The minimum wage law is more popular today than ever. In my last post, I demonstrated the racist origins of modern minimum wage laws in the progressive eugenics movement of the early 20th century. Today, socialists ignore their earlier arguments that such laws hurt minorities and insist they help the poor. Every intervention into the market by the state benefits some at the expense of others.
A minimum wage impacts mostly entry level, low skilled jobs, for the most part the jobs that teenagers with no work experience begin their careers in, such as hamburger flippers, ditch diggers, and shelf stockers. According to one of the best economists of the past 50 years, Dr. Thomas Sowell, minimum wage laws benefit whites. Who does it hurt? Minorities.
Dr. Thomas Sowell grew up poor in Harlem, New York but earned a doctorate in economics from the University of Chicago. Since 1980, he has worked at the Hoover Institution at Stanford University, where he serves as the Rose and Milton Friedman Senior Fellow on Public Policy.
Dr. Sowell is black. His race is important for two reasons: 1) Socialists insist that “lived experience” trumps all other knowledge, and 2) socialists insist that whites must remain silent when a black person speaks. In his 2007 book, Basic Economics: A Common Sense Guide to the Economy, Dr. Sowell traced the impact of minimum wage laws:
“Another group disproportionately affected by minimum wage laws are members of unpopular racial or ethnic minority groups. Indeed, minimum wage laws were once advocated explicitly because of the likelihood that such laws would reduce or eliminate the competition of particular minorities, whether they were Japanese in Canada during the 1920s or blacks in the United States and South Africa during the same era. Such expressions of overt racial discrimination were both legal and socially accepted in all three countries at that time.
“The history of black workers in the United States illustrates the point. From the late nineteenth-century on through the middle of the twentieth century, the labor force participation rate of American blacks was slightly higher than that of American whites. In other words, blacks were just as employable as the wages they received as whites were at their very different wages. The minimum wage law changed that. Before federal minimum wage laws were instituted in the 1930s, the black unemployment rate was slightly lower than the white unemployment rate in 1930. But then followed the Davis-Bacon Act of 1931, the National Industrial Recovery Act (NIRA) of 1933 and the Fair Labor Standards Act (FLSA) of 1938 – all of which imposed government-mandated minimum wages, either on a particular sector or more broadly.
“The National Labor Relations Act of 1935, which promoted unionization, also tended to price black workers out of jobs, in addition to union rules that kept blacks from jobs by barring them from union membership. The NIRA raised wages in the Southern textile industry by 70 percent in just five months and its impact nationwide was estimated to have cost blacks half a million jobs.
“By 1954, black unemployment rates were double those of whites and have continued to be at that level or higher. Those particularly hard hit by the resulting unemployment have been black teenage males.”
How should Christians respond to low-paying jobs such as those affected by the minimum wage? First, Christians should have an attitude of humility. No one knows what the right wage for entry level jobs should be. Church theologians kicked around Aristotle’s notion of a just price, including wages, for over a thousand years. Then in the Reformation they concluded that only God knows a just wage and he hasn’t revealed it to us. The closest humans can come is the wage arrived at in a free market in which neither party coerces the other.
So, if Walmart doesn’t coerce young job applicants and the applicants don’t pressure Walmart, the wage the two agree on is a just wage. Those Godly theologians rejected minimum wage laws because they knew such laws would cause greater unemployment among the poor and make them worse off than if they had kept the low-paying job.
Second, responsibility for taking care of the poor falls upon the whole community, not just employers. Placing that burden only on employers advertises laziness and envy on the part of the community. If someone is trying to support a family with a low-wage job and can’t, the whole community must step up and provide the charity to support the family.
Roger D. McKinney lives in Broken Arrow, OK with his wife, Jeanie. He has three children and six grandchildren. He earned an M.A. in economics from the University of Oklahoma and B.A.s from the University of Tulsa and Baptist Bible College. He has written two books, Financial Bull Riding and God is a Capitalist: Markets from Moses to Marx, and articles for the Affluent Christian Investor, the Foundation for Economic Education, The Mises Institute, the American Institute for Economic Research and Townhall Finance. Previous articles can be found at facebook.com/thechristiancapitalist. He is a conservative Baptist and promoter of the Austrian school of economics.