Promoted from the Ricochet Member Feed by Editors Created with Sketch. Should a Policy’s Racist History Matter?

 

shutterstock_54864934It’s funny. Left-wing opponents of school choice frequently carp about the fact that some segregationists thought school vouchers would be a swell way to avoid sending their kids to school with blacks, as though that’s a reason to oppose them today, even though research shows that school vouchers foster racial integration and their primary beneficiaries tend to be black and brown kids.

If so, why isn’t the extremely racist history of the minimum wage also relevant?

Progressives originally designed the minimum wage to keep racial minorities out of work. As Princeton Professor Thomas C. Leonard, author of Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era, detailed in the LA Times, progressives in the early 20th century proposed the minimum wage as a solution to the supposed problem of “race suicide,” the idea that immigrants and racial minorities were working for cheap wages, thereby undercutting the wages of American-born whites, who in turn had fewer children rather than lower their standard of living. (You hear echoes of this in the modern alt-right’s complaints about “white genocide.”) In the long run, these eugenics-enamored progressives feared that “inferior races” would “outbreed and displace their white Anglo-Saxon betters.”

Progressive economists proposed a minimum wage as the ideal remedy. It lifted up the deserving while excluding the unworthy and did both in the name of progress. Journalist and progressive social reformer Paul Kellogg in 1913 advocated a minimum wage of $3 per day for all immigrants, double the $1.50 per day ordinary laborers were then paid. Kellogg knew that no firm would hire an unskilled immigrant for $3 per day. That was the purpose of his high minimum wage, as he wrote, to exclude “Angelo Lucca and Alexis Spivak” from American shores, thus protecting American jobs for “John Smith and Michael Murphy and Carl Sneider.”

Progressives are no longer motivated by such racist beliefs, but the minimum wage still disproportionately harms racial minorities. The low-skilled workers priced out of the lowest rungs of the ladder of economic opportunity are primarily poor black teens.

Minimum Wage

As Milton Friedman said in an interview several decades ago, “The people who have been hurt most by minimum wage laws are the blacks. I have often said that the most anti-Negro law on the books of this land is the minimum wage rate.”

Recent studies confirm the minimum wage’s negative impact on employment:

A new working paper from the National Bureau of Economic Research finds that significant minimum wage increases can hurt the very people they are intended to help. Authors Jeffrey Clemens and Michael Wither find that significant minimum wage increases can negatively affect employment, average income, and the economic mobility of low-skilled workers. The authors find that significant “minimum wage increases reduced the employment, average income, and income growth of low-skilled workers over short and medium-run time horizons.” Most troublingly, these low-skilled workers saw “significant declines in economic mobility,” as these workers were 5 percentage points less likely to reach lower middle-class earnings in the medium-term. The authors provide a possible explanation: the minimum wage increases reduced these workers’ “short-run access to opportunities for accumulating experience and developing skills.” Many of the people affected by minimum wage increases are on one of the first rungs of the economic ladder, low on marketable skills and experience. Working in these entry level jobs will eventually allow them to move up the economic ladder. By making it harder for these low-skilled workers to get on the first rung of the ladder, minimum wage increases could actually lower their chances of reaching the middle class.

Most of the debate over a minimum wage increase centers on the effects of an increase on aggregate employment, or the total number of jobs and hours worked that would be lost. A consensus remains elusive, but the Congressional Budget Office recently weighed in, estimating that a three year phase in of a $10.10 federal minimum wage option would reduce total employment by about 500,000 workers by the time it was fully implemented. Taken with the findings of the Clemens and Wither study, not only can minimum wage increases have negative effects for the economy as a whole, they can also harm the economic prospects of low-skilled workers at the individual level. [emphasis added]

But some of the most prominent backers of the “Fight for $15” aren’t really concerned about the negative impact because they have ulterior motives. As Friedman explains in the video above, it’s a classic “bootleggers and Baptists” situation:

Almost always when you have bad programs, you have an unholy coalition of the do-gooders on the one hand, and the special interests on the other. The minimum wage law is as clear as case as you could want. The special interests are, of course, the trade unions.

Exactly so.

Indeed, the unions — which have their own racially troubled history — aren’t even shy about signaling their true intentions. In Los Angeles, which is now in the process of hiking its minimum wage to $15/hour by 2020, the unions are already asking for an exemption:

Los Angeles city council will hear a proposal on Tuesday to exempt union members from a $15 an hour minimum wage that the unions themselves have spent years fighting for. […]

Union leaders argue the amendment would give businesses and unions the freedom to negotiate better agreements, which might include lower wages but could make up the difference in other benefits such as healthcare. They argue that such exemptions might make businesses more open to unionization. [emphasis added]

And there you have it.

The unions’ real motivation in pushing a $15 minimum wage is not about improving the lot of the low-skilled worker, but forcing businesses into a situation where they’d have little choice but to unionize their workforce.

If only unionized workers would be exempt from the new minimum wage, businesses that couldn’t afford to pay $15 an hour for low-skilled workers would suddenly find unionizing their workforce to be a financially attractive proposition instead of a ruinous one. Every business with low-skilled workers would have to unionize or be put out of business by their newly unionized competition. Private-sector unions, which have been in decline for years, would suddenly find their ranks swelling — and all the new union membership dues would then swell their coffers, making them much more politically powerful, practically overnight.

It’s devious, really.

Friedman often exhorted us to judge policies by their results, not their intentions. Whatever the racist motivations of those who originally proposed the minimum wage or segregationists who supported school vouchers, what really matters is the impact of these policies today. School vouchers have been shown to foster racial integration, improve test scores, and increase rates of high school graduation and college matriculation, especially for racial minorities. By contrast, the minimum wage sounds nice, but its effect is to reduce employment and social mobility, especially for racial minorities.

If we really want to improve the social mobility of minorities, we should enact policies that enhance their educational and economic opportunities. Unfortunately, too many modern progressives are not inclined to do so.

There are 9 comments.

  1. rebark Inactive

    This is to say nothing of the racist history of gun control policies used in the Deep South to deny African American families their rights to self-defense.

    Too often standards like these are selectively applied when it’s easier to insinuate bad intentions than to look at the actual policy proposal.

    Not only that, but it feels good to believe that anyone who disagrees with you is a terrible person. I fear we will see more of this cherry-picking of history in the future, not less.

    • #1
    • April 13, 2016, at 3:25 PM PST
    • 1 like
  2. Casey Way Member

    Excellent post!

    • #2
    • April 13, 2016, at 3:25 PM PST
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  3. Richard Fulmer Member

    Most, if not all, of the studies on the effects of raising the minimum wage dealt with minor increases and not the very large hikes that are being proposed. Small increases may have little impact depending upon the effects of inflation. If, for example, inflation has largely made the current minimum wage irrelevant, a small hike will make little or no difference.

    A simple thought experiment will reveal the likely effects of a large increase. When the wage is raised, some people will benefit. They will be those who are currently employed at less than the new minimum and who keep their jobs. Also benefitted will be those who do not yet have a job but become employed at the new wage.

    On the other hand, some people will be hurt. These include consumers, to the extent that they have to pay higher prices, and business owners, to the extent they cannot pass on their increased costs to customers. In addition will be those workers who lose their jobs and those who cannot now get a job.

    What can we say about the employees who are benefitted and those who are hurt? Those benefitted will likely be the most productive. Usually, that will translate into those who are the most experienced and best educated. Those hurt will be the least productive – usually the least experienced and least educated. In other words, the increase will help those employees who need help the least and hurt those who need it the most.

    What is the moral case for hurting people who are less well off in order to help those who are better off?

    • #3
    • April 13, 2016, at 3:52 PM PST
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  4. Larry3435 Member

    Jason Bedrick: Progressives are no longer motivated by such racist beliefs

    Yeah? Coulda fooled me.

    • #4
    • April 13, 2016, at 4:06 PM PST
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  5. Richard Fulmer Member

    Yesterday, Katherine Timpf posted a piece on NRO about an op-ed that recently appeared in the Harvard Crimson. The gist of the editorial was that everything in the United States is tainted by racism because the “country was built on oppression.” In other words, the present is determined by the past. Presumably, then, the minimum wage can never be free of the stench of racism because it was built on racism.

    • #5
    • April 13, 2016, at 4:07 PM PST
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  6. Probable Cause Inactive

    Two words: Margaret Sanger.

    • #6
    • April 13, 2016, at 4:14 PM PST
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  7. HVTs Inactive

    Larry3435:

    Jason Bedrick: Progressives are no longer motivated by such racist beliefs

    Yeah? Coulda fooled me.

    Indeed. Maybe Progressives are no longer racist in the sense that Woodrow Wilson and Margaret Sanger believed non-whites were biologically inferior. Progressives certainly won’t voice that thought today, although it was at the core of their movement and fueled the Democrats’ apartheid political system in the southern states. But Progressives remain racist in that their political arm—that same Democrat Party—understands it cannot survive electorally unless it convinces racial and ethnic minorities that white racism is the most salient fact of their lives in America. They must convince minority groups that without White Progressives shielding them, they’d be swinging from nooses. That she can propel racial fear and anxiety to hypersonic speed is Hillary Clinton’s only real hope for getting elected in 2016.

    • #7
    • April 13, 2016, at 4:55 PM PST
    • 1 like
  8. tigerlily Member

    Great post Jason!

    • #8
    • April 13, 2016, at 5:05 PM PST
    • Like
  9. Brian Rants Member

    Not just a good post. A great post. I will share this.

    • #9
    • April 13, 2016, at 7:45 PM PST
    • Like