By William Haupt III | The Center Square contributor
Greg Bishop | Watchdog.org
“It is fascinating to see brilliant people belatedly
discover the obvious – and to see an even larger number of brilliant people
never discover the obvious about the minimum wage.”
– Thomas Sowell
Until 1938, the U.S. Supreme Court sided with business
over labor citing it was an unconstitutional delegation of government authority
to dictate to industry what to pay workers. The Court continually ruled there
was no Constitutional basis for a guaranteed income. In the 1800s during the
Industrial Revolution, the Court heard numerous cases as new industries
developed but they failed to rule in favor of labor. Their opinion was
employers would reward the good workers with increased wages.
Until the Great Depression, the Court ruled that states
were responsible for wages and labor under the 10th Amendment. But that would
change dramatically under Franklin Roosevelt. From the day he took office, he
backed legalization to control industry and empower workers and unions. But it
was not until 1938 when he was asked to address child labor conditions in the
Depression work place that he had an opportunity to fulfill his New Deal
promise to establish a federal minimum wage.
After losing his battle to “pack the court,” FDR lost
support from his party, and needed a signature bill. Opportunity knocked when
U.S. Sen. Hugo Black proposed legislation to protect child labor and provide a
federal minimum wage. And in 1938, Congress passed The Fair Labor Standards
Act. It created a federal minimum wage, a 40 hour work week and established
child labor protections.
“Democracy is not safe if the people tolerate the growth
of private power.”
– Franklin Roosevelt
When Congress passed the Fair Labor Standards Act, it
represented a major shift in labor policy. For the first time, the federal
government was able to dictate to private industry how much they had to pay a
person for any job regardless of skills or education requirements. It has
haunted us since.
The major objection to the FLSA was each state should
control its own minimum wage laws. The federal minimum wage has been $7.25
since 2009. Although the minimum wage is a contentious partisan issue in
Congress, states have done this on their own. The federal government does not
control state commerce or labor requirements and should not control the minimum
wage.
“The 10th Amendment is not a 'general assumption' but
rather a rule of law for the states.”
– Barry Goldwater
Recent data from The Bureau of Labor Statistics reveals
that in seven states, the minimum wage rises based on a cost-of-living index.
In another nine states and Washington D.C., the minimum rate rises on a
multiyear schedule. Another eight states increase the rate yearly until it
reaches a certain plateau and the legislature reviews inflation and cost of
living data and they put out a new formula.
It has been over eight decades since the FLSA passed and
there is no proof that increases in the minimum wage improves anyone’s standard
of living. British magazine “The Economist” lists three countries – Spain,
Greece and South Africa – that continually have the highest rate of
unemployment regardless of global economics. They have the most generous
minimum wage laws in the world.
Over 60% of minimum wage workers in Africa are jobless,
according to the World Bank. In North Africa, the youth unemployment rate is
25% and it is even greater in Botswana, the Republic of the Congo, Senegal, and
other parts of Africa. With 200 million people between 15 and 24, Africa has
the largest population of young people in the world, and the highest per capita
unemployment rate.
In contrast, Switzerland has no minimum wage and low
unemployment. The World Bank credits the overall health of the Swiss economy to
its incentive-driven labor policies that drive productivity. It is also not
part of the EU, which allows them to formulate independent lucrative trade
deals and control their own immigration policies. The result is an unemployment
rate averaging less than 3%.
“How can the Swiss stay in business when their watches
last for a lifetime?”
– Johnny Carson
Biden pledged to double the minimum wage to $15. While
the CBO said this would have a negative impact on employment and hurt our
recovery, Biden disagreed: “There’s no evidence when you raise the minimum
wage, businesses close. They only cut hours and adjust payrolls.”
In 2019, the nonpartisan Congressional Budget Office
estimated a $15 minimum wage would eliminate at least 1.3 million jobs. The CBO
concluded that an increase this large would reduce business income, raise
consumer prices, and it could cause major damage to a weak economy.
The U.S. economy was fragile when Biden took office and
the CBO told him not to anticipate much improvement throughout 2021. Our nation
needs more business income, not less. We need more jobs, not more unemployment.
We do not need anything to slow our economic growth; we need to stimulate
growth. Only the Chinese will profit if Biden’s minimum wage stratagem becomes
law.
According to the Bureau of Labor Statistics, half of all
workers in 20 states earned $18 per hour or less in 2019. In 35 states, the
median hourly wage was less than $20. Biden’s desire to raise the minimum wage
to mirror the median wage would price many workers out of the market and force
businesses to shut down. This massive unemployment would over-tax our social
service network.
“When dealing with people, remember you are not dealing
with creatures of logic.”
– Dale Carnegie
University of Washington economist Jacob Vigdor studied
the effects of Seattle’s increase in its minimum wage to $13 in 2016, on its
way to $15. It led to a 9% reduction in low-wage jobs. The pay increase didn’t
make up for the reduction in employment, and earnings fell for low-wage workers
overall. Vigdor also found that any financial gains were offset with cuts in
hours worked.
During one of the presidential debates when Donald Trump
accused Biden of bowing down to the socialists, Biden responded, “Trump thinks
he's running against someone else. Well he's running against Joe Biden. I beat
those other guys because I disagreed with them.” Yet a $15 an hour minimum wage
is one of the many progressive and socialist policies that Biden now supports?
Thomas Sowell wrote, “Any liberal will tell you
government can fix everything.” Federal mandating of higher hourly pay rates
places the burden of fighting poverty on the employers of the low-wage workers
and the customers of low-wage businesses. It deprives the most vulnerable,
least-skilled and least-experienced workers of an opportunity to earn their way
into better paying career jobs.
If people demand a minimum wage, then the states must
establish it, not the federal government. The central government does not control
local labor markets, the states do. Those who think Joe Biden can give them a
raise with the stroke of his pen will end up unemployed.
“The fact that so many successful politicians are such
shameless liars is not only a reflection on them, it is also a reflection on
us. When the people want the impossible, only liars can satisfy.”
– Thomas Sowell
