The Minimum Wage is Racist (Bumped)

The amazing Thomas Sowell, still writing a regular column at the age of 84, reminds us of the racist legacy of minimum wage laws.

It is not a breakthrough on the frontiers of knowledge that minimum wage laws reduce employment opportunities for the young and the unskilled of any age. It has been happening around the world, for generation after generation, and in the most diverse countries.

Thomas Sowell

Thomas Sowell

[…]

Low-income minorities are often hardest hit by the unemployment that follows in the wake of minimum wage laws. The last year when the black unemployment rate was lower than the white unemployment rate was 1930, the last year before there was a federal minimum wage law.

The following year, the Davis-Bacon Act of 1931 was passed, requiring minimum wages in the construction industry. This was in response to complaints that construction companies with non-union black construction workers were able to underbid construction companies with unionized white workers (whose unions would not admit blacks).

Looking back over my own life, I realize now how lucky I was when I left home in 1948, at the age of 17, to become self-supporting. The unemployment rate for 16- and 17-year-old blacks at that time was under 10 percent. Inflation had made the minimum wage law, passed ten years earlier, irrelevant.

But it was only a matter of time before liberal compassion led to repeated increases in the minimum wage, to keep up with inflation. The annual unemployment rate for black teenagers has never been less than 20 percent in the past 50 years, and has ranged as high as over 50 percent.

[…]

Incidentally, the black-white gap in unemployment rates for 16-year-olds and 17-year-olds was virtually non-existent back in 1948. But the black teenage unemployment rate has been more than double that for white teenagers for every year since 1971.

In a free labor market, unhindered by the minimum wage, the equilibrium wage adjusts to equate the number of qualified job seekers with the number of available positions. In this case, the market is said to “clear,” and many employers will hire a capable black teenager rather than see a position go unfilled.

But if a minimum wage is imposed, the market no longer clears, and there results a surplus of labor. Employers have more qualified applicants than available positions. The same black teenager now finds himself competing for a single job with a white teenager. The employer might evaluate the two workers nearly equally, and would hire them both if only he had two positions. But with only one position available, he is forced to choose, and even the slightest degree of prejudice means that the black teenager doesn’t get the job. In this way, the minimum wage invites discrimination and greatly exacerbates the effects of employer prejudice.

Students take note. All your professors say that racial discrimination is morally abhorrent and that they would oppose any policy that increases discrimination. At the same time, most of them also support the minimum wage, and none of them perceives the contradiction.

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The Magic of Socialism

Many years ago, Milton Friedman quipped that if government were put in charge of the Sahara Desert, there would soon be a shortage of sand.

Well, if you don’t like the sand analogy, how about an energy shortage in the country with the world’s largest proven oil reserves? Can’t happen? It’s called socialist Venezuela.

In a desperate attempt to save electricity, drought-stricken Venezuela has introduced a new concept to the workplace calendar: the five-day weekend.

President Nicolás Maduro will furlough the country’s public employees — who account for a third of the labor force — for the bulk of the week, so they can sit through rolling blackouts at home rather than in the office.

“The public sector will work Monday and Tuesday, while we go through these critical and extreme weeks,” he said on his regular presidential broadcast…

Primary schools also will close on Fridays. Blackouts lasting at least four hours have been imposed across much of the country, leaving shopping malls in the dark and scarce food supplies at restaurants and markets at risk of spoiling.

Within a few hours of his announcement on Tuesday night, Maduro got a troubling glimpse of what happens when his emergency rationing measures go on a little too long.

Venezuelans riot.

During an outage in the state of Zulia that lasted more than 12 hours, angry residents torched a bus, looted stores and attacked the headquarters of the government power company Corpoelec, according to Venezuela’s El Nacional. There were reports of rioting and looting overnight Tuesday in at least three other Venezuelan states and several dozen arrests.

The socialist government blames the energy crisis on a drought that has crippled the nation’s hydroelectric plants. But there’s also this:

“Rainfall is not the main culprit,” said Venezuelan economist Francisco Monaldi at Rice University’s Baker Institute for Public Policy. Years of mismanagement, under-investment and a failure to learn from the past have taken their toll.

“This is a predictable, periodic event,” Monaldi said.

The socialist government says it has invested billions of dollars to shore up the electrical grid by adding a network of smaller, less centralized turbines that can burn Venezuela’s heavy crude. But according to a report in Venezuela’s El Universal, 60 percent of the stations are offline, broken or operating below capacity because of lack of maintenance. The projects were widely viewed as riddled with government corruption.

If socialism can create an energy shortage in oil-rich Venezuela, it must have almost supernatural power. What will socialism’s awesome power accomplish next: a shortage of pine trees in Canada?

Socialism: What can’t it do?

FDA to boys with deadly disease: Drop dead

Yesterday, an advisory panel of the U.S. Food and Drug Administration announced its verdict regarding Eteplirsen, an experimental drug used to treat a deadly degenerative disease that mostly afflicts boys.

Duchenne’s is a rare genetic disorder characterized by progressive muscular weakness. The disease is caused by a lack of dystrophin, a protein needed to keep muscles healthy. Eteplirsen is designed to increase the production of dystrophin.

The disease typically emerges in boyhood, causing weakness in the arms and legs and eventually the lungs and heart. Patients typically lose the ability to walk during adolescence and frequently die in their 20s or 30s, according to the National Institutes of Health.

Hundreds of patients and family members pleaded with the panel to approve the drug.

“FDA, please don’t let me die early,” urged 15-year-old Billy Ellsworth, who has the disease.

The panelists said they were moved by the patients’ testimony and that in some cases, it swayed their votes.

But all that pleading did not sway enough votes, as the panel voted against approving the drug.

The panel voted 7-3, with three abstentions, that the clinical trial of 12 patients did not provide substantial evidence the drug was effective for muscular dystrophy patients with a specific genetic mutation.

The vote followed a skeptical presentation by FDA reviewers, who questioned the validity of the data. They said the results were hard to interpret and there was no clear evidence the drug slowed progression of the disease…

The panel’s decision reflects the malign influence of the 1962 Kefauver-Harris Amendments which required drug companies to demonstrate not just safety, but also efficacy. Failure to demonstrate efficacy was the FDA panel’s justification for voting down the Duchenne’s drug this week.

The drug may or may not be effective, but we fail to see how patients who are facing death are better off not being able to try the drug at all. The decision to take this drug, it seems to us, should rest in the hands of the patients and their doctors, not panels of bureaucrats.

In any event, the panel’s vote was only ‘advisory’ and the FDA has not yet reached a final decision. Although it seems unlikely, the FDA might still be persuaded to approve the drug. Maybe the company that produces the drug just needs to make the right political contributions.

FDA delenda est

Stupidest Scandal in Human History

Today a panel of federal judges ruled that Tom Brady must serve his four-game ‘Deflategate’ suspension imposed by the NFL.

A three-judge panel of the 2nd U.S. Circuit Court of Appeals in Manhattan ruled 2-to-1 that Commissioner Roger Goodell did not deprive Brady of “fundamental fairness” with his procedural rulings.

Sorry, but this Deflategate kerfuffle is the stupidest scandal since humans have walked upright on earth. In a sane society, everyone would have moved on after the first 48 hours, and in the long term, the NFL would have just adopted some practical measures to insure proper inflation–like equipping referees with pressure gauges.

Instead, Late Empire America has been subjected to an endless saga–15 months and counting–in which the issue has been considered by two different courts of law, one of which sits just one level below the U.S. Supreme Court.

Whom the gods wish to destroy, they first make mad.

Recall too that the Romans, as their civilization collapsed, distracted themselves with circuses and gladiatorial contests.

Parents in Denial About Academic Achievement

More than 30 years have now past since the famous report “A Nation at Risk” sounded the alarm about America’s underperforming schools. Despite lavish spending and some attempts at reform, student achievement remains scandalously low.

According to the Nation’s Report Card, widely considered the gold standard of assessing students, only 40 percent of fourth-graders are proficient in math, and only 36 percent in reading, let alone both subjects. For eighth graders, the picture gets slightly worse: 33 percent are proficient in math, 34 percent are proficient in reading.

Maybe one out of four students is proficient in both subjects.

Why does student performance remain so stubbornly low? Part of the problem is the teachers’ unions, which oppose most useful reforms. But perhaps the more fundamental problem is that most parents just don’t realize that their children are not up to par.

According to a survey commissioned by Learning Heroes, 90 percent of parents with children in grades K-8 think their child is learning at grade level.

A shocking number of those parents are wrong.

This phenomenon of parents overrating their kids’ school performance exists in all socioeconomic and demographic groups.

The reason for parents’ misperception might be that they assume that a grade promotion means their child must be performing at grade level.

“Kids are getting passed on from grade to grade, a large percentage of kids graduate high school on time,” he explains. “So certainly parents have been getting the message for a long time that their kids are doing just fine.”

In fact, the high school graduation rate is over 80 percent, and fewer than 2 percent of students are held back a grade, so perhaps parents can’t be blamed for thinking their own kids are at least on par with their peers.

Well, by definition, most kids are on par with their peers. They just aren’t on par with objective standards.

And by the way, as college professors, we can report that the practice of students “getting passed on from grade to grade” doesn’t stop at high school.

Denial–it ain’t just a river in Egypt.

The Minimum Wage Has Nothing To Do With Helping Low-Wage Workers

Supporters of the minimum wage always sell the policy as a way of helping low-wage workers. The truth of the matter is more nearly the opposite; the minimum wage is intended, and has always been intended, to disadvantage low-wage workers. This conclusion is supported by nearly 100 years of history.

Consider the minimum wage imposed by Congress on the District of Columbia back in 1918. This minimum wage applied only to women, not to men. Was this policy a way of helping working women, to ensure that their labor wouldn’t be exploited? Why, no, the policy was designed to help men by pricing women out of the labor market. And so, when a lady elevator operator lost her job to a man who could legally be paid less, she sued, and the case went all the way to the Supreme Court. The Court ruled the minimum wage to be discriminatory, and stuck down the law.

One hundred years later, not much has changed, except that the Supreme Court no longer so reliably defends economic freedom. And so we have the spectacle of the Los Angeles County Federation of Labor, which last year successfully lobbied for a $15 minimum wage in the city of Los Angeles, and this year lobbied for the same minimum in Santa Monica. In both cities, however, the union argued that its own members, like male workers in 1918, should be exempt. Minimum wage for thee, but not for me.

If the minimum wage is so great for workers, why does the union ask for an exemption? Answer: To increase the cost to employers of hiring non-union workers.

The labor union that led the charge for a $15 minimum wage hike in cities across California is now moving to secure an exemption for employers under union contracts.

The Los Angeles County Federation of Labor buried the exemption on the eighth page of its 12-page proposal for the Santa Monica City Council to review Tuesday while deciding whether to follow Los Angeles and increase the minimum wage.

The loophole would allow employers with collective bargaining agreements to sidestep the wage hike and pay their union members below the proposed $15-per-hour minimum wage…

The move in Santa Monica is not the federation of labor’s first attempt to compound a collective bargaining exemption into a minimum wage increase.

The federation received an outpouring of criticism when it attempted to push the same carve-out for unionized employers after Los Angeles decided to increase its minimum wage from $9 to $15.

“This is hypocrisy at its worst,” the Los Angeles Times wrote in a blistering editorial. “It plays into the cynical view that the federation is more interested in unionizing companies and boosting its rolls of dues-paying members than in helping poor workers.”

And that, Charlie Brown, is what the minimum wage is all about.