Minimum Wage – a different perspective

This article presents a fascinating history of one aspect of the minimum wage policy. It is well established that instituting and/or raising minimum wage leads to job loss (see links at the end of this article). What I didn’t realize is the fact that job-loss was considered one of the positive side-effects of minimum wage when the policy was first instituted.

The article quotes…

Advocates similarly didn’t deny that imposing a minimum wage might throw some people out of work. That wasn’t a bug; it was a feature — a way to deter undesirable workers and keep them out of the marketplace and ideally out of the country. Progressives feared that, faced with competition from blacks, Jews, Chinese, or other immigrants, native-stock workingmen would try to keep up living standards by having fewer kids and sending their wives to work. Voilà: “race suicide.” Better to let a minimum wage identify inferior workers, who might be shunted into institutions and sterilized, thereby improving the breed in future generations. …

Yes, the policy of minimum wage was laid on a foundation of racial discrimination. I don’t recall any politician ever filling us in on that little historical tidbit…

While the original motivation behind minimum wage may have been to exclude certain ethnic groups from employment, it seems unlikely to be racially motivated these days. In fact, given our enthusiastic embrace of multiculturalism it is rather common to see people of all racial backgrounds in all types of employment. Racial discrimination is, for most of us, a thing of the past; and good for us!

But minimum wage is still inherently discriminatory even if unintentionally so. An employer might have certain tasks that need to be completed in order to keep her business running smoothly, and she might be willing to pay somebody some nominal wage in order to complete those very simple tasks. The government forbids that arrangement so either those tasks are not completed or (more likely) they represent an additional burden on existing employees who have other, primary, responsibilities. While the stated purpose behind minimum wage may be to guarantee higher wages, the functional effect is to outlaw certain types of work or certain work arrangements.

But the minimum wage debate affects a very small portion of the population because most people are well above the minimum wage. If I were to lose my current job I could probably find another job (probably not in Alberta… or Ontario… actually Canada as a whole is not doing well right now, but I digress) and that job would also pay well above minimum wage. Most people are in this boat; their skills, abilities and work experience make them very employable at some wage well above any government regulated minimum. But if the majority are well above minimum wage then it must be some minority group that is impacted by such legislation. The majority are willing and able to perform work functions that warrant a wage higher than minimum wage, so some minority group must only be able (or willing) to perform work functions that warrant a wage that is lower than minimum wage. This minority group is, for all practical purposes, banned from working just like “blacks, Jews, Chinese, or other immigrants” used to be.

Somebody is always sidelined under any system with a minimum wage – in fact, that was part of the original appeal of the policy – and if it’s not “most of us” then who is it? Who are these “some people,” the minority demographic living under the thumb of government mandated discrimination?

[Hint, the second link below contains data that points to a probable answer.]


Links

Brief overview:

http://www.forbes.com/sites/realspin/2013/04/17/the-record-is-clear-minimum-wage-hikes-destroy-jobs/

Thorough study:

http://www.cfib-fcei.ca/cfib-documents/rr3216.pdf

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