Working Paper No. 11-28:
Waging War on "Unemployables"? Race, Low-wage Work, and Minimum Wages: The New Evidence

Author(s):

Harry Hutchison

Date Posted: June 2011

Availability:
Abstract (below) | Full text (most recent) on SSRN

Abstract:

Capturing both popular and academic imaginations, recent literature contributions contest the standard treatment of minimum wage statutes as vehicles that enlarge the economic and social dislocation of vulnerable workers. A persistent strain of the current scholarship dedicated to progressive labor ideology implies that minimum wages or, alternatively, living wage statutes are necessary to preclude the degradation of low-wage workers. The publication of Simon Deakin and Frank Wilkinson’s recent article, Minimum Wage Legislation, constitutes yet another effort to destabilize the neoclassical consensus that emphasizes the adverse employment effects of wage regulation. Prescinding from orthodox economic analysis, Deakin and Wilkinson insist that there is a good efficiency-based case for minimum wage legislation. If the authors are correct, and if efficiency standing alone supports their normative viewpoint, then the contention that such legislation ought to be seen as a societal good might become tenable.

Unfortunately, their claims are highly doubtful. Perceived through the lenses of American labor history, classical liberalism, Critical Race Theory and neoclassical economics, the authors’ allegations signify the capitulation of reasoned analysis to ideology. Rather than supporting the interest of the public or of vulnerable workers, their starkly conventional and progressive approach to labor law reform recalls John Stuart Mill’s embrace of Social Darwinism and consequent exclusion of inferior classes of workers. The authors’ approach also verifies Mill’s observation that modern liberal democracy—operating consistently with the goals of exclusion—is insufficient to protect disfavored groups and individuals from the coercive power authorized by a majority or its hierarchs. Since Deakin and Wilkinson’s credulous claims are in harmony with more than a century of progressive policies, and since the normative and prudential case for raising or retaining the minimum wage remains weak, marginalized members of society have much to fear from their analysis.

Minimum wage laws . . . are often advocated by those who see themselves as taking the side of the workers against their employers, when in fact the employers may end up less harmed by such laws than are the workers themselves, whose unemployment can deprive them of both current income and the human capital that work experience could build up for them and enable them to earn higher incomes in the future. - Thomas Sowell, Basic Economics: A Common Sense Guide to the Economy, 3rd ed., 2007.