One of the favorite responses of progressives to libertarian calls to dismantle the welfare state is to ask, “Why do you hate the poor?” That question can be modified and turned back on progressives: “Why do you hate black teenagers, the people whom you condemn to unemployment and poverty with your minimum-wage laws?”
After all, black teenage unemployment is a constant in American society. It ranges from 30 to 40 percent. These are young people who would love to work but are unable to do so because of the minimum wage.
How does the minimum wage condemn black teenagers to unemployment? It requires employers to pay more for the labor services of black teenagers than they otherwise would. While employers would be willing to pay, say, $4 an hour to a black teenager, it’s not worth it to them to pay $7 or higher. Given a choice between paying $7 an hour to someone whose labor is valued at less than the artificially established minimum, the employer is going to choose not to hire the black teenager.
Progressives can rant and rave all they want about how evil and selfish employers are for refusing to hire black teenagers at $7 an hour but that doesn’t affect the outcome. The fact is that a black teenager whose labor is valued in the marketplace at less than the legally mandated minimum isn’t going to be hired if the law prohibits the employer from paying him less than the legally mandated minimum.
Ask yourself a simple question: Why limit the minimum wage to $7 or $10? Why not raise it to $100 an hour? If raising the minimum wage is the key to economic prosperity for workers, wouldn’t they be better off with a $100 an hour minimum wage?
What would happen if the minimum wage were raised to $100 an hour? Every worker whose labor is valued in the marketplace at less than $100 would be immediately laid off or simply not employed. Progressives could go on the rampage, exclaiming how employers are nothing but evil, greedy, capitalist swine, but it wouldn’t matter. Hundreds of thousands of people would go unemployed immediately.
That principle is fairly easy to see. People understand that most employers are not in the charity business. They are in the for-profit business. If they are required to pay all their workers $100 an hour, they will quickly go out of business. They will lay them off rather than pay them $100 an hour.
But the same principle applies to an artificially established minimum wage of $7 an hour. Everyone whose labor is valued at less than that minimum is going to go unemployed. That’s why black teenagers have a permanently high unemployment rate.
Why do employers place a lower value on the labor services of black teenagers, as compared to white teenagers? Who knows? It could be because black teenagers don’t dress as well as white teenagers. Or it could be that black teenagers haven’t learned as much about how a business works, about pleasing consumers, about a work ethic, and about the importance of getting to work on time. Maybe it’s because the black teenager, oftentimes being forced to attend inner city public schools, is less educated than his white counterpart. It could be that the employer is a racial bigot.
Whatever the reason for the employer’s subjective valuation of the labor services of black teenagers, the fact remains: The minimum wage prevents them from getting hired.
What if there was no minimum wage? The firm would still be interested in hiring the white guy at $7 an hour because that’s the value he places on his labor anyway. How do we know that? Because of the fact that he hired him!
But without the minimum wage, the job prospects for black teenagers turn around. Now, they can approach the employer and say, “I know you place a higher value on that white guy but I’m willing to work at half his price–$3.50 an hour. Just give me a chance to prove myself.”
Now, the employer is faced with an entirely different situation. His business is profit. He knows that he stands to make a higher profit with a worker who is being paid $3.50 an hour compared to one to whom he’s paying $7 an hour. By competing on price, the black teenager even has a good shot at overcoming the rankest racial bigotry.
More important, the black teenager who gets the job at $3.50 now has his foot in the door. Sure, he’s not making a lot of money, but he’s learning job skills, a work ethic, how to run a business, the importance of consumer satisfaction, and other things about the workplace. He now has a chance to move up or move out to a better job or even to later start his own business.
All of that is denied to the black teenager if he is never able to get a job. That’s what the minimum wage law that progressives so ardently defend does to black teenagers. It prevents them from getting their foot in the door. It condemns them to unemployment.
And what do progressives say should be done for unemployed black teenagers who grow up without ever having worked in the marketplace. Well, that’s where welfare comes in. “Put them on welfare, where the government can take care of them,” progressives exclaim. Of course, welfare places them into a permanent state of dependency on the government as compared to living independent lives in the marketplace. Progressives know that control and manipulation become easier when people become hooked on this political heroin. “Vote Democrat or those mean compassionate conservatives will terminate your dole,” progressives love to tell their welfare recipients.
Even worse, all too many black teenagers or young black adults are often lured into the drug trade, where it’s possible to make a lot of money very quickly, thanks to another favorite government program of both progressives and conservatives—the drug war. That’s how so many blacks end up in jail for the next 20 or 30 years of their lives, only to be released without any real job prospects at all.
It might all be unintentional but there’s no denying that if someone wanted to devise a system that was anti-black, he’d have a hard time coming up with a better one that exists today, thanks to both progressives and conservatives.
Finally, I would be remiss if I failed to point out that there is another economic factor involved here: The minimum wage prohibits new businesses from opening up and hiring black teenagers at a lower wage. That protects the rich, well-established firms from the competition of start-ups that the minimum wage prevents from ever coming into existence.
Why do progressives do this to black teenagers? No, I don’t think they really hate them, but the effect of their minimum-wage laws are the same as if they did. If only black teenagers (and their parents) could see that the minimum wage (and the drug war) are their worst enemies and join up with us libertarians to get them repealed.