February 13, 2010

Hurting a Dedicated Constituency

Justin Katz

In an article about the ways in which Democrats' preferred policies hurt black Americans, Kevin Williamson emphasizes union racism and especially the minimum wage:

THE first answer many economists will give to that question is: the minimum wage. Milton Friedman, a Nobel laureate who spent much of his career showing how government programs reliably end up hurting those they are intended to help, was scathing on the subject, calling the minimum wage "one of the most, if not the most, anti-black laws on the statute books." And he's not alone: Acongressional survey of economic research on the subject, "50 Years of Research on the Minimum Wage," has a string of conclusion lines that read like an indictment, the first three counts being: "The minimum wage reduces employment. The minimum wage reduces employment more among teenagers than adults. The minimum wage reduces employment most among black teenage males." Other items on the bill: "The minimum wage hurts small businesses generally. The minimum wage causes employers to cut back on training. The minimum wage has long-term effects on skills and lifetime earnings. The minimum wage hurts the poor generally. The minimum wage helps upper-income families. The minimum wage helps unions." Helping the affluent and high-wage union workers at the expense of the young, the poor, the unskilled, and small businesses: That amounts to a lot of different kinds of injustice, and it also amounts to a wealth transfer from blacks to whites. ...

And it's not just that the minimum wage prices some low-productivity workers out of the labor market: It's that it prevents entry into the labor market in the first place for the most marginal would-be workers. If Will the candy hustler's real economic output is worth $6.67 an hour, his implied wage on the subway, he's unemployable with a $7.25 minimum wage. He can sell candy on the subway, but he can't sell candy for Big Candy Corp., make connections, learn what it's like to go to an office every day and have a boss, get references, get promoted, and sign up for the tuition-reimbursement program. And that, not the paltry lost income of a minimum-wage job, is the price he pays. Very few American workers actually earn the minimum wage--about 1 percent, in fact--but the minimum-wage job is a gateway into the labor force for many young workers. The value of your first job isn't the money you earn from it: It's your second job, and your third. With the right experience and network, a candyman like Will can do well for himself. But without that first job, he has a much higher chance of becoming a statistical blip on the long-term unemployment charts than a middle manager at Hershey or a salesman at Cadbury.

Perhaps for reasons of length, Williamson doesn't even touch on the deleterious effects of liberal social programs (from the welfare state to easy divorce to abortion on demand) and extra-statutory principles (like identity politics) that have destroyed family structures in minority communities. If the Ku Klux Klan had called grand meeting in the middle of the last century to contrive a national conspiracy that would effect long-term evisceration of blacks' progress, the bigots could hardly have done so more effectively than the American Left.

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It is accurately noted that about 1% of Americans work at the minimjum wage. One might then wonder why it is so beloved of the politicians?

One of the reasons for the minimum wage is "a rising tide tide lifts all boats". An increase in the minimum wage puts upward pressure on all wages, tending to push all wages up. So, politically speaking, an increase in the minimum legislates an increase in all wages.

Posted by: Warrington Faust at February 13, 2010 8:55 AM

Actually increasing the minimum wage just increases unemployment - either by eliminating the position or replacing it with technology.

Once an employer can no longer make a "profit" on the employee, i.e., the value / revenue the employee contributes toward generating exceeds the costs (direct and indirect) of having them on the premises, the employee's position goes away.

There's a reason why you now pour your own Coke at McDonald's, and bus your own table, and pump your own gas, and increasingly use a self-serve kiosk for this, that and the other.

Posted by: Ragin' Rhode Islander at February 13, 2010 11:15 AM

Anyone who believes that these Progressive special-interest groups have any interest in successfully raising up their constituencies is either a total dupe or corruptly self-serving. Like any bureaucracy, they game the system to get the most for themselves, as permanently as possible.

If the people they represent ever came to not need them, they would have to go get real jobs.

Liberals love to talk about "root causes" but they can't face the fact that the most prevalent and insidious root cause is dependence on government itself.

Posted by: BobN at February 13, 2010 5:37 PM

Here is a good example of what I wrote above, from today's New York Times. For the full article: http://www.nytimes.com/2010/02/14/us/politics/14cbc.html?pagewanted=all

From 2004 to 2008, the Congressional Black Caucus’s political and charitable wings took in at least $55 million in corporate and union contributions, according to an analysis by The New York Times, an impressive amount even by the standards of a Washington awash in cash. Only $1 million of that went to the caucus’s political action committee; the rest poured into the largely unregulated nonprofit network. (Data for 2009 is not available.)

The caucus says its nonprofit groups are intended to help disadvantaged African-Americans by providing scholarships and internships to students, researching policy and holding seminars on topics like healthy living.

But the bulk of the money has been spent on elaborate conventions that have become a high point of the Washington social season, as well as the headquarters building, golf outings by members of Congress and an annual visit to a Mississippi casino resort.

In 2008, the Congressional Black Caucus Foundation spent more on the caterer for its signature legislative dinner and conference — nearly $700,000 for an event one organizer called “Hollywood on the Potomac” — than it gave out in scholarships, federal tax records show.

At the galas, lobbyists and executives who give to caucus charities get to mingle with lawmakers. They also get seats on committees the caucus has set up to help members of Congress decide what positions to take on the issues of the day. Indeed, the nonprofit groups and the political wing are so deeply connected it is sometimes hard to tell where one ends and the other begins.

Posted by: BobN at February 13, 2010 8:01 PM

Seventy years ago FDR signed the first minimum wage bill, ever since then the right wing-nuts have opposed every increase with predictions of economic DOOM! In those 75 years the USA became the richest nation in the world by far. China does not enforce a minimum wage and adults earn 25 cents and hour, children are paid 12 cents. And people live in cardboard boxes, its a conservative paradise

Posted by: Jeff at February 13, 2010 10:45 PM

I don't know where you got the 1% from.

Over 22 million people earn the minimum wage(or only pennies more)than their state's minimum wage, not the federal minimum wage.

The Chamber of Commerce recomends that their members pay 5 cents more than the minimum, so that they wont be counted as minimum wage workers.

Posted by: Jeff at February 13, 2010 10:54 PM

I love it when people (like Jeff) cite statistics that have no connection whatsoever in order to "prove" a nonexistent point.

I did not know that as a Conservative I was supposed to cry DOOM over the minimum wage bill, nor that Communist China was a "conservative paradise". Once again, a Progressive engages in phony theatrics to smear his opponents. How juvenile.

Posted by: BobN at February 14, 2010 7:40 AM

I don't know where you got the 1% from."

Well, I took it from the post. It's absolute accuracy didn't seem important. "Minimum Wage Workers" probably seem more common then they are. They are the people we meet in public, food service workers, etc. In the course of events, we rarely encounter "factory workers" on the job. If we meet a teacher, we seldom think "here is someone employed at well above the minimum wage".

Posted by: Warrington Faust at February 14, 2010 9:48 AM

African Americans used to have near 100 per cent employment and no minimum wage at all. In fact they had no wages at all, but they were all working.

Posted by: Phil at February 15, 2010 10:16 PM
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