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Black Teenagers Should Call for Repealing the Minimum Wage

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For the life of me, I simply cannot understand how intelligent people can still support something as nonsensical as a government-established minimum wage. I find this to be absolutely incredible. The very thought that people living in the 21st century can still support such inanity is surely a testament to the destructive power of America’s governmental schooling system.

The latest example is the New York Times, which has a full-throated call for increasing the minimum wage as its lead editorial today. The title: “The Clear Benefits of a Higher Minimum Wage.” Citing a new report from the Congressional Budget Office, the Times says:

More than 16 million low-wage workers, now making as little as $7.25 an hour, would directly benefit from the increase, the report said. Another eight million workers making slightly more than the minimum would also get raises, because of the “ripple effect” of an increase. That would add $31 billion to the paychecks of families from poverty level to the middle class, significantly increasing their spending power and raising the nation’s economic output and overall income.

Wow! What tremendously insightful and ingenious economic analysis!

But wait a minute. The Times supports an increase in the minimum wage to only $10.10.

What’s that all about? Why only $10.10? If raising the minimum wage to $10.10 is going to bring all that great economic prosperity to America, why stop there? Why not go to $100.10 an hour?

Think about that for a moment. If $10.10 adds $31 billion to the paychecks of families, $100.10 an hour would add $310 billion to their paychecks. Think of the whopping “ripple effect” of that increase. Think would it would do to the nation’s economic output and overall income.

Like I say, it boggles the mind that libertarians still have to confront this economic inanity, especially since libertarian economists have decimated the utilitarian (and moral) case for minimum-wage laws for more than five decades.

If government could make people rich by passing laws that regulate economic activity, then there would be no more impoverished nations. Since the U.S. government enacted its minimum-wage law decades ago, you would think that North Korea, where people are starving to death, would have learned about it by now. So, why is North Korea still mired in poverty? Someone needs to get word to them that there is an easy government-concocted trick for economic prosperity.

No government edict, including a minimum-wage law, can make people prosperous. On the contrary, laws that regulate economic activity do the opposite. They impoverish people. That’s, in fact, why North Koreans are starving to death—because of the heavy hand of government in economic affairs.

The Times editorial observes that that Congressional Budget Office report points out that an increase in the minimum wage will make some people unemployed—an estimated 500,000 people, which, not surprisingly, the Times just pooh-poohs.

But from a logical standpoint, how could it be otherwise? In any market transaction, employers place a subjectively determined value on employees. If a worker asks to be paid $10 an hour, an employer asks himself a question: Is this person worth $10 an hour in the context of what he is going to do for my business? If an employer determines “yes,” he’ll hire the person. If he determines “no,” he won’t. It’s that simple.

If the employer says “no,” then if employee wants to work at that facility, he must lower his asking price. Let’s say he lowers it to $5 an hour. Now the employer thinks to himself, “I wouldn’t hire this person at $10 an hour but it is in my interests to hire him at $5 an hour.” He says to the worker: “Done. We have a deal.”

Not so fast! The government makes the deal illegal. Either the employer pays the worker the government-established minimum wage of $10 or the deal is off. Since the employer is not willing to pay the worker $10 an hour, the person goes unemployed, even though both of them were willing to strike a deal at $5 an hour.

Consider black teenagers. They suffer a chronic unemployment rate of 30-40 percent. That’s incredible. Yet, what do liberals-progressives, who love to tell us how much they love the poor, say about that? They either remain silent on the matter or they simply blame it on something other than their beloved minimum-wage law.

But it’s precisely the minimum-wage law that condemns black teenagers to chronic involuntary unemployment. For whatever reason, employers place a subjective value on the labor of black teenagers that is lower than the government-established minimum wage. So, while employers would be willing to hire black teenagers at, say, $4 an hour, the minimum-wage law prohibits them from doing so. Thus, the minimum-wage law condemns black teenagers to unemployment. That’s nothing to pooh-pooh.

That means that black teenagers are never able to get their foot in the door. They’d be willing to work for less—at an entry level wage—in order to learn a trade, to learn the culture of business, the importance of making a profit, a work ethic, getting to work on time, how to treat customers, and so forth. Later, they could ask for a raise or go elsewhere or even start their own business, where they could hire friends at entry-level wages in order to compete against the big, well-established firms.

But the minimum-wage law prevents them from doing so. Inevitably, they turn to the drug trade or other criminal activity and end up spending much of their lives in prison. Or they end up spending their lives on welfare, which is nothing but a form of political heroin.

The only way to raise people’s standard of living—especially for the poor—is to free economic activity from the heavy hand of the government. That’s what our ancestors meant by the “free market” and by “free enterprise”—economic activity that is free, totally free, from government control, interference, or manipulation.

A minimum-wage law, a law that prevents employers and employees from entering into mutually beneficial economic exchanges, is as far from a free market or free enterprise as one can get. That’s why it causes so much damage and destruction, especially to black teenagers and others whose labor, for one reason or another, is valued by employers at less than the government-established minimum wage.

I still have a little bit of hope that the liberal-progressive intellectuals at the New York Times might yet see the light on the minimum wage and on the immorality and destructiveness of economic interventionism in general. But my big hope is that black teenagers, along with their parents and friends, will figure it out and join up with us libertarians in calling for the total repeal of minimum-wage laws. What would the Times and other liberals-progressives do then?

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.