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Seven dollars and twenty-five cents. That is the smallest possible wage businesses, big or
small, are required to pay their employees per hour. That does not seem like a lot, right? Well,
Vermont Senator and former Democrat Party presidential nominee Bernie Sanders and the
thousands of Fight for $15 activists believe that everyone should be paid a living wage. This
is not an outrageous statement by any means, but what they are fighting for is. They want every
entry-level employee to be paid a minimum of fifteen dollars an hour. As great as that may
sound, people do not realize the repercussions that ultimately come with raising the minimum
wage a little more than double of what it is now. What these activists and politicians do not
understand is that the people who they want to help are going to be hurt the most by this
proposal. There is nothing wrong with having good intentions, but if those intentions cause bad
results then they mean absolutely nothing. That being said, with pressure on legislation to cater
to groups like Fight for $15 and people living in big cities, basic economic reasoning is being
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overshadowed by economically illiterate politicians and activists who dont understand the
Before jumping right into this topic, its important to understand the history of minimum
wage laws. In 1912, Massachusetts became the first state to erect minimum wage laws. This
piece of legislation was the first of its kind on the state level and it came twenty-six years before
the Fair Labor Standards Act, or simply FLSA, which was signed by President Franklin Delano
Roosevelt in 1938. Between 1913 and 1936, nineteen states, including Massachusetts, passed
legislation that created a minimum wage of some sorts. When the FLSA was passed in 1938, it
required wages of employees to be above twenty-five cents. The passing of the FLSA didnt
come easy for FDR. There were multiple compromises that had to be met, and for a while the
constitutionality of the act was in question. The fascist President even went as far as threatening
the Supreme Court that he was going to appoint six new justices so he could get a favorable
ruling in a case about the constitutionality of Washingtons minimum wage. FDR struck fear in
the eyes of his opponents to get what he ultimately wanted, a federal minimum wage (Neumark
Many economists during this time, and even before the FLSA was passed, were dubious
about the assertion of a minimum wage. John Bates Clark, a late nineteenth century and early
twentieth century economist, said that We can be surethat rising the rate of wages will, of
itself and the absence of any new demand for labor, lessen the number of worker employed.
This was not a radical theory back in the early 1900s. In fact, economists Hastings Lees-Smith
and Frank William Taussig believed that implementing a minimum wage would price low skilled
labor out of the market (Neumark and Wascher 15). The concept of pricing low skilled labor
out of the market has been one of the biggest concerns of minimum wage proponents. Current
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day economists such as Thomas Sowell, former economist at the Hoover Institute, and Walter E.
Williams, economics professor at George Mason University, have both argued that one of the
biggest issues with minimum wage is that it hurts the people its supposed to help--low skilled,
low income, and low experienced individuals. These two brilliant minded individuals are so
passionate about these issues because it effects the communities in which they were brought up
in.
Thomas Sowell once said, The last year in which black unemployment was lower than
white unemployment 1930 was also the last year in which there was no federal minimum
wage [referring to the extremely discriminatory Davis-Bacon Act which was passed in 1930].
For decades, politicians in Washington have made the claim that if you dont support a
minimum wage youre a racist. Well, that argument doesnt have much substance behind it.
And by claiming that a person is a racist for not supporting the raising, or the sheer fact that there
needs to be a minimum wage, than historically speaking their argument is invalid. In an article,
Sowell published in the New York Post, he mentions that Canadians in the Provence of British
Columbia were for minimum wage laws with the intent to price the Japanese out of the lumber
market in 1925. During this era, South African white supremacists demanded minimum wage
laws for everyone so blacks could get priced out of the market (Sowell). In fact, unions in South
Africa who didnt admit any blacks were the biggest supporter of these laws (Williams).
In 1931, Congress passed the Davis-Bacon Act that required a uniform wage for public
works workers (Calton). The Davis-Bacon Act of 1931 is also said to have caused a major
migration of blacks to the North, which resulted in blacks being restricted to poverty stricken,
run down neighborhoods. By no means are politicians in the current day pushing for these types
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of laws because they have racist intentions. One can only assume they have good intentions and
Sowell states in his book Basic Economics, that normally, in economics, there is a
surplus of something when an artificial price is implemented by the government, in this case it's
the price of labor. When the government imposes a price floor in a market, it creates a surplus. In
this case, the surplus that the government has created in the labor market translates to
unemployment because not everyone who is unemployed will work for themselves or get a job
with the government (Sowell 220). For example, if there was no minimum wage and the
equilibrium price of labor was $5.50, there would be near full employment in the sector because
the equilibrium point on a supply and demand graph is the point in which both supply and
demand intersect each other. Because of this price floor, employers generally look for more
skilled, more experienced workers, which in part hurts the teen who is looking for work for the
very first time. This potentially costs a teen the opportunity to make more money faster because
they are denied experience (Sowell 221). It's very important to allow young teens the opportunity
to gain experience, which will lead to more opportunities to make a lot of money down the road.
This is one of the simplest and basic arguments against the minimum wage because it can be
Basic economic principles like supply and demand of labor and price floors explain why
minimum wages wont work, and on top of that there are plenty of real world examples that
explain why minimum wage laws hurt employment. In 2015 in Seattle, Washington, the
government increased the minimum wage from $9.96 to $11.14. Economists predicted that this
would increase weekly wages by a little more than $5, but what they found out was that weekly
minimum wages one of two things happen, workers get fired or workers get their hours cut. In
2014, the Congressional Budget Office came out with a report saying that if congress voted on
raising the federal minimum wage to $10.10 it would lift 900,000 people out of poverty. This
sounded great until they found that raising the minimum wage to $10.10 would eliminate
anywhere in between 500,000 jobs to 1,000,000 jobs and would ultimately send that many
people well below the poverty line (CBO). This is the never-ending problem with raising the
minimum wage, no matter how many people might benefit from it there will always be others
who will suffer. This ultimately leads to more inequality of wealth, rather than less.
Many people who oppose the idea of no federal minimum wage will usually argue that
corporations will then take advantage of this and charge people slave-like wages. This is a
common fallacy that can be debunked through basic reasoning. Accepting a minimum wage job
is a consensual agreement between employer and potential employee. A potential employee who
is actively searching for a job in the labor market, especially someone who is joining the labor
force for the very first time, will normally not accept a wage below the price in which that person
values themselves. If that employee turns down a job offer from firm one because firm two
offered him or her more money than firm one will either have to raise their wages or find a
potential employee who would be willing to work for that wage. Most of the time the firm is
stuck raising its wages because it will attract more workers who are generally more qualified.
One very big misconception of the minimum wage is the fact that if wages were to be at
their natural equilibrium people wouldnt be able to live. Politicians and activists most
commonly refer to this by saying people need to be given a living wage. Its important to
understand the demographics of who exactly is working for minimum wage. According to a
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2014 Pew Research report, 50.4% of minimum wage earners are between the ages of 16 and 24
and 64% of minimum wage earners are part time (DeSilver). Also, the Bureau of Labor Statistics
discovered in 2015 that people who are 25 years of age or older who make minimum wage only
make up 2% of workers in their group (BLS). This makes it very clear that the minimum wage is
not meant to be lived on. Its pretty clear when you look at the statistics that a large majority of
minimum wage earners are between the ages of 16 to 24. Another factor that should be
considered is that generally minimum wage earners dont make the minimum wage for more
than a year (Sowell). Therefore, claiming that the minimum wage should be raised because
people need to be paid a living wage is not a valid point when a substantial majority of
minimum wage earners are, in fact, just entering the labor market.
Minimum wage laws have proven to price low skilled African Americans and minorities
out of the market while also being used as a form of discrimination in some cases. Also,
minimum wages have proven to hurt overall employment and small businesses all around the
country. With that being said, why do people advocate so profusely about raising the minimum if
most minimum wage earners will most likely earn more in less than a year of employment? Also,
why do politicians who have nothing to lose, like Senator Bernie Sanders, campaign relentlessly
on raising the minimum wage? And most importantly, why do voters, who would benefit the
most from a minimum wage of zero, countlessly support and vote into Washington politicians
who want to inadvertently price them out of the market? Are people generally stupid or are they
just misinformed? People all over the United States of America need to become more educated
on this issue for the sake of their own well-being. World renowned economist, Milton Friedman,
once said, Only a crisis, actual or perceived, produces real change. Well this crisis, that is the
Annotated Bibliography
Sowell, Thomas. Basic Economics. 5th ed. Washington: The Perseus Group, 2015. Print. Thomas
Sowell is a revered economist who had attended Harvard, Columbia, and the University
of Chicago for academia. After getting his Ph.D. at the University of Chicago, he went on
and UCLA while working closely alongside his mentor and Nobel Memorial Prize
winner Milton Friedman. Sowell has written many books, mostly on race and economics,
including the book Basic Economics. This 600-page book, is a long comprehensive guide
on some of the most basic economic ideas, topics, and issues. Sowell focuses on the
effects of certain economic policies rather than the intent that might be behind them. Its
Congressional Budget Office that talks about raising the minimum wage to $10.10 an
hour. The report was released in 2014 when then President Barack Obama planned to
raise the federal minimum wage. The report goes into great detail about the possible
effects of raising the minimum wage and how it would affect the labor force. It also talks
about how it would affect the people who are working for minimum wage.
Ehrenfreund, Max. "Why raising the minimum wage in Seattle did little to help workers,
according to a new study." The Washington Post. WP Company, 29 July 2016. Web. 12
the-minimum-wage-did-little-for-workers-earnings-in-seattle/?utm_term=.cef4216d846c
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Max Ehrenfreund, who writes for the Washington Post, wrote an article on the results
from a study that was conducted by the University of Washington. The economists who
conducted the study were, Jacob L. Vigdor, Jennifer Romich, Mark C. Long, Scott W.
Allard, Scott Bailey, Heather Hill, Jennifer Otten, Robert Plotnick, Anneliese Vance-
Sherman, Ekaterina Roshchina, Emma van Inwegen, Anne Althauser, Tori Rockwell,
Hilary Wethingm James Busckiewicz, Katherine Getts, who all work at the University of
Washington. The latest study was conducted in April of 2016 and touched upon
SOWELL, THOMAS. "Thomas Sowell: The Left Likes to Gamble with Other People's Money."
rlib.pace.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=bwh&A
about how politicians like to gamble with other peoples money. Sowell talks about the
difficulties of finding a job now compared to finding a job when he first entered the labor
market as a teenager. He also talks about the high turnover rate that comes with have
Williams, Walter E. "Minimum Wage, Maximum Folly." Human Events, vol. 62, no. 15,
rlib.pace.edu/login?url=http://search.ebscohost.com/login.aspx?direct=true&db=ulh&AN
who make minimum wage, young people. It also talks about the racist attempts that were
pushed by white labor unions in South Africa. Walter E. Williams uses information from
his book South Africas War Against Capitalism to justify his claims.
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Calton, Chris. "The Racist History of Minimum Wage Laws." Mises Institute. N.p., 16
Chris Calton is a writer for the Mises Institute, which is an institution that is named after
classical economist Ludwig von Mises. Calton gives an in-depth look at the racial history
the minimum wage has had in the United States. He provides multiple examples
throughout history of laws past that have had a direct impact on black employment.
DeSilver, Drew. "Who makes minimum wage?" Pew Research Center. N.p., 08 Sept. 2014. Web.
wage/ Drew DeSilver is an author for Pew Research and provides an article determining
who makes minimum wage based on 2013 numbers from the Bureau of Labor Statistics.
He mentions that most minimum wage earners are between the ages of 16-25 (50.4%)
"Characteristics of minimum wage workers, 2015 : BLS Reports." U.S. Bureau of Labor
Statistics. U.S. Bureau of Labor Statistics, Apr. 2015. Web. 02 May 2017.
from the Bureau of Labor Statistics and describes the characteristics of minimum wage
workers from 2015. It gives information on age, gender, race, education, marital status,
full time and part time status, occupation, industry, and state of residence.
Sowell, Thomas. "Why racists love the minimum wage laws." New York Post. N.p., 17 Sept.
wage-laws/ Economist Thomas Sowell wrote an article about the race implications of the
minimum wage. In the article, he talks about certain moments in history that had a direct
Neumark, David, and William L. Wascher. Minimum wages. Cambridge, MA: MIT Press,
2010. Print. David Neumark and William L. Wascher are both University of
Pennsylvania graduates in economics who teamed up to write a book for the MIT Press
about minimum wages. Their book explains the history of minimum wages along with
comprehensive studies done by the two men. By the end of their research they reported