Minimum wage zero

Jewish World Review - August 1, 2001
Minimum journalism
Thomas Sowell
http://www.jewishworldreview.com

A FRONT-PAGE story about minimum wages in The Wall Street Journal illustrates what is wrong with contemporary journalism as much as it illustrates anything about the minimum wage law.  The first nine paragraphs deal with one individual who is wholly atypical of people earning the minimum wage. She is a 46-year-old single mother who works full-time.

Way back on page 10, we learn from a small chart that just over half the people earning the minimum wage are from 16 to 24 years of age. Just over half of the minimum wage earners are working part-time. Nevertheless, the atypical middle-aged single mother is now brought back into the story again and covered for an additional 13 paragraphs on the inside page.

Three out of four pictures of people under the heading "The Faces of Low-Wage Work" are women over 40, including one who is 76. This is clever propaganda, but it is lousy journalism. People don't buy a newspaper in order to be deceived.

While The Wall Street Journal has one of the most intelligent editorial pages anywhere, some of its news stories on social issues - as distinguished from financial issues - are too often examples of the kind of mushy and even biased journalism that gives political correctness a bad name.

The politically correct party line on minimum wages is that people cannot afford to raise their families on low pay, so the government has to force employers to provide "a living wage" for families. But the vast majority of people making minimum wages are youngsters just beginning their careers. They are not going to be flipping hamburgers or sweeping floors all their lives. Most have better sense than to have children that they cannot feed and house.

Yet the main focus of this long article is on a small minority who have a "minimum wage career." Our atypical middle-aged single mother is invoked once again: "In Ms. Williams' case, practically everyone she knows has been mired in such occupations their whole working lives." Is it supposed to be news that birds of a feather flock together?

Are we supposed to base national policy on one woman's experience? If we wanted to watch Oprah Winfrey, would we be reading the Wall Street Journal?

What about those minimum wage earners who are just passing through that income bracket on their way up? Most of the people in the bottom 20% of the income distribution - "the poor" - are also in the top 20% at some other point in their lives, when they are now counted among "the rich." Usually they are not poor the first time nor rich the second time, but such is the state of political rhetoric.

The reality of what happens to people over time gets far less attention than one middle-aged single mother working at a minimum wage job - and, incidentally, receiving government subsidies.

The minimum wage law is very cleverly misnamed. The real minimum wage is zero - and that is what many inexperienced and low-skilled people receive as a result of legislation that makes it illegal to pay them what they are currently worth to an employer.

Most economists have long recognized that minimum wage laws increase unemployment among the least skilled, least experienced, and minority workers. With a little experience, these workers are likely to be worth more. But they cannot move up the ladder if they can't get on the ladder.

That is the real tragedy of the real minimum wage - zero. It is not just the money that these young people miss. It is the experience that can turn out to be far more valuable to them than the first paychecks they take home.

This is especially tragic in the Third World, where multinational corporations may be pressured into setting wages well above what the local labor market conditions would justify. This pressure often comes from self-righteous people back home who mount shrill demonstrations in the mistaken belief that they are helping poor people overseas.

Half a century ago, Professor Peter Bauer of the London School of Economics pointed out that "a striking feature of many under-developed countries is that money wages are maintained at high levels" while "large numbers are seeking but unable to find work."

These people can least afford to get the minimum wage of zero, just so that their would-be saviors can feel noble, or so that labor unions in Europe or America can price them out of a job, in order to protect their own members' jobs.

JWR contributor Thomas Sowell, a fellow at the Hoover Institution, is author of several books, including his latest, Basic Economics: A Citizen's Guide to the Economy.