For those who read the Dukakis editorial in the NY Times...

Here’s an interesting paper on the origin of the minimum wage:

ABSTRACT. American economics came of age during the Progressive Era, a time when biological approaches to economic reform were at their high-water mark. Reform-minded economists argued that the labor force should be rid of unfit workers—whom they labeled “unemployables,” “parasites,” and the “industrial residuum”—so as to uplift superior, deserving workers. Women were also frequently classified as unemployable. Leading progressives, including women at the forefront of labor reform, justified exclusionary labor legislation for women on grounds that it would (1) protect the biologically weaker sex from the hazards of market work; (2) protect working women from the temptation of prostitution; (3) protect male heads of household from the economic competition of women; and (4) ensure that women could better carry out their eugenic duties as “mothers of the race.” What united these heterogeneous rationales was the reformers’ aim of discouraging women’s labor-force participation.

I will admit, much to the chagrin of my girlfriend and many of my friends, that I do not support the minimum wage. Moreover, I think the case against the minimum wage can be made even from a liberal, social-safety-net perspective. The only reason it has endured so long is that it seems to make so much sense from a non-economic perspective: If people aren’t making enough money, let’s make all businesses pay them more. Problem solved.

Of course, if the logic of wages were that simple, I would advocate a minimum wage of $200 per hour, or more. Unfortunately, people respond to incentives, and businesses are simply going to respond by firing those people whom they deem not worthy of that wage, i.e. the exact poor, low-skilled laborers that the minimum wage was enacted to protect. I think there are much more economically viable and equally effective methods of battling poverty, including a negative income tax. Of course, every policy runs into its own snags, but any EC11 student at Brown (or any of mine, at least) can tell you why a price floor is unnecessarily punitive. It provides for the same loss of trade without even gaining any tax dollars to redistribute. The minimum wage is a naïve, overvalued part of the American welfare state, and it needs to go.

P. S. I had a similar argument with my girlfriend about this a couple of weeks ago that ended with her ordering a copy of Mankiw’s Principles of Economics online. I don’t think she’s had a chance to read it yet.