While increasing the federal minimum wage from $7.25 an hour to $15.00 is all the rage in Progressive circles, I suspect most proponents are unaware of the program’s checkered past and results.
First, a little historical background on the issue: At the turn of the twentieth century, Progressives considered the minimum wage the “Holy Grail” of the labor movement.
But as historian Thomas Leonard points out in his 2016 book, Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era, the motives of many adherents were not pure.
Progressive labor reformers supported “the minimum wage for its power to exclude as well as to uplift. The minimum wage test would … target the inferior races of southern and eastern Europe by identifying inferiority not with illiteracy but with low labor productivity —the inability to command a minimum wage….”
For Progressives who embraced the Eugenics movement (and there were plenty of them, including Supreme Court Justice Oliver Wendell Holmes and President Woodrow Wilson), the minimum wage was actually an anti-immigration measure.
“Removing the inferior from work,” those Progressives reasoned, “was not a regrettable outcome, justified by the higher wages for other workers. Removing the inferior from work benefited society by protecting American wages and Anglo-Saxon racial integrity.”
A century later, the minimum wage continues to hurt the very people it is supposed to lift out of poverty.
A Congressional Budget Office study released this summer concluded that “an increase to $15 would boost pay for 17 million workers who would otherwise earn less, it would also cost 1.3 million Americans their jobs.”
Particularly hard-hit would be workers in the struggling rust-belt cities and towns in New York, Ohio, Michigan and Pennsylvania. Businesses in lower-cost areas in those states, would cut back on workers’ hours or lay off people because $15 an hour is more than they can absorb.
Even in New York City, which is experiencing an economic boom, the minimum wage increase, has been taking a toll on small businesses.
A New York Hospitality Alliance report released earlier this year noted that restaurant employment for the first time in 20 years declined by 1.6 percent. The reason for the drop: the minimum wage is too high.
The Queens County Chamber of Commerce confirmed Hospitality Alliance’s findings. The Chamber pointed out that the $15 wage is responsible for an increase in small business failures. And many surviving companies are cutting back on their staffs, curtailing work hours for remaining employees and raising prices.
The owner of the Lido Restaurant in Harlem, Susannah Koteen, told The Wall Street Journal that so far she hasn’t laid off any of her 40 employees, “but the increase has forced her to cut back on shifts and be more stringent about overtime. What it really forces you to do is make sure that nobody works more than 40 hours.”
Minimum wage laws hurting those on the bottom rung of the economic ladder is not new.
Milton Friedman, Nobel Laureate economist, observed back in 1960, “Minimum wage laws are about as clear a case as one can find of a measure of the effects of which are precisely the opposite of those intended by the men of good will who support it…. The effect of the minimum wage make[s] unemployment higher than [it] otherwise would be.”
Twenty years later, in his work Free to Choose, Friedman denounced the minimum wage “as one of the most, if not the most, anti-black laws on the statute books.”
He continued, “The government first provides schools in which many young people, disproportionately black, are educated so poorly that they do not have the skills that would enable them to get good wages. It then penalizes them a second time by preventing them from offering to work for low wages as a means of inducing employers to give them on-the-job training. All this is in the name of helping the poor.”
Decades of minimum wage data has been ignored by Progressive ideologues because they prefer to promote flawed social policy formulas, regardless of the consequences, to buy off constituencies.