765 words                   The Freeman
page 1 of 3                 Foundation for Economic Education
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                   Minimum Wage, Maximum Harm

                      by Perry E. Gresham

     I learned a very big lesson in a very small town.  I was
president of a small college, but that college was the biggest
thing in town; in fact it was about the only place of
employment.  Teachers were the principal earners, and their
salaries were modest.  Children came to town anyway.  The baby
boom reached into the Allegheny foothills.  Town children had
limited opportunities to earn spending money.  They played in
the streets and sometimes got into minor mischief.

     At about that time we built a new college library.  Moving
more than 100,000 books was a considerable project.  Money was
scarce and costs were rising.  A bid to move the books seemed
exorbitant.  We decided to train the town young people to
carry, haul in small hand wagons and wheelbarrows, and place
the books in such a manner that the trained librarians could
complete the process.  The youngsters loved it.  They earned
some spending money and had the new self-esteem that comes from
joining a work force.  They were learning to go to work on time
and feel the thrill of doing something significant for the
college.

     We were hardly started when the comptroller was informed
that we were breaking two laws -- child labor and minimum wage.
The town young were distressed, and the college was subjected
to unnecessary expense.  I remembered the wise words of Walter
Lippmann.  In his book, The Good Society, he made the
observation that good intentions in the field of government
action for social change often bring about unexpected and
unfortunate results.  The legislators who perpetrated the laws
meant to help the children and the poor.  The effect of the
laws was damage to both the poor and the eager young.

     Van Wyck Brooks called America one of the oldest countries
in the world.  He used the term "old" in a pejorative sense as
neglected, run down, cluttered with trash, dilapidated, and
smitten with desuetude.  The work of cleaning up the
countryside or minor chores around the house is inexpensive,
but unlikely to command minimum wage.  Old, handicapped,
inexperienced, and otherwise limited workers could find
occupation in such endeavors -- but few would be willing to pay
minimum wage.  Only the rich or the government could afford to
spend a qualified worker's wage for such marginal activity.
The government could do it only by higher taxes.

     One's labor is the most valuable property one has to sell.
If I wish to work for a small wage, and someone wishes to hire
me, why should the law forbid it?  The answer is that
politicians find this kind of legislation to be popular with
special interest groups and, at the same time, small drain on
the public purse.  They are apparently insensitive to the
damage wrought against the young, the old, the handicapped, and
the unemployed.

     Many people have labor to sell, but some such labor is
substandard.  Beginners are worth less on the market than
experienced workers.  People with truly limited skills, who
could perform such useful but impecunious tasks as collecting
abandoned trash or sweeping sidewalks, cannot sell their labor
on the market for as much as those who handle computers or
analyze the stock market.  Why should Congress feel free to
pass laws that would send people to jail for selling their
labor for less than the minimum wage?

     Unfortunately, people often misread their own best
interests on account of group opinion.  Many young people who
are offered work, which is legally excluded from the minimum
wage law, destroy their opportunities to gain experience by
demanding minimum wage.  How hard it is to see clearly that the
choice is not between $10 a day and the minimum wage, but
between $10 a day or nothing.

     I hear the cry that low-salaried workers are shockingly
underpaid -- that they do not make enough to live on.  This is
true.  No one in history has ever been able to guarantee plenty
for everybody.  The idea that everybody can live at the expense
of everybody else is very appealing, but impossible.

     There is a way for low-wage people to improve their
earnings: Develop the skills that our society needs and a
higher wage will be forthcoming.  If a person is working for
minimum wage at a fast food place and wishes to make more, the
way to accomplish this is to do the work so well that the wage
is increased, or else find an employer who has sense enough to
hire competence and pay for it.  The market, and not the
government, is the road to higher wages.

_______________________________________________________
Dr. Gresham is President Emeritus of Bethany College, Bethany,
West Virginia.  This article is adapted from the November 1988
issue of The Freeman.