Day By Day© by Chris Muir.

Tuesday, November 15, 2005

Making it too expensive to hire people

I've always been ambivalent about the minimum wage jobs. Part of me applauds them as a way to ensure that poor, uneducated, desperate workers aren't grossly exploited by avaricious employers. And part of me decries them as a disincentive to employers that encourages, not quality employment, but unemployment and a black market economy. Thomas Sowell inclines to the latter view, and in a column tying France's minimum wage laws to the riots, throws in this factual tidbit about the first American minimum wage law:

Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black workers in an era of open discrimination. The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from "taking jobs" from white construction workers by working for lower wages. It was not meant to protect black workers from "exploitation" but to protect white workers from competition.
As Johnny Carson used to say, "I did not know that." I guess as with all things, one must strive for a happy medium. Theoretically, one should be able to set a minimum wage that prevents the grossest kinds of exploitation of the weakest workers, while ensuring that the minimum wage demanded is not so high that it makes employers shy away from providing employment (something manifestly obvious in Germany and France, countries that have established "perfect" salaries that employers can't afford).