought to demoralize wage rates."


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