Left-wing Washington—led by labor unions—is once again full of zeal to raise the federal minimum wage. It turns out that some of the best arguments against raising the minimum wage come from an unlikely source: the editors of the New York Times, who a generation ago editorialized in favor of abolishing the minimum wage. “Raising the minimum wage by a substantial amount,” the editors wrote, “would price working poor people out of the job market.”
The NYT editorial, published on January 14, 1987, was entitled “The Right Minimum Wage: $0.00.” It reminds us of that old French adage that the more things change, the more they stay the same. “In some states,” the editors wrote, the minimum wage compares unfavorably even with welfare benefits available without working.” (In 2013, this was true of 35 states.) Back then, too, it was labor unions that pressed for a minimum-wage increase, because many labor union contracts require that employers raise union members wages if minimum-wage laws are also increased.
But the Times editors—courageously, given their progressive politics—pointed out that raising the minimum wage was “still a mistake.” They point out that raising the minimum wage “would price working poor people out of the job market” and “increase employers incentives to evade the law” by doing things like hiring illegal immigrants:
“Anyone working in America surely deserves a better living standard than can be managed on $3.35 an hour. But theres a virtual consensus among economists that the minimum wage is an idea whose time has passed. Raising the minimum wage by a substantial amount would price working poor people out of the job market. A far better way to help them would be to subsidize their wages or – better yet – help them acquire the skills needed to earn more on their own.
An increase in the minimum wage to, say, $4.35 would restore the purchasing power of bottom-tier wages. It would also permit a minimum-wage breadwinner to earn almost enough to keep a family of three above the official poverty line. There are catches, however. It would increase employers incentives to evade the law, expanding the underground economy. More important, it would increase unemployment: Raise the legal minimum price of labor above the productivity of the least skilled workers and fewer will be hired.
The minimum wage would increase the wages of those low-wage workers who could keep their jobs, the Times conceded, but it would exacerbate the economic challenges of the poorest Americans:
“If a higher minimum means fewer jobs, why does it remain on the agenda of some liberals? A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs. That gain, it is argued, would justify the sacrifice of the minority who became unemployable. The argument isnt convincing. Those at greatest risk from a higher minimum would be young, poor workers, who already face formidable barriers to getting and keeping jobs. Indeed, President Reagan has proposed a lower minimum wage just to improve their chances of finding work.
Wisely, the Times proposed expanding the Earned Income Tax Credit, a way of subsidizing the wages of the working poor, instead of making it harder for employers to hire low-wage workers:
“Perhaps the mistake here is to accept the limited terms of the debate. The working poor obviously deserve a better shake. But it should not surpass our ingenuity or generosity to help some of them without hurting others. Here are two means toward that end: Wage supplements. Government might subsidize low wages with cash or payments for medical insurance, pensions or Social Security taxes. Alternatively, Washington could enlarge the existing earned income tax credit, a ”negative” income tax paying up to $800 a year to working poor families. This would permit better targeting, since minimum-wage workers in affluent families would not be eligible. Training and education. The alternative to supplementing income for the least skilled workers is to raise their earning power in a free labor market. In the last two decades, dozens of programs to do that have produced mixed results at a very high cost. But the concept isnt necessarily at fault; nurturing the potential of individuals raised in poverty is very difficult.
“A humane society would learn from its mistakes and keep trying,” wrote the editors. “The idea of using a minimum wage to overcome poverty is old, honorable—and fundamentally flawed. Its time to put this hoary debate behind us, and find a better way to improve the lives of people who work very hard for very little.” I couldnt have said it better myself.
Original Source: http://www.forbes.com/sites/theapothecary/2014/02/19/not-too-long-ago-the-new-york-times-editorialized-in-favor-of-abolishing-the-minimum-wage/