How to Throw Millions Out of Work. No, that's not a fond hope. But it is one of the prime results to come out of the legislation recently passed by Congress increasing the minimum wage from its present $1.60 an hour to $2.20. Although President Nixon, happily, vetoed the bill on September 6, the Senate could over-ride easily enough if it can muster just one more vote. As M. Stanton Evans of the INDIANAPOLIS NEWS warns us in a superb recent article in HUMAN EVENTS magazine, the legislation is a surefire recipe for disaster.
For whom? For the marginal workers of America, specifically colored youths, certain farm workers, some kinds of domestic workers, and various others. Stan Evans reminds us of a report emanating recently from the National Association for the Advancement of Colored People. The NAACP observed that the "rates of unemployment among black youths have reached disaster levels." According to the Labor Department's MONTHLY LABOR REVIEW, the jobless rate for nonwhite teen-agers seeking jobs in 1972 was 33.5 percent!
One does not wish to commit the post hoc ergo propter hoc fallacy, which assumes that because phenomenon A occurs after phenomenon B, A is caused by B. But the facts on Negro youth unemployment and hikes in the minimum wage are fascinating, and revealing. 1951: minimum wage 75 cents; adolescent Negro unemployment, 15 percent. 1956: $1 minimum wage; teen-age joblessness among Negroes, 26.4 percent. 1971: $1.60; 30 per cent.
Most economists recognize that the minimum wage is economically harmful, especially to teenagers, nonwhites, and women. (Cf. the work of Professors Peterson and Steward, "Employment Effects of Minimum Wage Rates," 1969, and Professor Thomas Moore of Michigan State University.) The Moore study validates NAACP labor director Herbert Hill's prediction, that, "virtually an entire generation of ghetto youth will never enter into the labor force," given the expected increase in the minimum wage.
I recall the warning of Henry Hazlitt way back in 1946, in his classic book, ECONOMICS IN ONE LESSON: "You cannot make a man worth a given amount by making it illegal for anyone to offer him anything else. You merely deprive him of the right to earn the amount that his abilities and situation would permit him to earn, while you deprive the community even of the moderate services that he is capable of rendering. In brief, for a low wage you substitute unemployment."
Of course, those made unemployed owing to the minimum wage law can always turn to welfare, precisely the other side of this debased coin: first Congress takes away their jobs by Congressional do-gooding; then Congress can up everybody else's taxes to pay for welfare to provide for the unemployed now shunted onto the debasing status of recipients of the dole.
No doubt, men in Congress try to Do Right. And many are now talking the rhetoric of "restoring Congressional powers;" "asserting Congress's role," and so on. Given the fact that Richard of Watergate, the President, is vehemently opposed to this terrible piece of legislation, and the Congress overwhelmingly favors it, one wonders if a reassertion of Congressional powers will really be such a blessing. But, ideology must be served: hikes in the minimum wage are Good Things. So be it.
David Brudnoy teaches at Harvard University's Institute of Politics, University of Rhode Island and Boston College. Dr. Brudnoy's viewpoint appears in this column every third month, alternating with the viewpoints of Murray Rothbard and Tibor Machan.