To the Editor:
In approaching 90 years of age, I can remember the pre minimum wage days before we oldsters were priced out of the workforce. It is essential to our economic future to persuade our fellow voters that mandating higher wages is destructive and that public figures advocating this nostrum knowingly are cynical opportunists.
Take a simplified island economy where the people make goods to trade for the food the other half grow. One dollar buys one unit of food or goods. Now double the “wage” of those making goods. The fortunate recipients proceed to bid up the price of food. Result: no gain for anyone. However, there may be goods workers who are not very productive who lose their jobs – now, on welfare, all must pitch in to support them. Result: fewer employed, fewer goods produced, some goods diverted to those on welfare, and a lower standard of living for all.
We must also consider nearby islands not mandating higher wages. Some buy their goods. Some producers of goods depart. Call the nearby Islands Wisconsin, Iowa and Indiana.
To stem the flight of textile manufacturers to Georgia and the Carolinas in the 1910s, NE congressmen backed minimum wages to force southern textile mill labor costs up to Massachusetts levels. Unions back such legislation today to prevent non-union firms’ price competition and limit “outsourcing.”
The steel mills I worked in, 1953-85, Pittsburgh and elsewhere, suffered union “minimum” wages two or so times higher than area wages. We could hire experienced journeymen away from non-union firms – and discontinued all our apprenticeship programs. We had master’s-degreed hourly employees – and more college grads in the union ranks than in management. When Japan and Korea were slow to unionize, their competition put my employers out of business.
A beginner econ course will insist that mandating a minimum/union wage above the free market will limit employment and encourage more to seek employment, creating unemployment – there being none in a free market. If a free market creates low-paid and destitute citizens, the employed can aid by charity toward the deserving.
Today, we can’t tell deserving from undeserving jobless. We have high poverty rates in the most prosperous economy ever. And 80 years of steadily increasing minimum and union wages is never enough?
Alphonse I. Johnson