Walter E. Williams writes:
One of the more insidious effects of minimum wages is that it lowers the cost of racial discrimination; in fact, minimum wage laws are one of the most effective tools in the arsenals of racists everywhere, as demonstrated by just a couple of examples. During South Africa’s apartheid era, its racist unions were the major supporters of minimum wages for blacks. South Africa’s Wage Board said, “The method would be to fix a minimum rate for an occupation or craft so high that no Native would likely be employed.” In the U.S., in the aftermath of a strike by the Brotherhood of Locomotive Firemen, when the arbitration board decreed that blacks and whites were to be paid equal wages, the white unionists expressed their delight saying, “If this course of action is followed by the company and the incentive for employing the Negro thus removed, the strike will not have been in vain.”
More on the federal unemployment guarantee (aka minimum wage) here.
What then keeps employers from giving slave wages,say $1.00 or $2.00 an hour,knowing that desperate people will work for it and still not be able to support themselves much less a family. People who aren’t super intelligent or educated just aren’t worth it in this society but they are also the back bone. Are there other solutions? I’d like to here them.
What keeps employers from employing those that are willing to work for lower wages? The minimum wage.
[...] In other words, they want to be able to be compensated for more than the market demands (aka minimum wage) and if welfare was really the issue then the obvious solution is to eliminate [...]
minimum wage is communism. the free market will make sure that everyone has enought to eat!
“What keeps employers from employing those that are willing to work for lower wages? The minimum wage.”
NO, it means those people are NOT employed! It does not make people earn more, it just stops those under a productivity level earning anything.
To add a simple quote:
“You cannot make a man worth a given amount by making it illegal for anyone to offer him less. 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. You do harm all around, with no comparable compensation.”
[1] Heny Hazlitt, Economics in One Lesson (New York: Arlington House Publishers, 1979), p. 135.
Minimum wages tend to hurt people when the job markets price for minimum wage cannot correct itself because of a price floor. Minimum wages are a price floor so in the end what tends to happen is if kept low enough there is little effects form a job creation standpoint, however minimum wages are often set at a federal levels then adjusted at a state level. This often leads to unions and several different lobbyists pushing or petitioning for a higher minimum wage as long as the price floor is equal to job market prices then it is no problem but often it tends to lobby above market prices and it would tend to create unemployment. If the minimum wage is below market prices it creates under employment. In a free market society this is avoided, the best example being hong kong. Hong Kong until 2010 did not have a minimum wage but despite being an island without any natural resources it had the least unemployment and under employment in the world for over 15 years. The reason is if you look for a job even if your unskilled labor employers have to attract you into employment with either higher pay or better benefits if not they`ll lose most of the labor to the competition, however this does not change the fact is that it wont be perfect. Most people think that minimum wages and monetary fiscal policies are finite policies that they have no negative effect however this is not true. Increasing minimum wage tends to decrease the youth and diversity in the work place. This article showed how minority groups can be affected but what about the young. The truth is young workers at the teenage years are passed over due to low skills and experience in the workplace hence it would not be in the interest of employers to hire younger workers. Ever wonder why there are no service gas stations with teenagers running to your car eager for a tip while they wash your windows. Minimum wage killed alot of these jobs. Minimum wage is not a policy that is cut and dry. If you increase the price floor employment is lost if you decrease it underemployment increases. If you take it away you tend to have the market produce its best market potential provided that the market system is trully free which its hasnt been for over 150 years. It is a scale that cannot be ballanced by government because government force is not directed by the people in a market system but rather a politician that is motivated by funding, or associating itself with lobbyists such as unions and several other collective movement that push for higher wages. It is corrupt in the sense that your decisions as individual carry any weight for you in a market. Instead its the decision of collective interests that do. This is why Democracy is faulty the majority or special interests tend to overrule the minority and so America tends to be labeled a democracy. America however, was not founded as a democracy but a Republic this is why the Federal government should just butt out of the issue and why the minimum wage will never achieve infinite market potential in a job market. As a student of economics I tend to argue that protectionism tends do more harm to those it protects.