Clinton's own Labor Department admits the minimum wage destroys entry-level jobs of the poor, even in an economic boom:
The Minimum Wage's
Disreputable Origins
By BURTON W. FOLSOM JR. May 27, 1998
Sen. Ted Kennedy is pushing for yet another increase in the minimum wage.
If we are to evaluate his plan, we need to know why we have a minimum
wage law and what its historical effects have been.
In June 1938 President Franklin Roosevelt signed into law America's first
minimum wage: 25 cents an hour, rising to 40 cents an hour over the next
seven years (almost $5.00 in today's dollars). The driving force behind the
legislation was not the working poor, who were struggling to eke out a
living, but the highly paid textile workers of New England, who were eager
to protect their jobs.
During the 1920s and '30s, the American textile industry had begun to shift
from New England to the South, where the cost of living was lower and
where Southern workers produced a high quality product for lower wages.
Politicians in Massachusetts, led by Republican Sen. Henry Cabot Lodge,
Jr. and House Minority Leader Joseph Martin, battled in Congress for a
law that would force Southern textile mills to raise wages and thereby lose
their competitive edge. Democratic Gov. Charles Hurley demanded that
Congress pass a law to hike Southern wages so that "Massachusetts
[would] have equal competition with other sections of the country, thus
affording labor and industry of Massachusetts some degree of assurance
that our present industries will not move out of the state."
Southerners were well aware of what Massachusetts was doing and they
scuttled all minimum wage laws before Congress during 1937 and well into
1938. In doing so, they handed President Roosevelt his first major defeat in
Congress on any piece of New Deal legislation.
"Northern industries are trying to stop the progress of the South," Rep. Sam
McReynolds (D., Tenn.) observed, "and they feel if they can pass this
[minimum wage] bill it will really be a tariff against Southern goods."
Southern congressmen joined those economists who argued that Congress
couldn't make a man worth a certain amount by making it illegal to pay him
any less. They said that people whose skills and experience were worth less
than whatever Congress decreed as the minimum wage would be priced out
of the labor market. The Great Depression, they said, would get worse by
Congress telling workers, in effect, "If you can't find a job that pays at least
the minimum, then you're not allowed to work."
The desperate plight of unskilled workers trying to hold on to their jobs
disturbed Rep. Carl Mapes (R., Mich.). "The enactment of this legislation,"
Mapes concluded, "will further increase unemployment, not reduce it. It is
bound to increase unemployment unless all human experience is reversed."
Mapes predicted that the law would most harm workers who had limited
skills and were desperately trying to secure a foothold on the first step of
the job ladder. Mapes cited the case of a local minimum wage law passed
in early 1938 in Washington, D. C. Immediately after its passage, the
Washington Post lamented, scores of maids and unskilled workers were
laid off by local hotels.
Mapes's prediction has been prophetic: Like magic, the steady hikes in the
minimum wage have made jobs disappear. The most vulnerable workers,
especially blacks, teenagers and women with limited skills, have often been
the first to be fired and last to be hired because their labor is not yet worth
what the law says they must be paid.
The particularly harmful impact of minimum wage laws on blacks has been
conspicuous since 1956, when the minimum wage shot up from 75 cents to
$1.00 an hour. During the next two years, nonwhite teenage unemployment
spiraled from 14% to 24%. The 1996 hike in the minimum wage to $5.15
an hour had a similar effect: Unemployment among black male teenagers
jumped from 37% to 41%.
Data from President Clinton's own labor department show that at least
20,000 jobs were eliminated by the 1996 hike. The Employment Policies
Institute calculates that the real number was closer to 128,000.
Sen. Kennedy would have us believe that what has been good for
Massachusetts is good for the nation. That was wrong in 1938 and it's still
wrong 60 years later.
Mr. Folsom, a senior fellow with the Mackinac Center for Public
Policy in Midland, Mich., is author of "Empire Builders" (Rhodes and
Easton, 1998).
interactive.wsj.com |
