Minimum Wage Effectively Stifles Job Opportunities

Published in the Mesa Tribune on July 28, 1992

Ever since the Los Angles riots, the air across all of America has been as heavy as that over Los Angeles with suggestions about how to rebuild our cities. Every day we hear new proposals for "frontal assaults," "wholesale overhauls," and "Marshall Plans" to deal with the myriad crises afflicting urban America

A good place to start would be either to lower the minimum wage or, better yet, to repeal it altogether. The minimum wage is a political sacred cow with few peers. Yet is has probably visited more devastation on poor and unskilled American workers than any other law. This should be obvious to anyone who has gotten through the first to weeks of Economics 101.

I am continually amazed at how those who shape public policy persist in ignoring the basic tenets of how wages and prices are determined.

Professor Thomas Sowell of Stanford once remarked that asking adults where wages and prices come from is somewhat like asking 6-year-olds where babies come from: the answers you will get are just as varied and just as absurd.

Yet wages and prices, like babies, have a very definite genesis: the laws of supply and demand. Unskilled labor, the kind with which so many of us begin our working lives, is not exempt from this law.

And yet, our lawmakers blithely ignore this fact and keep pushing the minimum wage to higher and higher levels. Employers are thus forced to pay workers a wage at which it might not be profitable to hire them.

When this happens -- presto! -- unemployment increases.

Labor statistics since World War II substantiate this. In 1948, the minimum wage was 40 cents per hour and teenage unemployment was 9 percent. Unemployment among black teenagers was 8 percent.

It is often argued that black teenagers tended to come from less affluent backgrounds and had to start working at a younger age. Well, the same holds true today and over one-third of black teenagers are unemployed. Why? Because successive increases in the minimum wage -- it is now $4.25 an hour -- have simply priced countless jobs out of the market.

It is extremely significant to note that 1948 was before the Supreme Court's Brown v. Board integration decision and the civil rights laws of the 1960s. While racial discrimination has not skyrocketed since 1948, the minimum wage has.

A veritable industry has grown up around blaming Ronald Reagan for the plight of black America. Yet during his administration, the minimum wage remained at $3.35 an hour and unemployment among black teens dropped from 48 to 32 percent. How many jobs were "created" simply by leaving the minimum wage alone? How many more jobs would have been created if the minimum wage had not been raised over the last two years?

Supreme Court Justice Clarence Thomas once said that, "I never would have had my first job if I had to make the minimum wage, but the benefits of my job were more than just the salary: getting up, going to work, working hard, doing a good job, not destroying my boss' equipment, just being responsible."

Most people's first jobs are not glamorous. (My own first two jobs were as a caddy and as a dishwasher.) But because of the lessons they teach us, they are often the most important jobs we ever have.

It is hardly "compassionate" to take a poor teenager from a broken home, force him to attend an abysmal school, and then deny him the opportunity to put his foot on the first rung of the economic ladder.

Even former Washington, D.C., Mayor Marion Berry has stated that "a job paying $2.50 an hour is better than no job at all." Nobel Laureate economist Milton Friedman regards the minimum wage as "one of the most, if not the most, anti-black laws on the books."

Without a doubt, the minimum wage has also done grave harm in such impoverished places as Appalachia and the area near the border with Mexico.

There is a well-known proverb, almost Solomonic wisdom, which states that if you give a man a fish, he will eat for today, but if you teach him how to fish, he will eat for the rest of his life.

Inner-city teens desperately need the same opportunities as their suburban counterparts have. The most efficient way to create these opportunities is to remove those barriers which prevent them from getting their first, most fundamental, work experience. The most harmful such impediment is the current minimum wage.

Removing the minimum wage would carry an added benefit: it would be an urban renewal program that would not cost taxpayers a dime.

Freely Speaking: Essays by Doug Newman

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