For economists such as Deirdre McCloskey, the implementation of minimum wage policy is contentious because of the implications such a policy (among others) has regarding free society. That is, in a society such as that of the United States and its relatively disgraced history in regards to race relations, gender roles, and general mistreatment of people perceived as the “other,” minimum wage policy may actually be designed to damage certain people economically as opposed to lifting them up. Despite this, there are guardians of the minimum wage who claim that the phenomenon of “monopsony” is pervasive in the labor market, and that by implementing a minimum wage we can erode the employer’s buying power in setting wages and actually raise employment. On the other hand, they may point to the Industrial Revolution, citing the fact that because women and children worked long hours for what is considered a minuscule wage, we all got rich just by struggling against labor exploitation and therefore need big governments to protect us. To the extent that both views are erroneous, McCloskey claims that there are three methods that serve to illustrate why the minimum wage is an impermissible mistake to those who so stoutly defend it. The first method is to explain that the minimum wage actually reduces the number of jobs available on the market by pricing the youngest and most inexperienced workers out. There is absolutely nothing that these unemployed workers can do except become dominated by their fellow man who now holds arbitrary power over them. The second method is to explain that if the minimum wage presents an interference in the market that makes it so it is illegal to pay some laborers what they are really worth, and the resulting annual income from paying fair-market wages are determined to be unbecoming, then taxpayers should make up the difference to provide the poor with a basic minimum income rather than a basic minimum wage. In doing so, we would eliminate all the processes that interfere with the voluntary exchanges of labor on the part of the employer (the buyer) and the employee (the seller). The third method, which is the most pertinent in regards to McCloskey, is to explain the assertion that the minimum wage policy was an early twentieth century Progressive policy in the United States that was designed to directly damage low-wage workers.
Indeed, the minimum wage policy achieved the specific outcome that it was designed for, and that was sabotage low-wage workers to the point of unemployability. The motivating forces behind doing so were race suicide theories that prevailed in the United States during the early twentieth century that emphasized bigoted views that the society was built for some (if you were white, male, of northern European ancestry), but not for others (if you were black, a woman, an immigrant, of southern European or African ancestry). The commonly held belief was that the “inferior” races, by exhibiting their low wage “standards,” would thereby curtail the wages of the “Saxons” and reduce their fertility as a result. The main concern for those who adamantly adhered to these strictly racist doctrines was that the national “stock” of those who were considered “desirable” would be diluted by the high fertility rates (another baseless claim) of those who were deemed to be “undesirable.” Therefore, the prevailing thought was that if the United States were to be a nation of peoples that were capable, independent, and efficient individuals, it would make sense to enact policy to essentially “cut off” hereditary lines that were otherwise regarded as undesirable through means like sterilization or isolation. It stands to reason, then, that the minimum wage would be the perfect policy to implement in order to achieve this specific outcome. If society were to exclude the “undesirables” from employment, then there are fewer people of color or immigrants in the workforce to drive down the white man’s wages, and the white women will have more time to become subservient to their husbands and have more white children. By implementing a federal, mandatory minimum wage, then no longer will the “decent” capitalists be forced to compete with those that hire women, children, immigrants, persons of color, the feeble-minded, or anyone otherwise who did not fit the description of who “belonged” in greater society. McCloskey explains that about fifteen American states had enacted minimum wage legislation by 1919. The phenomenon of economic growth that came as courtesy of The Great Enrichment was hijacked as being a testament to the racial superiority of the Saxons, despite McCloskey’s obvious point that contemporary, non-Saxon societies have achieved similar prosperities by simply adopting the free-market policies consistent with ideas like trade tested betterment.
McCloskey contends that minimum wage policy was just one way in which American Progressivism tried to structure the outcomes of markets in a way that favored race-purity measures. A worldwide rejection of laissez-faire economics during the time period in which commercially tested betterment was beginning to heed collective growth and prosperity allowed Progressives to mold social evolution on behalf of the “fittest” in society. It is in this way, McCloskey asserts, that made the Progressives in the United States in the twentieth century illiberal and against free society. By creating hierarchies in categories such as race, gender, class, IQ, skills, wages, or otherwise, one is favoring inequalities in nearly all facets of society. The resulting trivialization of economic freedoms made it so that it nearly always extended past simply the wage that someone earns. Thus the rules regarding the rights to open a shop through zoning and building codes, rules regarding the right to make wage bargains, or even the rules interfering in the possession of property. McCloskey has urged us that it is time to get “woke” in regards to the minimum wage. Its only purpose is by design: to damage poor people and women.
Reference:
Deirdre Nansen McCloskey, Why Liberalism Works, pg. 282-286
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