“In the year 2015, a job has got to lift workers out of poverty, not keep them in it”[i]. Apparently, a Bernie Sanders bill to price-set wages is the ticket to improve the lives of 62 million workers, including half of African-American workers and 60% of Latino workers [ii]. There has to be a catch though, right? How would other groups in society be affected? The costs will only be “modest and readily absorbed” they say [iii].
Is this too good to be true? I can understand the desire to believe such a solution to poverty is so easily obtained, and with such a negligible impact on the middle class to boot. Unfortunately, our politicians playing economic pundits are overreaching their jurisdiction. Not that civil government applying force is inherently wrong. Civil government is by nature coercive. This presents a great danger if this institution is not kept in check by God’s law. God instituted it to bear the sword, so it is “an institution of legalized violence” [iv]. But when there is no legitimate moral compass for guidance, the guys with the badge and the gun get power hungry. And when the power goes to their heads, there is a desire to control anything they can get their hands on. When this all-encompassing enforcement mentality extends into something like price controls, they think they can arm-twist even the laws of (very, very basic) economics. Your Economics 101 class likely covered the law of demand: forcing the price up will decrease the demand.
University of California, Irvine economist David Neumark has examined more than 100 major academic studies on the minimum wage. He states that the White House claim “grossly misstates the weight of the evidence.” About 85 percent of the studies “find a negative employment effect on low-skilled workers.” A 1976 American Economic Association survey found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. A 1990 survey found that 80 percent of economists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. If you’re looking for a consensus in most fields of study, examine the introductory and intermediate college textbooks in the field. Economics textbooks that mention the minimum wage say that it increases unemployment for the least skilled worker. [v]
So the political science experts say African Americans and Latinos will benefit immensely. Economists and statistics say otherwise.
Minimum wages have their greatest unemployment impact on the least skilled worker. After all, who’s going to pay a worker an hourly wage of $10 if that worker is so unfortunate as to have skills that enable him to produce only $5 worth of value per hour? Who are these workers? For the most part, they are low-skilled teens or young adults, most of whom are poorly educated blacks and Latinos. The unemployment statistics in our urban areas confirm this prediction, with teen unemployment rates as high as 50 percent. [vi]
Google Walter Williams on minimum wage for plenty more.
How did we get here?
I mentioned that institutionalized coercion is the very nature of a civil government. Democratic persuasion is not an exception to this reality. However in this particular system, we are talking about elected representatives. So did we do this to ourselves? Well yes, but it gets worse. Our nation is actively pushing for the government to be responsible – for everything. God has instituted the civil government, but we are running it off the tracks. Instead of working through the covenantal institutions of the family and the church, enough Christians have sided with the pagan notion that bearing the sword in the name of social justice will work better. Further shirking individual responsibility, our society cannot bear cutting the cord to Mother State. John Crawford referenced a stat in his article last week that over half of U.S. Households receive government benefits [vii]. I haven’t seen a clearer example of this subsidy addiction as the recent test run for minimum wage increases in Seattle. Employees are requiring reduced hours so they don’t make more than the maximum to qualify for housing subsidies [viii]. So what’s next? Increase the threshold for housing subsidies I suppose. And the cycle continues. We need to recognize that this is slavery. Instead of seeking productive ways to improve self and community, people are reaching farther for handouts, actively scaling their productive work back, and entrenching themselves ever deeper into full dependence on the State. This is not a sustainable model for a society, nor does it provide any inheritance (not even talking about money) to the next generation. Inheritance requires freedom; freedom is the precious asset being sacrificed for the short-term payout.
Many are in need and many see a need in our culture. But we are falsely seeking coercion as the solution, trusting that the State is the capable and benevolent administrator. God has established a beautiful plan for provision, but collectively we do not trust Him. Our society is choosing a life of slavery to the bearer of the sword instead. We have chosen our leader and are setting our eyes back towards Egypt.
[iv] North, Gary. Political Polytheism. Pg. 102.