The Cruelty Of The Minimum Wage

Which allows an American Samoan worker to have a higher standard of living: being employed at $3.26 per hour or unemployed at a wage scheduled to annually increase by 50 cents until it reaches federally mandated wages at $7.25?

Chicken of the Sea International moved its operation from Samoa to a highly automated cannery plant in Lyon, Ga. That resulted in roughly 2,000 jobs lost in Samoa and a gain of 200 jobs in Georgia.

Given Samoa's low cost of living, $3.26 provided Samoan workers a higher standard of living than some of their neighbors on other islands. Now these workers are unemployed.

What's worse is that Starkist, Chicken of the Sea's competitor, might leave the island as well. If that happens, increases in the minimum wage will have cost more than 8,000 jobs in Samoa's canneries and related industries; that's nearly half of its labor force.

Samoan standard of living will be further reduced by the increased cost of goods it imports. Ships delivering goods from the U.S. and elsewhere to Samoa will not have as much cargo on their return trips, making shipping a costlier proposition.

Cannery jobs flourished in Samoa because of its location, and it was one of the few American territories exempted from the minimum wage. Even the proposed 2007 increases in the minimum wage exempted Samoa.

You think that lack of minimum wage would default to a good worker getting paid 41 cents an hour in a free and competitive market?

Sure. The whole world is benchmarking to the default Chinese prison-labor minimum: ~zero.

Or can you think of a reason why Americans should be paid more, if an employer can run away to Sinkiang and engage a prison labor gang?

You think that existence of minimum wage doesn't weaken employment and squelch teen and entry-level jobs?

A) Doesn't weaken employment, not if the employer is determined to remain in business. B) Does squelch teen and entry-level jobs which, if they were not squelched in some degree, the employer would be using to displace more-experienced employees with "fingers-and-hand" employment practices: one experienced employee and a dozen underpaid/entry-level ones replacing eight or ten more-experienced employees.

If society didn't take these tools away from employers, they'd bargain their workforces' compensation far below what their labor is worth, justifying underpay with a cry of "market-clearing wage!"

Have you ever pondered the workings of a small business and the paperwork, regulation, and legal fragility involved?

Yes I have, and so what? None of that ever stopped a small business from laying people off or underpaying them.

It's immoral to force a business owner to pay an employee more than he's worth in production.

Cry me a river. You get your underwear in a bunch whenever an employer sharps a new or naive employee and underpays him? Your sense of morality is contemptibly selective.

I imagine lots of times there's a perfect part-time job <snip>....That's the real-world loss of being guaranteed to never have to work for 41 cents an hour.

I call it fair and square. It puts the proprietor in the barrel with his help; otherwise he'd assign all the austerity to his workers through their pay packets in hard times while he continued to collect his profits (that's how it worked in the 19th century, as employers like Andrew Carnegie and Henry Clay Frick did exactly that, at e.g. Homestake), and then in good times he'd sorta forget to restore that which he took away from them while pleading exigency.

Sorry, but these laws represent society's collective memory of what employers did when their hands were untied. They did it to themselves, by the choices they made when they enjoyed all the choosing and their workers got Hobson's choice.

If things were such that employers could pay a market wage instead of an arbitrarily established government minimum, jobs would flourish......

But pay and families would not.

..... and so would American productivity and righteous work ethic.

Two parts: A) Productivity always goes up when management cuts labor's throat. B) It wasn't "work ethic" that went up when managements deployed wage-cutting and labor-saving strategies in the later 19th century, it was labor syndicalism. Workers realized that if they didn't combine for protection, black-listing and collaborating employers would cut them to bits in the supposedly open market for labor.

Hardly. It was written so that a high school sophomore could understand it.

I don't know...I got me one'a dem kollege dergreees, and I had trouble understanding whether the minimum wage increases affected Samoa or not. From the article:

You say, "Williams, that's a stupid question. Who would support people being unemployed at $7.25 an hour over being employed at $3.26 an hour?" That's precisely the outcome of Congress' 2007 increases in the minimum wage. Chicken of the Sea International moved its operation from Samoa to a highly automated cannery plant in Lyon, Ga. That resulted in roughly 2,000 jobs lost in Samoa and a gain of 200 jobs in Georgia.

Now, that clearly seems to indicate that the 2007 increase in the minimum wage affected Samoa and was the primary reason that Chicken of the Sea moved its operations. However, he then makes this statement:

Even the proposed 2007 increases in the minimum wage exempted Samoa.

What am I to make of that statement? I assume that he means that "there were proposals to exempt Samoa from the 2007 minimum wage increases, but those proposals were rejected", but he in NO WAY makes that clear. Or, if he'd said "SOME proposals for increasing the minimum wage in 2007 exempted Samoa", that would have made sense, but he didn't - he said "the proposals...exempted Samoa." That implies that ALL of the proposals for raising the minimum wage in 2007 exempted Samoa - which completely muddies the entire point of the article.

If you take the time to read the full column, you will learn . . it was the Republicans' fault! Even the great Prof. Williams was snookered for a while.

One of the consequences of FR being limited to excerpts of most articles is that many posters will take the excerpt out of context because they did not open the link. You wouldn't respond to a personal letter until reading the whole thing, but it's perfectly all right to comment on an article -- even a short one, as this was -- based on what's in the first seven paragraphs? Why is that? Excerpting.

Yes, Samoa is now subject to the minimum wage, just not the $7.25 minimum wage . . yet.

This is a great example of the often-told story of Democrats proposing a really, really bad law and Republicans -- rather than taking the principled approach and opposing it outright -- showing their stupidity by taking the moderate approach, that it needs to be phased in over time.

Incrementalism only seems to work in one direction, toward bigger government.

One of the more insidious effects of minimum wages is that it lowers the cost of racial discrimination; in fact, minimum wage laws are one of the most effective tools in the arsenals of racists everywhere, as demonstrated by just a couple of examples. During South Africa's apartheid era, its racist unions were the major supporters of minimum wages for blacks. South Africa's Wage Board said, "The method would be to fix a minimum rate for an occupation or craft so high that no Native would likely be employed." In the U.S., in the aftermath of a strike by the Brotherhood of Locomotive Firemen, when the arbitration board decreed that blacks and whites were to be paid equal wages, the white unionists expressed their delight saying, "If this course of action is followed by the company and the incentive for employing the Negro thus removed, the strike will not have been in vain."

Tragically, minimum wages have the unquestioned support of good-hearted, well-meaning people with little understanding who become the useful idiots of charlatans, quacks and racists.

Walter E. Williams NAILS IT again!

{ping}

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