Serious question: How on earth could anyone oppose a policy that would effectively give low-skilled workers (workers who barely make enough money to feed themselves, let alone a family), higher wages? After all, we live in difficult economic times, and it doesn’t seem wholly unreasonable that individuals working in low-skilled jobs should be entitled to a minimum, universally agreed upon standard of living. And indeed, as you might expect, this isn’t by any means an unpopular idea: According to a recent Gallup poll, almost all the Democrats -- and precisely half the Republicans -- surveyed would vote “for” a proposal to raise the federal minimum wage to $9 per hour, an idea the president himself proposed in his second inaugural address:
But is raising the minimum wage law smart public policy? The late economist Milton Friedman didn’t think so, and neither do I. In fact, Dr. Friedman went to great lengths to expose the flawed logic of the “do-gooders,” explaining that any type of federal or state minimum wage law was inherently discriminatory, and disproportionally hurt teenagers and African-Americans:
The minimum wage law is most properly described as a law saying, ‘Employers must discriminate against people who have low skills.’ That’s what the law says. The law says here’s a man who has a skill which would justify a wage rate of a dollar and a half/two dollars an hour. You may not employ him it’s illegal because if you employ him you have to pay him $2.50 … Thus, the consequences of minimum wage rates have been almost wholly bad -- to increase unemployment and increase poverty. Moreover, the effects have been concentrated on the groups that the do-gooders would most like to help … There is absolutely no positive objective achieved by minimum wages. Its real purpose is to reduce competition for the trade unions and make it easier for them to maintain the wages of their privileged members.
Friedman’s argument runs as follows: While he concedes that teenage unemployment rates have always been higher than those of the general population for obvious reasons, it wasn’t until the 1950s -- when the minimum wage was increased to an unprecedented degree -- that unemployment rose sharply and poverty became more widespread. Go figure. In other words, raising the federal minimum wage had the opposite effect the do-gooders intended -- despite how ostensibly practical and well-intentioned the idea seemed at the time.
But the truth is that minimum wage laws bring about more pronounced levels of unemployment. Why? Because minimum wage laws actually force businesses to discriminate against workers lacking the requisite skills necessary to justify a government-mandated minimum wage (in this case, $9 per hour, in keeping with the Gallup survey question). To put it differently, if the proposed law passed (as it almost certainly would) hiring a teenager and paying him anything less than $9 per hour would be illegal. But how does this make any sense? Prohibiting employers from hiring individuals with skills that fall short of the government’s arbitrary standard (thus making it unlawful to pay a teenager $7 or $8 per hour to work at a fast food restaurant, for example) defies common sense, and leads inevitably to ever-higher levels of unemployment. Is it any coincidence, then, that the teenage unemployment rate in 2013 hovers around 25 percent? Milton Friedman’s words are as true today as they were when he first uttered them fifty years ago.
And yet part of the problem too, I think, is that some Republicans and Democrats believe minimum-wage jobs can -- and should -- provide a permanent, sustainable standard of living for American workers and their families. I don’t necessarily agree. In an ideal world, minimum-wage jobs would be predominately filled by young people (and perhaps individuals trying to re-enter the labor market after a pro-longed absence) as a means of acquiring the skills and knowledge necessary to advance one’s professional career. The problem today, however, is that after years of economic stagnation, opportunities for advancement and good job prospects seem harder and harder to find. And so one solution might be rather than raising the federal minimum wage -- a quixotic and implausible way to end poverty in America -- perhaps we should instead focus on growing the economy. Only then can we usher in a new era of prosperity in which good, higher-paying jobs are plentiful -- and more and more Americans than ever before can make their dreams a reality and finally make it into the middle class.