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From: kiessig@idi.UUCP (Rick Kiessig)
Newsgroups: net.politics
Subject: Unemployment & the minimum wage
Message-ID: <215@idi.UUCP>
Date: Fri, 13-Jul-84 17:06:09 EDT
Article-I.D.: idi.215
Posted: Fri Jul 13 17:06:09 1984
Date-Received: Sat, 14-Jul-84 02:34:15 EDT
Organization: Intelligent Decisions, Saratoga, CA
Lines: 80


	I was watching an interesting program on the tube the other
night.  A professor from George Mason Univ. made some interesting
(and I feel very responsible) observations.  His premise is that
this country's minimum wage law is largely responsible for our
large unemployment problem - especially among minorities and the
poor.  He pointed out that many people simply aren't capable
of putting out $3.50/hr. worth of work.  And although they would
be happy to work for less, the law doesn't allow it.  This wage
it too expensive for movie theaters to be able to hire all of
the ushers they used to, for example.  It's not that people don't
like to be walked to their seat, it's that it's not worth $3.50/hr.
to the theater - it might well be worth $2.50/hr., but they can't
legally pay that.

	Also take the case where a black and a white apply to
an employer for the same job.  They are equally well
qualified.  The employer will likely hire the white simply
because he is probably better educated.  Under the normal laws
of the free market, the black could simply underbid the white -
say by offering to work for $3.25/hr. instead of $3.50/hr.,
and he would surely be hired.  That sort of competition is
inhibited by the current system.

	He also made the point that entry barriers in existing
industries have really gotten out of hand.  It takes $65,000
to get a taxi license in New York City, for example.  50 years
ago, all you had to do was to hang a sign on your car, and
you were in business.  He also pointed out how the "qualification
exams" for certain things like beauticians is prejudiced
against minorities.  One black lady passed the practical
part of the exam just fine, but couldn't handle the written
part because of her poor education.  She didn't get her license.
She's now unemployed, when she is perfectly qualified to work.

	They had a black congressman from NY on after the
presentation to discuss the situation.  I was totally
amazed.  He said that he felt the minimum wage was perhaps
too low, and that he felt the solution was more education
and government subsidization.  He also pointed to the "targeted
jobs credit", which he said serves to lower the effective
minimum wage, and is hardly used.  The reply was that it
only provides a 15% credit, and that it has some nasty
complications, like you have to certify that no existing
employee will loose their job to someone getting the credit.
No wonder it's hardly used!

	I brought up these same points with a Democrat
running for congress in my district (Martin Conroy).  I
was equally amzed at his response.  He also said he thought
the minimum wage was too low (i.e. full time work at that
wage leaves the employee at poverty level).  When I
pointed out that having an income guaranteed by the
government (welfare) was not an insentive to work,
he disagreed!  He said he believed that people on
welfare had a strong incentive to work.  One saving
grace was that he advocated a national work program -
which I think is better than welfare, but it's still
not the answer.  Why not just let the market determine
how much a person's skills are worth?  Why does the
goverment feel it has to intercede?  The only thing
I can think of is that they are trying to "fix" something -
poverty, perhaps?  If the minimum wage were a cure to poverty,
couldn't we just set it at $5/hr. in Pakistan and instantly
cure their horrible poverty?  No.

	A more cynical perspective is perhaps that it's
a politically expedient thing to do - for both the minium
wage and for "entry barriers".  I can't see how anyone
could possibly justify them, except on the grounds that
it would get politicians more votes from the people effected
in a positive way.

	Just some food for thought,

-- 
Rick Kiessig
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