Laissez Faire Today

The Laissez Faire Club Daily e-Letter

The Basement Beneath the Wage Floor

Screen Shot 2013-02-15 at 12.15.40 PM

There are certain sounds that tend to make people crazy. Think of nails on a chalkboard. An infant screaming nonstop on a long flight. A piercing whistle that won’t go away.

Now we need to add another: a U.S. president who thinks he can legislate high wages into law. For anyone who knows the basics of economics — not distorted by a bogus central-planning mentality — hearing this is like torture. It’s painful. It makes you crazier and crazier until you finally want to yell, “Make it stop!”

This is how I felt when President Obama said the following:

“Let’s declare that in the wealthiest nation on Earth, no one who works full time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. This single step would raise the incomes of millions of working families.”

Why stop there? Let’s also declare that everyone should make $9,000 or $9 million per hour. If all that stands between us and total riches is the word of a president and an action by Congress, let’s get on with it!

Does Obama really not get what’s wrong with this approach? I’ve long disagreed with him, but I’ve never really thought he was ignorant. But even from the earliest interviews I’ve read, he does seem to have a tin ear on economic topics. He doesn’t seem to get where wealth comes from. He doesn’t seem to understand how prices work. And now we can be certain that if he understands how wages work, he isn’t willing to let on.

Of course, he could also be lying. It wouldn’t be the first time a politician did that.

Much of the current problem with youth unemployment is due to the high minimum wage increases we’ve seen over the last five years. When the crisis hit in 2008, the minimum wage was $5.85. Lots of jobs got shaken up. Low-wage workers hit the road. When things settled down again, they went knocking on doors. The next year, they found that it was illegal to accept a wage less than $7.25. And we wonder why so many people are unemployed? It’s not a mystery. The huge increase in the wage floor is not the whole reason, but it is a contributing factor.

A wage floor of any sort traps people in the basement. The higher the floor, the larger the basement. Today, millions are rattling around down there, unable to find their way out. And now the U.S. president, in the name of creating jobs, wants to make more of the unemployed more permanently unemployed.

I feel a particular frustration with this issue, and it’s not because of the economics texts I’ve read alone.

My first real job was working maintenance at a department store. I was 15 (yes, I lied about my age; you could do that back then). My job was to clean toilets, crush boxes, pick pins out of the dressing room closets, wax the floors in the china shop, vacuum the place, and shine the glass.

It was a great job. I mean, truly great. I loved it because it was a hugely important job. If I didn’t clean the bathrooms well and replenish the toilet paper and towels, customers the next day might be grossed out and never come back. I played a big role in ensuring the profitability of this store.

I especially loved my co-worker. His name was Tad. The department store would close, leaving just the two of us to have so much fun doing all this wonderful work. We would sing together, thrill to the danger of the wax machine, gross out at the mucky bathrooms, and just have that wonderful feeling that comes with having a real work partner.

You see, Tad was not a normal kid. He had some physical deformities. His face was oddly shaped and had what looked like a large stain on half of it. He couldn’t move around that well, really. I had to help him and assign tasks carefully. He was also mentally retarded. He spoke in a muffled way, and you had to be very clear about instructions.

But I tell you what, when he was happy, it made me happy. To see that big smile come across his face when I would praise the way he shined up a counter just gave me a huge lift.

One day, a poster appeared in the workroom. It was from the Department of Labor. The minimum wage was going up by 50 cents. Tad pointed the sign out to me. He said, “Look, we are getting a raise!” I was a bit suspicious. I was pretty sure that the boss was the one who set the wage, not some weird distant government thing. I didn’t quite believe it was true. Still, I was happy that he was happy.

The next day, I showed up at the usual time after school. I was getting the mop ready, running hot water in the pail and prepared to do the thing. Tad wasn’t there. I asked the boss, “Where’s Tad today?”

Well, he explained that he had hired Tad only because he was a boy he knew from church. He needed work. He knew that he would require a lot of help, which was one reason he was excited that I was able to work with him. In the end, he said, this was charity, because he knew that I could do the job by myself. It worked for us to be together so long as he could afford it, but this new minimum wage changed things. The store’s profit margins were very thin, and he had to make a hard decision.

The long and short of it: Tad had to be let go.

I was devastated. I stared at the Department of Labor sign again. Cursed thing! That sign just ruined a kid’s life. It stopped a great act of charity. And look what it did to me. I now had to work alone.

Management left, the lights dimmed, and I heard the familiar click of the doors leading to the outside. I would have to clean alone today. I did all the tasks I had to. But there was no more music, no more laughter, no more clowning around, and no more beautiful smiles. Tad was somewhere else, probably at home, confused and sad.

He died a few years later.

This is what the minimum wage means to me. So you can say that I have a vendetta. When the president announces that he is raising wages to make everyone better off, I can’t help but think of the millions of Tads that will lose that opportunity to do wonderful things in this world and with their lives.

Sincerely,
Jeffrey Tucker

  • Pingback: Minimum Wage:Economically and Morally Bankrupt | Better Living Through Liberty

  • http://www.ofwealth.com/ OfWealth

    Government bureaucrats are not well known for doing sensible things when it comes to the economy. Most of the time their aim is to suck resources out of the private sector and funnel them into their pet projects in the public sector. They buy votes and feather their own nests, while steadily destroying private enterprise and slowing down growth. They are parasites. We, the people, are the hosts.

  • Pingback: Minimum Wages vs Unemployment | UnemploymentData.com

  • plj22

    I saw exactly the same thing while living in New Zealand about 2005 – my colleague had a grown son who was mentally disabled. Every week day his son took the bus on his own to his job, which was putting chains on the pens used in banks. It paid little and was partially funded by a company foundation as they could have easily bought the pens off an assembly line. The government passed a law for ‘wage equality’ stating that the mentally disabled had to be paid min wage and the news covered it as such a good thing, no more exploitation.

    My colleague and the other families had lobbied their politicians, written letters to the press asking that they not pass it. It killed the program and his son, who was so proud of contributing and looking after himself, now was left without a purpose. I don’t know what he ended up doing.

    But it always stayed with me as a law’s intent has NOTHING to do with it’s outcome – but no one cares beyond intent. Thus the minimum wage craziness. Compassion is mostly about the intent – 99% of folks never bother to look at whether their action causes harm or not.

  • Jay Stang

    We all know how it is: When a leftist has a story like this, they cry over it and tell everyone else that they are mean and hateful and then call names. If anyone else who isn’t a lefty has a story like this, they ignore it.

  • http://www.facebook.com/thebannedgeek Nick Pellegrino

    Such a beautiful story. I’m sorry that had to happen to you and your friend, Tad. This isn’t the end though. The minimum wage increase will be temporary. This system is not sustainable. We will overcome.

  • Pingback: Källaren under minimilönens golv « Ludwig von Mises Institutet i Sverige

  • http://dudewheresmyfreedom.com/ Dude Where’s My Freedom

    Beautiful. Too often, libertarians are forced to resort to arguing about statistics and political/economic theory while the statists tug on the heart-strings and deliver gut-wrenching personal anecdotes. It’s nice to see the shoe on the other foot, and hear about the true human cost of the economic meddling by the government thugs.

    It is a great tragedy that the handicapped today are no longer allowed the joy and the dignity of working and earning a wage. Instead they are forced to grovel at the feet of bureaucrats, subsisting entirely on stolen money and forced charity.

  • http://www.facebook.com/JoeACushing Joe Cushing

    I wish I could click on the graph and have it show up large enough to see

  • Robin Miller

    If the job was charity, why didn’t the charitable boss simply give Tad money? Or in the face of that evil minimum wage raise, cut his hours back?

    • http://www.facebook.com/thomaspbogle Thomas Bogle

      Charity was not to be had in the money he earned. The charitable thing was giving him something he could do that made him feel like he was contributing to the company. When that becomes too burdensome, that type of employment charity disappears. If the boss had offered to keep Tad on, but cut his hours or his wages, it diminishes Tad’s value in his own eyes.

      After I graduated from high school, I moved out of my parents house to try to fend for myself. I had a decent job and was doing quite nicely. When that job dried up, I went seeking employment elsewhere. One of my ecclesiastical leaders mentioned from the pulpit that Deseret Industries (the LDS version of the Salvation Army or Goodwill thrift stores) was in need of some help and seeking employees. I applied and got the job. My first day at work, I met some of my co-workers. One in particular, Ben, was sent to train me on what was expected. Ben was a cheerful guy and very hard working. He did have some type of handicap that simply made him noticeably different, but did not hamper him significantly in his ability to work hard. I learned, later on, that he is also quite the rap artist and has appeared on stage with many local musical acts. His handicap does not prevent him from doing just about any job that he would want to do. However, he recounted back to me how difficult it had been for him to find employment elsewhere, and that was why he was working there. I don’t know if he was being unfairly discriminated against, or if he had some other issue that I was not aware of. What I did know, however, was that he could do this job well and that this job was happy to have him.

      When it came time for me to leave, I walked into my bosses office and told her I would not be back the next day. It was not that I didn’t need the job, or that I couldn’t do the job. I left because I knew that I could find a job elsewhere, while someone like Ben would not be able to. Raising the price of labor reduces the quantity demanded. That is basic economics. Those who are the first to be priced out of the labor market are those that have a limited skill set, or are perceived (even wrongly) to have a diminished capacity to perform those jobs.

      Unlike Mr. Tucker’s story, Ben is still around. I don’t get out to concerts much these days, but I have seen him in the last year. He was on stage, layin’ down his beats. He was happy and confident, and I don’t discount the dignity he felt at that job (from now over a decade ago) as having a strong impact on his confidence and giving him the courage to be a productive member of his community.

    • Franklin

      You didn’t compehend the point of the essay.

  • Pingback: The Basement Beneath the Wage Floor - Investing Video & Audio Jay Taylor Media

  • Franklin

    I’m sorry for this ending. Instead, your memory could have been one where you later went to college and, during brief visits home, or summer breaks, perhaps ran into him now and then, smiling together over some remembered chore, and department store camaraderie.

    It’s ironic, actually not ironic at all, that when these stories are spoken, some leftist’s knee jerks, calling it anecdotal — sad but not backed by statistics.
    Yet when a libertarian cites the statistical reality of government intrusion, the leftist will say those cold hard numbers do nothing to help a kid like Tad.

  • http://www.facebook.com/people/Jayk-Wiggins/1146380462 Jayk Wiggins

    We need more stories like this to demonstrate the immorality of the minimum wage.

    Morality truly is on our side, but unseen are all the opportunities which have been lost to the ‘unemployment generation’.

    How many people are now incapable of reaching the bottom rung of the economic ladder? The answer is too many, and knocking out one more rung will only increase the unemployable.

    Stories like this shed light on this suffering, which needs to me seen.

    It’s far too easy for liberals to ask “how do you expect someone to feed a family on $7/hr!?”

    We always must counter this question with one of our own “How do you expect someone to feed themselves on $0/hr!?”