Walter E. Williams

In the U.S., the Davis-Bacon Act of 1931 (still on the books), a super minimum wage law, was enacted to protect unionized white construction workers from competition with black workers. The support ran along the lines of Alabama Rep. Clayton Allgood's testimony: "That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country." (Congressional Record, 1931, page 6513).

What minimum wage laws do is lower the cost of, and hence subsidize, racial preference indulgence. After all, if an employer must pay the same wage no matter whom he hires, the cost of discriminating in favor of the people he prefers is cheaper. This is a general principle. If filet mignon sold for $9 a pound and chuck steak $4, the cost of discriminating in favor of filet mignon is $5 a pound, the price difference. But if a law mandating a minimum price for chuck steak were on the books, say, $7 a pound, it would lower the cost of discrimination against chuck steak.

Minimum or maximum prices are one of the most effective ways to encourage people to indulge their preferences, be they racial or any other preference. In general, any kind of economic regulation that restricts peaceable, voluntary exchange has the capacity to lower the costs of preference indulgence. Decent people should be against such regulations.


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.'
 
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