Raising the minimum wage is not economic development and it’s not “socially just”

So, it looks like the big “economic development” introduced by the majority party in Santa Fe is an increase in the minimum wage. “You can have both. You can have social justice and a strong economy,” said Rep. Brian Egolf D-Santa Fe.

Of course you can have justice or fairness and a strong economy. Free market capitalism is the fairest system available and it has done more than any other force to bring billions of people out of poverty. Not surprisingly, New Mexico, which is the least economically free state in the nation. Interestingly, New Mexico also has the most rampant income inequality among the 50 states according to the liberal Center for Budget and Policy Priorities. Of course it is Egolf and his buddies who have controlled New Mexico for generations, running its economy into the ground. I’m sure a minimum wage hike is just the economic boost we need!

Oh, and lest you fall for the line that raising the minimum wage has anything to do with “social justice,” check out this exchange between then Sen. John F. Kennedy and others:

In a 1957 Senate hearing, minimum-wage advocate Senator John F. Kennedy of Massachusetts, who just four years later would be President of the United States, stated,

Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too – the wages of the white worker who has to compete. And when an employer can substitute a colored worker at a lower wage – and there are, as you pointed out, these hundreds of thousands looking for decent work – it affects the whole wage structure of an area, doesn’t it?

“The witness he was addressing, Mr. Clarence Mitchell, then director of the Washington Bureau of the NAACP replied,

I certainly think that is why the Southern picture is as it is today on the wage matters, that there is a constant threat that if the white people don’t accept the low wages that are being paid to them, some Negroes will come in [to] work for a lower wage. Of course, you feel it then up in Connecticut and Massachusetts, because various enterprising people decide to take their plants out of your states and take them down to the areas of cheap labor.

“Kennedy’s colleague Jacob Javits, then a U.S. Senator from New York, was similarly blunt. He said,

I point out to Senators from industrial states like my own that a minimum wage increase would also give industry in our states some measure of protection, as we have too long suffered from the unfair competition based on substandard wages and other labor conditions in effect in certain areas of the country – primarily in the South.

If anything, the minimum wage is just another left-wing plot to support their union allies by keeping the poor and minorities out of the work force.

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5 Replies to “Raising the minimum wage is not economic development and it’s not “socially just””

  1. Minimum wage. This is pushed as a way to make sure people earn a “living wage.” But the reality is that if I am an employer and the minimum wage is say $8 per hour, am I going to hire an unskilled, uneducated and inexperienced applicant who I expect can only contribute to my business to the tune of $5 an hour for $8 an hour, or a skilled, educated, experienced applicant who will be fully worth the $15 an hour I need to offer to hire him? Without the minimum wage many people who are now unemployed could get entry level jobs and work their way up. As it is entry level jobs for the unskilled, uneducated and inexperienced are virtually non-existent – unless, of course, you are an illegal immigrant.

    Minimum wage laws only help two kinds of people. First, it protects union workers from competition from the unskilled, uneducated and inexperienced by effectively locking them out of the labor market. Second, it helps politicians who vote for minimum wage by earning them votes and contributions from the unions.

  2. “Since this is your first time commenting, your comment is awaiting moderation.”

    What does that mean? I certainly don’t approve of you making changes to what I wrote unless you run the changes by me first.

  3. I’ve often wondered why the Republicans have never made the hidden racism of minimum wage laws an issue. Not just the history, but the here-and-now.

    It’s long been known that minimum wage laws have a disastrous effect on black teenager employment, as pointed out by Milton Friedman in his famous Playboy interview way back in 1973. In that interview, Friedman said that before minimum wages began to rise rapidly in 1956, the unemployment rate for black and white teenagers was “about the same“: “From that day to this, the (unemployment) rates for both black and white teenagers have been higher than before 1956. —The black teenage rate has been very much higher than the white teenage rate, for reasons that are highly regrettable and that we ought to be doing something about: Blacks get less schooling and are less skilled than whites. Therefore, the minimum wage rate hits them particularly hard. I’ve often said the minimum wage rate is the most anti-Negro law on the books”.

    That was forty years ago. What has changed. Nothing. An article last July 11 noted overall unemployment of 8.2%, teenage unemployment of 24%, and black teenage employment of 44%. (Jeff Jacoby 7/11/12)

    You shouldn’t have to read Bastiat to know about unseen consequences of well intentioned laws, just pay attention to the results of minimum wage laws. Interestingly, increasing minimum wages would be something the KKK would support if they had the brains to know what the consequences were. Gosh, does that mean the KKK has an intellectual affinity with all the Progressives and Liberals who support increasing the minimum wage? Hmmmm.

    For a more up-to-date review of the racial effects of wage laws, read Chapter 3 in Race & Economics, Walter E. Williams (2011).

  4. Mr. Burrows,

    Of course you are right! I should not have suggested that all supporters of minimum wage laws are all self serving. Many mean well, but just don’t understand the realities of economics and human nature. They have an idealized view of the way the world “should” be and think that all they need is a few laws and regulations to make it happen. If we tell employers they have to pay everyone at least an arbitrarily determined wage, it will magically happen.

    The reality is that people respond to economic incentives. If you tell a business owner that he has to pay unskilled workers more than they are worth to his business, he won’t hire them, and if he has any on his payroll already, he will fire them. And if worse comes to worse and he can’t make a profit, he will simply close up shop.

    If only more of the world would listen to Walter Williams!

    1. Matt,

      Did you see Jason Riley’s comment in today’s Wall Street Journal, “Minimum Expectations”? Jason’s a young black man who works on the WSJ’s editorial page. I was thinking the same thing this morning, but he says it better: how “sadly ironic”.

      Yes! More Walter and Doctor Tom (Sowell).

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