I am beginning a series of posts on the blog that centers around the intentions of governmental policy vs. the actual results. We will be examining federal policy and issues that everyone knows really well and go "Beyond Intentions."
Thinking Rightly
Before I talk briefly about this subject, I want to make sure that I approach the sensitivity of the subject rightly. I know many people that have been disabled and have been blessed by their impact in my life. It always gives me comfort to know that if they believe in Christ, then the Bible teaches: the Lord Jesus Christ...will transform our lowly bodies so that they will be like his glorious body. (Philippians 3:20-21). What a great promise! So, in that mindset, I want to point out a part of the Federal Minimum Wage Law that I believe exposes the law for what it is: a law with good intentions but destructive consequences.
Minimum Wage and the Disabled
The minimum wage law signed by FDR in 1938 is pretty well known to most people; however, there is a particular provision of the law that provides an exemption for people with disabilities. The Columbus Dispatch brought this issue to my attention with this article. Thousands of adults with developmental disabilities such as autism work at jobs in Ohio that pay less than the minimum wage. Some work for $2.15 assembling auto parts and some sew table linens for 79 cents. A majority do not earn half of the minimum wage. This little known provision allows businesses to pay less than the minimum wage if the disability limits the worker's productivity. Comments from the article:
"It's immoral," said Curtis L. Decker, executive director of the National Disability Rights Network.The debate comes down to this: Critics say low wages show that disabled workers are being exploited, but supporters say the pay rates reflect opportunities – that even the most disabled Ohioans are being given a chance to pursue work and build full lives.
"This has been a godsend," said Ted Williams, whose autistic son earns a low wage at his job in Columbus
The Question
What do you think? Are the disabled being exploited? Or, is the exemption giving them an opportunity that would not be there otherwise? Think about it: If an employer did have to pay a person who is disabled the minimum wage of $7.25, would they be hired? Or, would the employer opt to hire the young high school or college student who needed the money but could be more productive? As a result, are you, through the good intentions, pricing more disabled out of the market? Now, would less disabled workers be able to be work, build their lives, build their skills, and contribute greatly to society?
If you look at this situation and think that it would adversely affect the disabled, then good, we agree (ha ha). But, just as important, taking this argument to an extreme has revealed a principle. If a mandated floor prices disabled out of the market of employment, wouldn't it also price young, unskilled workers out of the market as well without disabilities. I made this point on a previous post on the blog:
The fact is that the minimum wage is hurting the very people that it was most intended to help. Instead of letting a low-skilled or uneducated person be employed at a rate to suit the employer like $5 an hour, they government has made that practice illegal and is forcing a business to employ them at $7.25 an hour, plus mandated fringes such as social security tax, health care, and unemployment insurance . The government is effectively denying low-income folks and teens an opportunity to gain experience and some cash flow that could lead to a more stable life and potential opportunities in the future.
I believe this is a classic example of good intentions having destructive consequences. The poor and young workers have borne the brunt of the good intentions. I have included an interesting article about how the minimum wage began to help break down preconceived notions you've had. This is the issue that was the first domino to fall that turned me to liberty minded economic views. Good for me. Bad for anyone that has to listen to me, I guess.
Blake
A Brief History (Written in 1998)
Sixty years ago on June 25, 1938, President Franklin Roosevelt signed into law America’s first minimum wage: 25 cents an hour, rising to 40 cents an hour over the next seven years, which is equivalent to almost $5.00 in 1998 dollars. Today, many increases later, Senator Ted Kennedy of Massachusetts is pushing for yet another hike in the minimum wage. Now is a good time to reexamine the origins of this important law and its impact on the job market.
Once the original bill was passed, many economists and politicians predicted that more workers would be thrown out of work and that the Great Depression—already in its ninth year—would get worse. That’s exactly what happened and during the fall elections, Roosevelt lost an astonishing 80 House seats to the Republicans.
It turns out that Ted Kennedy’s Massachusetts is where the impetus for the minimum wage actually began. The working poor struggling to eke out a living were not the driving force behind the 1938 law. New England’s highly paid textile workers were.
During the 1920s and 30s, the American textile industry had begun to shift from New England to the South, where the cost of living was lower and where Southern workers produced a high quality product for lower wages. Politicians in Massachusetts, led by Senator Henry Cabot Lodge, Jr. and House leader Joseph Martin, battled in Congress for a law that would force Southern textile mills to raise wages and thereby lose their competitive edge.
Governor Charles Hurley of Massachusetts bluntly demanded that Southern wages be hiked so that "Massachusetts [would] have equal competition with other sections of the country, thus affording labor and industry of Massachusetts some degree of assurance that our present industries will not move out of the state."
Southerners were well aware of what Massachusetts was attempting and they scuttled all minimum wage laws before Congress during 1937 and well into 1938. In doing so, they handed President Roosevelt his first major legislative defeat.
"Northern industries are trying to stop the progress of the South," Congressman Sam McReynolds of Tennessee observed, "and they feel if they can pass this [minimum wage] bill it will really be a tariff against Southern goods."
Southern congressmen joined those economists who argued that Congress couldn’t make a man worth a certain amount by simply making it illegal to pay him any less. They said that people whose skills and experience were worth less than whatever Congress decreed as the minimum wage would be priced out of the labor market. The Great Depression, they said, would get worse by Congress telling workers, in effect, "If you can’t find a job that pays at least the minimum, then you’re not allowed to work."
The desperate plight of unskilled workers trying to hold on to their jobs disturbed Congressman Carl Mapes of Grand Rapids, Michigan. "The enactment of this legislation," Mapes concluded, "will further increase unemployment, not reduce it. It is bound to increase unemployment unless all human experience is reversed." Mapes cited the case of a local minimum wage law passed in early 1938 in Washington, D. C. Immediately after its passage, the Washington Post lamented, scores of maids and unskilled workers were laid off by local hotels.
Roosevelt’s political muscle eventually prevailed and the national law was passed, but Mapes’s prediction has proven to be prophetic. Over the years, steady hikes in the minimum wage have priced out of the market the most vulnerable workers, including blacks, teenagers, and women with limited skills. Also vulnerable have been workers with developing skills whose labor is not yet worth what the law says they must be paid.
The bias of minimum wage laws against disadvantaged minorities has been conspicuous ever since 1956, when the minimum wage shot up from 75 cents to $1.00 an hour. During the next two years, nonwhite teenage unemployment spiralled from 14 to 24 percent. The recent 1996 hike in the minimum wage to $5.15 an hour had a similar effect: unemployment among black male teenagers jumped from 37 to 41 percent almost immediately, at a time when the economy was doing well for almost everyone else. That’s why Milton Friedman, the Nobel Prize winning economist, once called the minimum wage "the most anti-black law on the books."
Data from President Clinton’s own labor department show that at least 20,000 jobs were eliminated by the 1996 hike. The Employment Policies Institute calculates that the real job loss was closer to 128,000.
Senator Kennedy would have us believe that hiking the minimum wage again would be good for Massachusetts, and that what’s good for Massachusetts is good for Michigan and the nation, too. That was wrong in 1938, and it’s still wrong sixty years later.
-Article Courtesy of Mackinac Center for Public Policy
No comments:
Post a Comment