Walter E. Williams
Recommend this article

Are low-skilled workers made better or worse off as a result of the $9 minimum wage? It's almost a no-brainer to conclude that being hired at $5 an hour puts more food on the table than not being hired at $9. What's more, minimum wages reduce training opportunities. Most of us gain skills through on-the-job-training. Minimum wage laws deny that opportunity.

A more insidious effect of minimum wages, as racists everywhere know, is that it lowers discrimination costs. Say a white and a black were equally productive and an employer prefers white workers to black workers. Since he has to pay $9 an hour no matter whom he hires, the cost of discriminating against the black worker is zero. But if it were legal for the black worker to offer a lower price, there'd be a cost to discrimination. That's precisely why South African whites demanded that blacks be paid the minimum wages -- they wanted to cheapen discrimination costs.

Gephardt's speech is to be commended for its public service, namely that of revealing the underlying motive for minimum wages: making sure that one class of workers doesn't have to compete with another.

Recommend this article

Walter E. Williams

Dr. Williams serves on the faculty of George Mason University as John M. Olin Distinguished Professor of Economics and is the author of 'Race and Economics: How Much Can Be Blamed on Discrimination?' and 'Up from the Projects: An Autobiography.'
 
TOWNHALL DAILY: Be the first to read Walter Williams' column. Sign up today and receive Townhall.com daily lineup delivered each morning to your inbox.