Thomas Sowell

Labor unions in the private sector have long been in the forefront of those pushing for higher minimum wage laws. Usually union members already make much more than minimum wages but they need to safeguard their jobs from others who could do the same work for less.

People on the inside looking out benefit at the expense of people on the outside looking in. Losers include not only less experienced and lower skilled workers, whose output would not cover the cost of the minimum wage, but also future workers who may find fewer job opportunities in the unionized industries.

Minimum wage laws are like protective tariffs insulating unionized workers from the competition of other workers. It is robbing a less affluent Peter to pay a more affluent Paul -- all the while using noble rhetoric that appeals to the uninformed and the unthinking, which includes many people with fancy degrees and even fancier illusions about their own higher sense of compassion.

Some people may believe that unions benefit their members at the expense of employers -- and that big corporations should be paying a "living wage."

That may be possible in the short run. But think about it: If unionized workers producing widgets get higher pay by reducing the rate of profit of widget manufacturers, do you think investors are going to continue to invest as much in the production of widgets when they can earn higher rates of return by investing elsewhere?

The rate of return on widgets cannot remain permanently below rates of returns in other industries. Widget prices will have to rise -- and that means lower sales and lower employment. There is no free lunch, no way to get something for nothing.


Thomas Sowell

Thomas Sowell is a senior fellow at the Hoover Institute and author of The Housing Boom and Bust.

Creators Syndicate



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