Anti-poverty activists, left-leaning government officials and unions have been protesting all over the United States encouraging the federal and state governments to raise the minimum wage. They have been successful because many states have been hiking the minimum wage, particularly in cities and states on the West Coast.
Ostensibly, these same groups have failed to read any of the works by Milton Friedman, who referred to minimum wage as the worst “anti-negro law” around, or Murray N. Rothbard, who famously described minimum wage laws as “compulsory unemployment.”
Why should the minimum wage be given another glance this time around? Well, let’s look at a new report from the Center for Popular Democracy, a liberal advocacy group, and the Economic Policy Institute, a liberal think tank. The report discovered that the jobless rate for black people remains high.
During the financial collapse, the unemployment rate for blacks rose rather quickly and it has contracted more slowly over the past five years. Hourly wages for blacks are also down 3.7 percent. Moreover – and this is key – blacks are less competitive when it comes to their resumes and education attainment.
What’s the solution? According to these two organizations, the Federal Reserve must intervene (what a terrifying thought).
“The Federal Reserve needs to craft monetary policy that tightens the labor market sufficiently so that all Americans, and African-Americans in particular, have an opportunity to benefit from the shared prosperity that a full-employment economy provides,” the two groups wrote in the report.
What they fail to realize, though, is the fact that they have a higher jobless rate because of the minimum wage, an iniquitous piece of legislation that only benefits unions and corporations.
These laws make it a lot more difficult for the unskilled and uneducated to find jobs. If businesses are required to pay a higher wage then they will increase the company’s qualification needs as opposed to providing these individuals with training and giving them the skills to succeed and advance in the labor market.
Remember, a person’s human capital as well as the demands of the market (supply and demand) determine a worker’s wage and not some arbitrary number instituted by a senior bureaucrat (SEE: An extensive critique on Jesse Ventura calling for minimum wage hike). Most people know how to flip burgers, wash dishes or mop a floor, hence why the pay is rather minimal in these fields because they aren’t in-demand skills.
In addition, these two liberal organizations shouldn’t exactly seek the aid of the United States central bank. If they wanted effective assistance from the Fed then they should instead demand a sound currency rather than constant debasement, which leads to a higher cost of living, and higher interest rates to encourage savings.
The best way to help minorities, immigrants, unskilled, uneducated and youth is to abolish the minimum wage because then they can attain skills that can improve their human capital and thus have businesses compete for their labor.
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