{"id":42016,"date":"2018-01-28T03:00:23","date_gmt":"2018-01-28T08:00:23","guid":{"rendered":"http:\/\/quotulatiousness.ca\/blog\/?p=42016"},"modified":"2018-09-27T16:51:18","modified_gmt":"2018-09-27T20:51:18","slug":"the-origins-of-the-minimum-wage","status":"publish","type":"post","link":"https:\/\/quotulatiousness.ca\/blog\/2018\/01\/28\/the-origins-of-the-minimum-wage\/","title":{"rendered":"The origins of the minimum wage"},"content":{"rendered":"

In Ontario, many businesses are still struggling to cope with the provincial government’s mandated rise in the minimum wage (the Tim Horton’s franchisees being the current Emmanuel Goldsteins<\/a> as far as organized labour is concerned). In this essay for the Foundation for Economic Education<\/em>, Pierre-Guy Veer<\/a> points out that most franchise businesses have very low profit margins (2.4% for McDonalds franchises, for example) meaning that they can’t just pay the higher wages without a problem, and that the original intent of minimum wage legislation in the US was actually to drive down<\/em> employment for certain ethnic and racial groups:<\/p>\n

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Normally, wages are determined at the intersection of supply (employees offering their services, the blue line) and demand (employers wanting workers, the orange line), the letter E. Since working in retail or restaurants requires little more than a high school diploma, that equilibrium is much lower than, say, a heart surgeon, who must endure years of training and study.<\/p>\n

But when governments come and impose a minimum wage (the dark line), wages do increase\u2026 at the expense of workers. With a base wage now at E’, more workers want to work but fewer employers want to hire because of the increased cost. The newly formed triangle is made of surplus workers, i.e. unemployed workers who can\u2019t find a job. This unlucky Brian<\/a> meme summarizes the situation of what minimum wage is: wage eugenics.<\/p>\n

And don\u2019t think it\u2019s a vice; creating unemployment was the explicit goal of imposing a minimum wage. It was a Machiavellian scheme imagined during the so-called Progressive Era (late 19th Century to about the 1920s), where it was thought that governments could better humanity by \u201cweeding out\u201d undesirables \u2013 in other words, eugenics<\/a>.<\/p>\n

In the U.S., this eugenic attitude was explicitly aimed at African Americans, whose (generally) lower productivity gave them lower wages. To \u201cfight\u201d this problem nationwide, the Hoover administration passed, in 1931, the Davis-Bacon Act<\/a> in order to impose \u201cprevailing wage\u201d (usually unionized) on all federal contracts. It was a thinly veiled attempt to \u201cweed out\u201d non-unionized workers<\/a>, who were either African American or immigrant, in order to protect unionized, white jobs. Supporters of the bill, like Representative Clayton Algood, were very explicit in their racist intents:<\/p>\n