Opinion Editorial | |
| Monday, May 4, 1998 | |
Homeless Victims of Minimum Wage |
There is an old saying that no good deed goes unpunished. That is certainly
a lesson that was recently learned the hard way by some naive New York businessmen,
who thought they were helping the homeless by giving them $1 to $1.50 an
hour for simple custodial, security, office and laundry jobs. However,
rather than being applauded for their generosity, the businessmen were rewarded
by being sued. Advocates for the homeless took them to court, contending
that the homeless should have been paid the minimum wage. A federal judge
ruled in their favor, awarding the homeless back pay. Although the homeless advocates are busy congratulating themselves for
a major victory over Big Business, it is doubtful that the homeless former
workers feel the same way. Of course, they may be happy for any windfall
pay for past work, but they know that their chances of finding any future
work at the minimum wage are probably nonexistent. Thus the net effect
of the great victory won by their advocates will be to perpetuate their
homelessness. What this story illustrates is an important lesson about the static and
dynamic effects of the minimum wage. The static or first-order effect is
to give higher wages to those previously earning less. But the dynamic
effect is to foreclose job opportunities for many who would be happy to
work for less, but are now prevented by law from doing so. Some opponents of the minimum wage overstate their case by predicting
that many of those now working for less will be fired when a higher minimum
is mandated. However, typically, this does not happen. The burden of unemployment
is much more likely to fall on those not yet employed, especially those
just coming into the labor market. And for them the economic costs can
often last a lifetime. When a teenager cannot get his first job, he often
loses enormously valuable skills that are commonly taken for granted, such
as learning to be punctual, to follow orders and to take responsibility.
Those who do not learn these lessons as teenagers find them much harder
to learn as adults. For many employers today the most valuable thing a prospective worker
can have on his resume is not his education, as important as that is, but
a proven history of productive work. Employers will frequently take a chance
on someone lacking specific job skills, but with a good attitude and references
from previous employers. It is easier to train someone how to run machine
or do a particular job than it is to imbue them with a positive work ethic. The minimum wage is one reason why some employers prefer to hire aliens
over native Americans, since aliens often have better work habits than better-educated,
but less reliable natives. It is also why some employers will only hire
those who have worked for them as unpaid interns. (The minimum wage applies
only to those who are paid something, not to those who are paid nothing.) The point is that the impact of lost job opportunities by teenagers,
especially minorities, is often casually dismissed by supporters of a higher
minimum wage. They are a small segment of the labor force and seldom need
to support families, so even if some of them are denied job opportunities,
it is a small price to give higher wages to many others. Unfortunately,
many of those teenagers go on to become unemployed adults, because they
missed that first rung on the ladder of employment. And the cost to them
and to society is enormous. The prisons and homeless shelters are filled
with such people. Source: Bruce Bartlett (senior fellow, National Center for Policy Analysis),
May 6, 1998. For more on Minimum Wages go to http://www.public-policy.org/~ncpa/hotlines/wagehtl.html Home | Support Us | All Issues | Social Security Debate Central | Contact Us |