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# Mandated Wages and Discrimination

Let's work through an example. Suppose 100 yards of fence could be built using one of two techniques. You could hire three low-skilled workers for \$15 each, or you could hire one high-skilled worker for \$40. Either way, you get the same 100 yards of fence built. If you sought maximum profits, which production technique would you employ? I'm guessing that you'd hire one high-skilled worker and pay him \$40 rather than hire three low-skilled workers for \$15 each. Your labor costs would be \$40 rather than \$45.

Suppose the high-skilled worker came into your office and demanded \$55 a day. What would be your response? You'd probably tell him to go play in the traffic and hire the three low-skilled workers. After all, hiring the three low-skilled workers for \$45, to get the same 100 yards of fence, would be cheaper than the \$55 a day now demanded by the high-skilled worker.

The high-skilled worker is not stupid and knows that's exactly what you'd do. He will do a bit of organizing first, convincing decent, caring people that low-skilled workers are being exploited and not earning a living wage and that Congress should enact a minimum wage in the fencing industry of at least \$20. After Congress enacts a minimum wage of \$20, what then happens to the chances of a high-skilled worker's successfully demanding \$55 a day? They go up because he's used the coercive powers of Congress to price his competition out of the market. Because of the minimum wage, it would cost you \$60 to use the three low-skilled workers.

The minimum wage not only discriminates against low-skilled workers but also is one of the most effective tools of racists everywhere. Our nation's first minimum wage came in the form of the Davis-Bacon Act of 1931. During the legislative debate over the Davis-Bacon Act, which sets minimum wages on federally financed or assisted construction projects, racist intents were obvious.

Rep. John Cochran, D-Mo., supported the bill, saying he had "received numerous complaints in recent months about Southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South." Rep. Miles Allgood, D-Ala., complained: "That contractor has cheap colored labor that he transports, and he puts them in cabins, and it is labor of that sort that is in competition with white labor throughout the country." Rep. William Upshaw, D-Ga., spoke of the "superabundance or large aggregation of Negro labor." American Federation of Labor President William Green said, "Colored labor is being sought to demoralize wage rates." The Davis-Bacon Act, still on the books today, virtually eliminated blacks from federally financed construction projects when it was passed.

During South Africa's apartheid era, the secretary of its avowedly racist Building Workers' Union, Gert Beetge, said, "There is no job reservation left in the building industry, and in the circumstances, I support the rate for the job (minimum wage) as the second-best way of protecting our white artisans." The South African Nursing Council condemned low wages received by black nurses as unfair. Some nurses said they wouldn't accept wage increases until the wages of black nurses were raised. The South African Economic and Wage Commission of 1925 reported that "while definite exclusion of the Natives from the more remunerative fields of employment by law has not been urged upon us, the same result would follow a certain use of the powers of the Wage Board under the Wage Act of 1925, or of other wage-fixing legislation. The method would be to fix a minimum rate for an occupation or craft so high that no Native would be likely to be employed."

Whether support for minimum wages is motivated by good or by evil, its effect is to cut off the bottom rungs of the economic ladder for the most disadvantaged worker and lower the cost of discrimination.

Walter E. Williams is a professor of economics at George Mason University. To find out more about Walter E. Williams and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.

Sir;... No doubt, you do not lie, and no doubt, many employers say exactly that... They neither explain their conditions to employees, nor ask after the condition the employee must bear... In this sense the economic relationship is all form, and no relationship... The economic form in your example is void of morality, void of humanity, and treats the employee as an object, or worse: as an impediment to ever greater profits...
This is just a simple observation on you, and your character; but I don't think you and those like you will ever ever get it...When you have driven people out of your forms, out of your economy, and out of your considerations; your forms will fall, and I hope, directly on top of you... Your failed and empty forms would serve as well as the pyramids have as the grave stones of a dead society... Rest in peace...
Thanks...Sweeney
 Comment: #1 Posted by: James A, Sweeney Mon Mar 4, 2013 4:34 PM
Geez, Sweeny, can't you simplify your language, because your point is obscured. I take it you're a liberal college professor. Professor Williams's "form" is the capitalist model. Yours is the socialist and "social justice" model aka "Obamanomics." As long as we are still a largely capitalist society and economy, the professor is correct: raising the minimum wage again will continue to create more job losses and unemployment as employers will tighten their belts to protect their bottom line, especially as Obamacare kicks in, and they will further reduce their liability by cutting jobs. What you advocate will backfire on your social justice and create more misery. There's plenty of morality and humanity in our society, maybe just not enough to suit you and your ilk. Check out the failure of Soviet communism if that's your preferred model.

Moreover, minimum-wage jobs were never intended as permanent careers -- they serve as entry-level jobs, and the people who take them regard them as stepping-stones to better jobs and so on up the food chain. In college, I worked for 65 cents an hour for my own uncle's bookstore. In short order, I found a job for \$1 an hour, and I moved on. That's the way it's supposed to work, and it will ever be thus, unless Obamanomics screws up the process. You need come down from your ivory tower and get real.

Finally, it's OK to disagree with the professor, but you were being disagreeable by impugning his character.
 Comment: #2 Posted by: Derel Schrock Wed Mar 6, 2013 7:47 AM
For once, Professor Williams, I disagree with you. I loved and agree with your example and premise of the highly-skilled worker and the three unskilled workers. And I also agree the Democrats and their “street walker” advocates—the unions—have the audacity for such devious modes of operation. However, I just refuse to believe they are bright enough to even contemplate such “profound calculations” to solve for “X.”

It's not that “liberals” are ignorant; it's just that what they know is wrong! Even the bible speaks to this a bit in Ecclesiastes 10:2: “The heart of the wise inclines to the right, but the heart of the fool to the left.”

I believe the minimum wage discussion is--from the employer's perspective--simply all about making economic sense, and hiring people to do entry level work at a wage commensurate with that work performed. And from the employee's perspective, the minimum wage is all about entry into the workplace and workforce, being paid to learn, and the ability to “go the extra mile” and move on and UP.

We must remember the minimum wage is usually paid at the millions of small businesses around the country, and not usually at the larger or Fortune 500 companies. Yet, where do the minimum wage people go after they are paid-to-learn in the small companies? Yes, the larger, large and Fortune 500 companies!

No, minimum wage is never enough. But neither is \$36,000 for most families today. It's not until we all “go that extra mile” in the performance of our work that the law of compensation provides us with first bonuses, then a better position, more responsibility, more authority, and ultimately a better monthly and yearly salary.

Yes, minimum wage is a humble beginning. We all start there. But, most of us don't end up there. Why? Because we each have the inalienable right to render an overplus of service than that for which we are being paid…to “go the extra mile” in order prove our worth and value. On the other hand, if we perform no more service than that for which we are being paid, then obviously we are receiving all the pay to which we are entitled…minimum wage for minimum work.
 Comment: #3 Posted by: Rick Martinez Wed Mar 6, 2013 11:18 AM
For once, Professor Williams, I disagree with you. I loved and agree with your example and premise of the highly-skilled worker and the three unskilled workers. And I also agree the Democrats and their “street walker” advocates—the unions—have the audacity for such devious modes of operation. However, I just refuse to believe they are bright enough to even contemplate such “profound calculations” to solve for “X.”
It's not that “liberals” are ignorant; it's just that "what they know is wrong!" Even the bible speaks to this a bit in Ecclesiastes 10:2: “The heart of the wise inclines to the right, but the heart of the fool to the left.”
I believe the minimum wage discussion is--from the employers perspective--simply all about making economic sense, and hiring people to do entry level work at a wage commensurate with that work performed. And from the employee's perspective, the minimum wage is all about entry into the workplace and workforce, being paid to learn, and the ability to “go the extra mile” and move on and UP.
We must remember the minimum wage is usually paid at the millions of small businesses around the country, and not usually at the larger or Fortune 500 companies. Yet, where do the minimum wage people go after they are paid-to-learn in the small companies? Yes, the larger, large and Fortune 500 companies!
No, minimum wage is never enough. But neither is \$36,000 for most families today. It's not until we all “go that extra mile” in the performance of our work that the law of compensation provides us with first bonuses, then a better position, more responsibility, more authority, and ultimately a better monthly and yearly salary.
Yes, minimum wage is a humble beginning. We all start there. But, most of us don't end up there. Why? Because we each have the inalienable right to render an overplus of service than that for which we are being paid…to “go the extra mile” in order prove our worth and value. On the other hand, if we perform no more service than that for which we are being paid, then obviously we are receiving all the pay to which we are entitled…minimum wage for minimum work.
 Comment: #4 Posted by: Rick Martinez Wed Mar 6, 2013 11:25 AM
So, Sweeny, the ball's in your court.
 Comment: #5 Posted by: Derel Schrock Wed Mar 6, 2013 6:10 PM
Re: Rick Martinez;... If you read the old testament prophets you can see many examples of a society torn apart by the actions of the rich in parasitizing the poor... Nations of people are families, and our nation is not a true nation in any true sense of the word... Yet; if we so choose we can have a nation on the principals our founding fathers said they wanted to make real in this land through government...We have no alma mater; no soul mother that made so many nations in the past... We only have the soul ideas of liberty and justice for all... Now sir; injustice makes one the slave of another as much as his enemy, and under such conditions a nation is impossible... Look at what happened in Judea and Israel... Certainly the rich were rich, and the powerful were powerful, and the poor were all put upon; but when unity was essential and strength was needed they folded up like a house of cards- and we are in no better position to face our future than they were...
Thanks...Sweeney
 Comment: #6 Posted by: James A, Sweeney Thu Mar 7, 2013 5:22 AM
Re: Derel Schrock;... Sorry... Dictionaries are my favorite sort of book, and I have read a lot in them, and own a lot of them; and though you might not believe it from the way I butcher my spelling at times, I actually know what a lot of words mean, and those big old words with a lot of meaning often serve better than a lot of sentences for a guy like myself with diarhea of the finger tips...
The form I have is actually too primitive to be called socialist except in retrospect... I don't expect that primitive people liked sharing any better than modern people do, but their relationships within their societies, and the pressures of other societies made sharing their only option... Now; I would not like to replicate the conditions that made socialsim essential in the past because it was only cruel necessity... And I do not believe anything short of cruel necessity will bring people to anything approaching complete socialism... The necessity that makes public roads, public schools, public libraries, and public hospitals does not make them enjoyable, but endurable...

If you read much of anthropology, you soon realize that even in the most sharing and community centered societies, that were dependent upon honor and democracy, that people were very hungry for distinction... Though the economy was one of honor, that one might give up all they had to the community for greater honor instead of money, that people still wanted more and better out of their own hands or as symbols of their honor...I do not think it is good to hold people back from creativity, or activity aimed at profit so long as no injury comes of it, and so society knows the benefit of it... I think the object of capitalism as a nationally supported economy comes out of the expectation of gain for the whole society that realistically has not arrived...After two hundred years of special government privilages granted to property we should not see the people in need and the government broke...
Where commonwealth ought to be under pressure to produce value for the common people it has been left free, and instead of taxes bringing more of it back into the commonwealth we find estate taxes, to name only one tax exempting far more of wealth than ever before... What good does it do to entrench wealth, and with the same spade bury the poor in perpetual poverty???
If we want to encourage a wealthy society always on the edge of invention and industry we have to return the commonwealth to the people so it is there as a prize, even if not for ever... Societies do not die from want of rich folks, but often die from too many poor... We don't want people poor who have drive, desire and ability frustrated only because wealth has forever been cornered by the wealthy...Now; the only true entitlement we have in this country at this moment is to property and to government protection for that property; but the people need to realize that we hold that title to all the commonwealth and stand behind the owners rights in it... And for this the owners are supposed to support their government with its system of laws and courts and really support all people denied the commonwealth by their occupation of it...
For a society to live it must be dynamic, and it must move, and ours has long been forozen... If people are entitled to the wealth they take out of the commonwealth that does not mean they are entitled to the commonwealth for ever...Ideally, all would return to the commonwealth, and everyone would have to be on their toes to get more or keep more than another...If you can believe some authors, the idiot children of the rich are as destined to lives of poverty as much as the idiot children of the poor; but on that I have no more than their facts... What I can see is the difference between our society passed and today, and when there was plenty of country and few people, no one much cared about a little injustice...
Now, with most of the commonwealth of any value locked up by the rich, the people have to fight non stop for justice, and since the parties have together denied their representation in government, the people must fight harder, first to move the parties, and then the government, and then the businesses- to have the smallest portion of justice...
It is no longer a man to man relationship... We often never know our employers, and he does not know us...Often, employers are dependent upon banks and bankers they never meet; and yet all must answer to the inevitable demand of profit or die... Lord Coke said that corporations have no souls... The living and breathing human being in need of enough of everything for his survival is at a terrible disadvantage going against a corporation for a raise or better working condition...Maybe corporation should not be eternal...
The whole people have the right and the obligation to demand of business anything they find necessary for their collective survival... Socialism was never entirely just, and I do not expect entire justice when ever people are concerned...But look out if the people find they must unite as a community against the whole owning class as though they were the enemy, because numbers do count...
Thanks...Sweeney
 Comment: #7 Posted by: James A, Sweeney Thu Mar 7, 2013 6:13 AM
Sweeney. I would say that it is more likely that a minimum wage, small business based job, is as close to man to that man to man relationship you are talking about. However no one starts a small business in order to provide more money to the common man. They start a business to make money. It would be morally wrong for the business owner not to take care of his/her own family and business first.
 Comment: #8 Posted by: david Thu Mar 7, 2013 9:42 AM
Re: david;... Sir, you understand the basis of morality completely, and that is a part of the problem here... Yes, it begins with family, and so does nation in the true sense of the word, coming as it does from natal (navel) which is our common connection to our society, through our mothers... But we are not a natural nation, and you can see the root in that word as well, and if that were so, and we were all related, then the exploitation of one by another would be very bad form...Since we are a made up nation, a nation of many nations, we can commonly accept the notion that exploitation of one group by another, one class by another or one race by another is not immoral unless one sees the effect it has on the nation, not as an abstraction, but as a reality...I put my family first, but I put all nations second to ours... This is where the fight for liberty and justice is, as two qualities common to all nations...
Justice is our alma mater, our soul mother, or we are all bastard orphans... When we are all willing to demand justice, and not only for our own, but for all Americans we will be ready to help all of human kind...Surely we can do good for our own without injuring others... I think I have done fairly well at it, and I can say the same for my father, and grand father... And they were well ordered people taking care of themselves, their families, and their societies without a lot of squawking about how hard it all was... A lot of intelligent people are like that, willing to live by their wits without exploiting anyone, but how many actually have that opportunity to talk with their boss, and work out their own deal??? Those days are past, and the employers of today are squeezed as much by banks as the slave masters once were...
The banks squeeze the heart right out of bosses, and they see they have to be bigger and more ruthless yet, if they don't want to be on the recieving end of big and ruthless themselves... We are all trapped, small business and working class, and the enmity between us is unfounded...If across the board all people are paid better, then all people will be better consumers, and no employer will be hit harder than another... It is a level plaing field...
What if people are paying more on their own??? I don't expect them to resent it less if they are told to do what they already do...I tell people to be good... It does not mean they are being bad; but clearly a minimum wage that is not a living wage needs the action of the whole people...
I may be telling you something that may have escaped your attention, but just as businesses have been able to whip saw people into harder work for less money with the threat of relocating business elsewhere, even outside of our borders, and with the collusion of the states; the states have also been brutal in forcing people to relocate by supporting wages and working conditions not fit for an animal to survive on... They don't care...
Why does the North have so many blacks and whites living here who began life in the South??? It isn't for the lovely weather...Those people were driven out, even when their loyalties belong to the South and they hate the Union and the North and all we stand for...Just as with Slavery, some issues in this country are national, and can only be addressed in that fashion; and then we must ask: why are business allowed to leave the country only because the hate Just wages... Their only loyalty is to money, to profit...They have no morality..
Thanks...Sweeney
T
 Comment: #9 Posted by: James A, Sweeney Thu Mar 7, 2013 2:02 PM

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