On Jan. 1, Arizona’s minimum wage increased 10 cents. This is bad news for those unskilled workers seeking employment, but not as bad as the whole notion that minimum/living-wage laws help the poor.
Our Arizona law was voted in by referendum in 2006. Unlike the federal law, Arizona’s minimum wage is indexed to the “cost of living” and adjusted annually. The stated intent of these laws is to raise incomes of the working poor to a level at which a head of a household can support a family. As the late Sen. Ted Kennedy said, “I believe that anyone who works 40 hours a week, 52 weeks a year, should not live in poverty in the richest country in the world.”
This kind of thinking assumes that wages are arbitrary, and they might just as well be set arbitrarily much higher. Unfortunately, wages are not arbitrary. George Mason University economics professor Walter E. Williams points out, “It’s breathtakingly stupid to think of minimum wages as an anti-poverty tool. If it were, poverty in places such as Haiti, Ethiopia and Bangladesh could be instantly eliminated simply by proposing that these country’s legislators mandate a higher minimum wage.”
Minimum-wage workers make up only 3 percent of the workforce, and only half of those workers are full-time. Most of these workers are not making the minimum for long. Socioeconomic levels are not fixed; people are not stuck in the economic class into which they were born—not in this country. As workers acquire knowledge and skills, their productivity increases, which is followed by wage increases. In fact, the pay of a minimum-wage employee increases an average of 30 percent within the first year of employment. “Entry-level” jobs are just that—a place where a worker can enter the workforce.
I have demonstrated this myself. I recall a time when I was desperate to enter the workforce. I would go down to the moving-company warehouse and stand outside a loading dock with a bunch of other guys early in the morning. At around 6 a.m., the door would roll up, and a guy with a clipboard would look us over and point to someone and say, “You, with him,” and point to a driver on the dock. The lucky guy would scramble up next to the driver. This was repeated a few more times; then the door came down, and the remaining guys wandered off. That was below entry level, because I was not even an official employee, yet I learned on the job, moved to a better moving company, learned more on the job, became a driver, learned more, and then went to work for IBM. All this was done in two or three years.
So, if the minimum-wage worker is such a small part of the workforce, and few workers stay at that level, why do big labor unions spend millions of dollars promoting these laws—particularly when none of their constituents are minimum-wage workers? The answer isn’t pretty: If the cost of unskilled workers is set artificially high, then they will not be employed. This effectively sets work aside for union members by shutting unskilled workers out of the job market, denying them their chance. Dr. Williams puts it succinctly: “They do it because higher minimum wages protect their members from competition with low-skill, low-wage workers. Most other minimum-wage supporters are decent people with a concern for low-wage workers, but their actions suffer from a misguided vision of how the world operates.”
Municipalities are subject to the same incentive when it comes to living-wage ordinances. Jacking up labor costs for potential private-sector contractors tends to keep more city work in-house.
I would also like to suggest a moral aspect: The essence of a free society is the ability to enter into contracts with others without undue interference from the state. If the government can control your ability to sell your labor, then it effectively owns your labor—not quite like an antebellum plantation owner, but you get the idea.
Clearly, the best thing for a poor person is to start working at a wage concomitant with his productivity so he can get in the game. Soon, he will learn skills and move up to bigger and better things. He should not be shut out of the labor market for the benefit of the more-prosperous and well-connected.
This article appears in Feb 17-23, 2011.
Yes Mr. Hoffman, we get the idea.
Personally, I find the way your mind works, and what you choose to express when writing, to be offensive ( then again I always find myself musing that, no one is this cold, this indifferent to their fellow citizens, so unnerringly consistently wrong; that you must be getting paid to submit this crap ).
Just a paycheck Jonathan? So what if it actually helps in hurting people?
Republican Senator Jane Cunningham has introduced a bill into Missouri’s legislature to repeal the child labor laws in that state.
Perhaps next week Jonathan, you can spin us another rationalization about how little Johnny’s FREEDOM will be denied should he not be able to sell his labor at 10 years old.
FYI : There no longer exist any big labor unions. Unions in total, currently represent only a meager 7%
of our work force. One of the central reasons our democracy has been hollowed out to only a pretense of its intended incarnation. Freedom my aching ass.
Robert Alexander Dumas
You know what’s an immoral restriction? Keeping parents from making their own decisions about when their children should begin working. After all, childrenshouldn’t be frozen out of the labor market just because of their age! There’s a five-year-old down the block playing on a swingset RIGHT NOW that could instead be contributing to society by slapping some Big Macs together for 50 cents an hour.
Also, to many, job security is paramount. So why is slavery no longer an option? After all, slaves are provided basic food and shelter by their owners, whereas the minimum wage does not guarantee the ability to even afford those basics. To ensure complete freedom in our society, we need to curtail the excessive government interference in regulating slavery.
James Kenneth Galbraith said it better than I could ever hope to:
“The modern conservative is engaged in one of man’s oldest exercises in moral philosophy; that is, the search for a superior moral justification for selfishness.”
So far, so good, liberals. You manage to take a sensible argument about minimum wage and switch the question to child labor with no indication whatever that the writer was talking about it. Typical. You can’t debate the question until you change it! I have said for many years that the four worst ideas of the 20th century – Democratic with Republican complicity – are Tax Withholding from paychecks, the minimum wage, the concept of entitlements, and cost-of-living adjustments. (Incidentally, one of the points the writer missed was to point out the simple fact that – nationally – any increase in the minimum wage is consumed by inflation within about two years, give or take. It is arguable that the minimum wage is a major CAUSE of inflation.)
So, anyone want to actually debate the merits of the author’s thesis or is name-calling the best some of you can do?
It is true that unions represent only 6-7% of the workforce – in the private sector. Unions represent something over 40% of the government workforce. Unions spent over $400,000,000.00 in the 2008 election cycle, now they “negotiate” with the people whose elections they financed. Is it any wonder that elected officials jump when unions want to abandon elections for representation (card check), or continue to increase the minimum/living wage?
BTW – It was John Kenneth Galbraith who said that, not James.
Excellent article, Mr. Hoffman. People should be paid for their skills. There is no right to a job or to a wage in this country. Unions were good at one time, but (as we see in Wisconsin) now they are nothing but ways to extort money from the government and from private companies.
Mr. Hoffman,
Public sector jobs + private sector jobs = national workforce total.
7% of which is small “d” democratically organized and represented by unions.
In 1960 union representation was 35% of the workforce. Forcing 100% of employers to treat workers fairly, union job or not.
Corporations have subverted the secret ballot system with intimidation, necessitating card check (which presently does not exist, so if elected officials are jumping as you claim, they are not jumping very high). Corporations have nearly completely corrupted our national Congress with money.
400 million? This past presidential election cycle cost over 1.2 billion just for the 4 final nominees.
Here’s some suggested reading to get you started on a path to redeem yourself: go check out rollingstone.com for Matt Taibbi’s new article out yesterday “Why is Wall Street Not In Jail?”. What is being described is first of all verifiably factual; secondly it clearly is not something which could occur in a functioning democracy, or republic if you prefer; it is fascism (defined as corporate rule).
Robert Alexander Dumas
At chuckj: The example of child labor made perfect sense to me. No, it wasn’t brought up i Hoffman’s column, but it puts his arguments into context. The economist Ha-Joon Chang has also used child labor to illustrate how economic arguments can be made to justify things that are almost universally reviled. And child labor–like minimum wage laws–can make good economic sense. (Child labor laws ensure that a good portion of our workforce gets adequate education; and anything that puts money into the poorest hands–like minimum wage laws–is an economic stimulus, since people in lower social classes spend a greater portion of their incomes than the rich do.)
Mr. Hoffman is simply being dishonesty. He would much rather pay $1/hr for labor to make widgets than $7/hr, so he can pocket more money for himself. It’s simply greed. This is why corporations move factories to communist China and pay workers Cents per day.
Even if his hypothetical worker takes the jobs and learns the skills to move up, what incentive would there be for the bosses to pay him more? They will simply fire him and hire more beginners.
The minimum wage has prevented people from living in abject poverty, the type you see in Haiti. Without it, this country would become a new serfdom, with oligarchs tossing crumbs to the masses.
You’re appeals to “morality” are not only backwards, but utterly depraved. Trying to pass off the ludicrous idea that a minimum wage hurts poor people is Orwellian doublespeak.
I sincerely hope you don’t believe your own bullshit.
I’m not yet ready to touch the arguments in Hoffman’s article, but I will bring up the following:
– 1) It’s a bizarre slippery slope some people are making about child labor here. Nowhere did the author mention child labor. It seems convoluted to bring it up. I’m not ready to call it disingenuous, but I’m wondering about that…
– 2) I agree there are arguments that the national rate of inflation sucks up any gains made with minimum wage increases, creating a “vicious” circle.
To address one point in Hoffman’s commentary:
I understand and often agree with the arguments for a meritocratic society that places pure skill over “networking” capability. (Ref. sentence: “Clearly, the best thing for a poor person is to start working at a wage concomitant with his productivity so he can get in the game. Soon, he will learn skills and move up to bigger and better things. He should not be shut out of the labor market for the benefit of the more-prosperous and well-connected.”)
However, while I agree in part on making America a meritocratic nation, the principle is flawed on two fronts. One, humans naturally gravitate toward trusting “who they know” not “what they know you can do”. It is instinctual.
(Side note: If we removed the layer of instinctual trust people inherently use in decision-making on hiring and firing, and life worked as a pure meritocracy, more minorities would be CEOs and the glass ceiling would be shattered.
Meritocratic principles state it is quantified testing skill, not appearance or pleasantness, that gets the job. In other words, the best human wins. And your boss is automatically a really smart asshole who doesn’t care about you.)
Two, in my years I’ve become more cognizant of how many people are just… unskilled. In most cases, this is not by choice. People have sometimes indomitable hindrances that prevent them from succeeding. Not everyone is smart, and not everyone is strong. You can become smart, and become strong, but it takes a lot of extra effort that others don’t have to put up with.
IPH,
A bizarre slippery slope to where? The restoration of a functioning democracy devoid of special interest corruption?
I for one, don’t recall voting for the Koch brothers.
Disingenuous? Even though you are not ready to call it that, even though you just did (prolepsis). Irony anyone? Talk about disingenuous.
I assure you that I am in deadly earnest.
Robert Alexander Dumas
The slippery slope, from what I’m reading, is this:
The comments reads like a slippery slope argument that an opinion piece arguing against minimum wage laws would devolve into a future piece or statement favoring child labor.
In other words, to provide a specific case, Mr. Dumas you argue in a statement above that child labor could end up being rationalized by Hoffman as part of the free market. Labor restrictions already in place correctly prevent child labor, and it seems flawed to discredit Hoffman’s worldview on an assumption Hoffman would attempt to rationalize child labor. (That was wordy, I know.)
It seems devious to posit that without Hoffman actually weighing in on it. It seems disingenuous to bait it, but as you are being earnest I take it back. I was on the fence about whether it was disingenuous or not.
Your response?
I completely disagree with the ideas presented in that paper, and I think it is necessary to provide the readers with more serious studies that can be found through the following links. One of the most dangerous thought in Mr Hoffman commentary is the (deliberate) misuse of the controversy over minimum wage. To set it clear: the vast majority of the economists agree that minimum wage reduces poverty, where the controversy lies is if minimum wage increase would reduce or increase income for the poorest. It seems that the most recent research shows that if it generally increases incomes, unskilled workers can be at risk in loosing their jobs.
Here are some links.
http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8543.2009.00723.x/full
http://www.wider.unu.edu/publications/working-papers/research-papers/2008/en_GB/rp2008-23/_files/79003814258671828/default/rp2008-23.pdf
http://onlinelibrary.wiley.com/doi/10.1111/j.1475-4932.2007.00432.x/full
http://www.epi.org/publications/entry/bp178/
N P
IPH,
The corruption of our Supreme court made evident in the Citizens United V. Federal Elections Commission decision, the very topic of the eradication of the minimum wage laws where no controversy existed, the attempt to abolish child labor laws in Missouri, the attempted destruction of organized labor ( and thus Democratic party funding ) through the abolishment of hard won blood stained collective bargaining rights in Indiana/Wisconsin/New Jersey and Ohio, the attempt to destroy our public education system through privatization, the intentional decimation of the American middle class through the implementation of trade agreements that offshore good jobs by the millions, the bank bail-outs and now the 13 infamous criminally organized banks sit on trillions of ill gotten gains while over a million American families lose their homes to foreclosure annually ( perhaps 3 million this year ) since 2008 and no one lifts a finger to help them or a gavel to bring indictments.
And you are asserting that I have done, what? Overstepped the recognized practices of debate polemics because I chose to conjoin two of these fascist atrocities rather than acceed to being bogged down in the parsing of an argument that basically avers that we should prey upon the weakest among us because they can be preyed upon; and of course, the ever present right wing preeminent cause, there’s money there.
I am not attempting to argue with Mr. Hoffman. I am refusing to allow his arrogance, his hubris to go unchallenged in this instance; lest anyone be swayed by his well written, polemically correct tripe. Even Mr. Hoffman doesn’t believe a word of what he’s written, he is engaged in an exercise of pushing the boundaries. A propagandist constantly tests for the limits, to make anything less loathesome seem more acceptable.
Here’s a suggestion IPH; you keep claiming to be “on the fence” & “not ready to touch” things: pick a side and commit. Because I believe things are going to get much, much worse; before they get better. In fact this whole segment of history is going to end badly regardless of which side prevails. The consequences are going to wash over you and yours whether you wish them to or not, whether you choose a side and define your conscience for your God or not.
People or money IPH. Democracy or fascism.
It is really just that simple.
Hope this helped.
Robert Alexander Dumas
Wages have been stagnant despite increased productivity and the wealth disparity has been growing for more than thirty years while the minimum wage as fallen behind inflation. If the minimum wage kept pace with inflation and had the same buying power as it had in 1960, it would now be around $13 an hour and more money would be in the U.S. economy circulating and creating wealth instead of concentrated in offshore tax havens and 90% of us would be better off.
Tucson Weekly must be trying to attract National Review’s readership with this editorial.