- Cafe Hayek - https://cafehayek.com -

Quotation of the Day…

Tweet [1]

… is from page 213 of Thomas Leonard’s Fall 2005 article in the Journal of Economic Perspectives, “Eugenics and Economics in the Progressive Era [2]” (original emphasis):

For progressives, a legal minimum wage had the useful property of sorting the unfit, who would lose their jobs, from the deserving workers, who would retain their jobs.  Royal Meeker, a Princeton economist who served as Woodrow Wilson’s U.S. Commissioner of Labor, opposed a proposal to subsidize the wages of poor workers for this reason.  Meeker preferred a wage floor because it would disemploy unfit workers and thereby enable their culling from the work force.

Few policies have origins as ugly as that of the minimum wage.  “Progressive” intellectuals in the early 20th century supported the minimum wage because they believed it to be an effective policy detergent to help cleanse the gene pool of ‘undesirables.’  By pricing low-skilled, ‘undesirable’ workers out of jobs, ‘undesirables’ are less likely to successfully pro-create and to immigrate.  The fact that the minimum wage, by pricing ‘undesirables’ out of work, thereby artificially raises the incomes of white workers was considered to be an added benefit of this social-engineering device.

Business owners and labor unions in higher-wage regions of the United States supported the minimum wage because it would dampen the competition they were under from businesses and workers in lower-wage regions of the United States [3].

The ethics of these early supporters of the minimum wage were despicable.  But say this much for these racist, protectionist creeps: they understood economics better than do many people today (including some economists) who believe either that the law of demand is uniquely inoperative in the market for low-skilled workers or that the American market for low-skilled workers is monopsonized.*  Each belief is as inexplicable as it is unsupportable.

…..

* And monopsonization of the labor market is only a necessary condition for a minimum wage to not destroy employment opportunities for some workers; it is not a sufficient condition.

Comments