Because most philosophies that frown on reproduction don't survive.

Monday, November 26, 2012

The Minimum Wage and Race

Over at Cafe Hayek, Don Booudreaux posts an extended quote from David Henderson's book The Joy of Freedom dealing with the ulterior motives that were involved in raising the national minimum wage in the 50s and 60s:
“Forty years ago, the politicians who pushed for the increased minimum wage did not hide their motives. Nor, in an era of state-sanctioned segregation, did they feel the need to hide their knowledge of who the intended victims of minimum-wage legislation would be. In a 1957 Senate hearing, minimum-wage advocate Senator John F. Kennedy of Massachusetts, who just four years later would be President of the United States, stated,
Of course, having on the market a rather large source of cheap labor depresses wages outside of that group, too – the wages of the white worker who has to compete. And when an employer can substitute a colored worker at a lower wage – and there are, as you pointed out, these hundreds of thousands looking for decent work – it affects the whole wage structure of an area, doesn’t it?
“The witness he was addressing, Mr. Clarence Mitchell, then director of the Washington Bureau of the NAACP replied,
I certainly think that is why the Southern picture is as it is today on the wage matters, that there is a constant threat that if the white people don’t accept the low wages that are being paid to them, some Negroes will come in [to] work for a lower wage. Of course, you feel it then up in Connecticut and Massachusetts, because various enterprising people decide to take their plants out of your states and take them down to the areas of cheap labor.
(The quotations from Kennedy, Mitchell, and Javits are from U.S. Senate, Labor and Public Welfare Committee Proposals to Extend Coverage of Minimum Wage Protection, Hearings before the Subcommittee on Labor, 85th Congress, 1st session, March 20, 1957, p. 856)
One of the things which people often forget in discussing setting minimum wage levels is that when people are forbidden from using cost as a means of determining who to hire, they necessarily fall back on other reasons for choosing which in many cases may actually prove to be less savory: influence, preferment, race, etc.


Josiah Neeley said...

There were a lot of folks in the past who supported raising the minimum wage because they thought it would disemploy minorities. But I don't think the Kennedy quotes from Henderson's book are a good example.

Kennedy made his comment to a guy from the NAACP, who, it seems, agreed with what Kennedy was saying. Is it really plausible that the NAACP favored raising the minimum wage while thinking that this would cause blacks to lose their jobs? I don't think so.

From the context, it seems like what Kennedy and the NAACP guy are thinking is that without the minimum wage white wages will be driven down to the level of current black wages, but that if you raise the minimum wage both whites and blacks will get the higher wages whites currently enjoyed without any increase in unemployment. It's bad economics, but it's not open racism.

Darwin said...

Yeah, this is one of those situations where it's really hard to follow the thought process of the speakers. The problem as states is pretty clear: absent a national minimum wage, the fact that blacks in the South made so little made it easy for Southern manufacturers to warn that if white workers didn't accept low wages, they could always hire blacks instead. This kept wages lower for whites in the South than in the North, which made it attractive for manufacturers to move to the South and also put downward pressure on Northern wages.

The proposed solve was apparently to institute a national minimum wage, such that the South would not be paying lower wages than the North.

What's unclear is: Why would one not assume this would mean shutting blacks out of work in the South?

Darwin said...

So yeah, you're right that it seems really weird to figure that Kennedy would be fairly openly discussing raising the minimum wage so that Southern blacks wouldn't get jobs as the expense of whites -- it's just really hard to figure out what else he could have imagined the effect of his proposed policy would be.

Josiah Neeley said...

I assume Kennedy made the common mistake of assuming there would be no effect on unemployment. Certainly he wasn't known as being the most economically literate guy.

Darwin said...

I guess. I'm just not clear why one would bring up the "blacks are taking whites' jobs" angle in the first place then.

Josiah Neeley said...

If I had to speculate, I would guess that the NAACP witness was talking about how raising the minimum wage would help blacks with low paying jobs, and Kennedy's comments were meant to broaden the measure's appeal by arguing that low wages for blacks would also hurt whites.