Minimum Wage: B*tch, don’t kill my vibe
The policy hurts the people it intends to help; kills everyone vibe
Federal minimum wage laws drive up the costs of labor, reduces employment, and hurt those at the bottom. Kendrick Lamar joins us today in his song Bitch, Don’t Kill My Vibe to help explain why minimum wage laws kill everyone’s vibe.
A quick history of the minimum wage:
In 1912, Massachusetts organized a commission to recommend non-compulsory minimum wages for women and children. Within eight years, at least thirteen U.S. states and the District of Columbia would pass minimum wage laws. During the Lochner era (the time at which this was proposed) United States Supreme Court consistently invalidated compulsory minimum wage laws. The laws were considered unconstitutional for interfering with the ability of employers to freely negotiate appropriate wage contracts with employees.
The first attempt at establishing a national minimum wage came in 1933 (note: 4 years into the depression) when a $0.25 per hour standard was set as part of the National Industrial Recovery Act. However, in the 1935 court case Schechter Poultry Corp. v. United States (295 U.S. 495), the United States Supreme Court declared the act unconstitutional, and the minimum wage was abolished.
The minimum wage was re-established in the United States in 1938 (pursuant to the Fair Labor Standards Act), once again at $0.25 per hour ($4.23 in 2015 dollars). In United States v. Darby Lumber Co. (1941) the Supreme Court upheld the Fair Labor Standards Act, holding that Congress had the power under the Commerce Clause to regulate employment conditions.
But timing is key here.
So why does timing matter?
For those who forgot, America was in a depression and these were dire times. Inaction made people worried, so an unconstitutional idea became constitutional.
How did this happen? Well, “somehow” the Supreme Court was able to get a consensus on the ruling in favor of a minimum wage. Of the 9 court justices, guess how many were appointed by FDR in 1941?
Eight. Of Nine. James F. Burns just happened to be appointed in 1941 and resigned in 1942. But that must be a coincidence right? With WWII beginning in 1942, it probably is. I mean, a politician would never use their office for anything other than protecting the constitution, right?
In sum, in 1933 the Supreme Court abolishes the minimum wage, then 5 years later the legislation was reintroduced and the Supreme Court upheld the ruling in 1941 by using the commerce clause of the constitution. Which says “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes.” So basically to help improve commerce between states, we needed a minimum wage? Sounds fishy huh?
The Supreme Court sided in favor with Congress and FDR to stimulate the economy. In doing so, they told business owners they can’t pay a worker lower than $0.25 cents/hour. EVEN if the workers wanted to work for less, it would be illegal.
The minimum wage kills jobs. (And vibes)
One of the first lessons you learn in economics is that when the price of a good goes up, people tend to buy less of it. This same principal applies when it comes to working; if a high cost is mandated by the federal government, then the workers who produce less than that wage will be let go.
For example, an increase in the federal minimum wage killed jobs during the Great Recession of 2008, according to a new study from the National Bureau of Economic Research.
The study revealed how widespread the minimum wage’s disastrous effects are. Even though only 2.4 percent of American workers earn the minimum wage, minimum wage increases were responsible for 14 percent of the national decline in the employment-population ratio from 2007 through 2012.
Between the time President George W. Bush signed the Fair Minimum Wage Act in May 2007 and the final wage increase in 2009, (#ThanksObama) the Great Recession cost the economy more than 7 million jobs. The employment-population ratio fell by 3.7 percentage points to 59.3 percent, a 25 year low.
The minimum wage hurts the people it sets out to help.
These laws tend to disenfranchise workers who would work for less than $15.00, one wage proposed in our current debate. This means the youth, elderly, the disabled, and minorities are disproportionately impacted. As seen in the civilian labor participation rate (the percent of the population that is in the labor force) below, check out the downward trend since the 1990s:
If we know it’s hurting the people we’re trying to help, then why have we had 27 increases in the 80 years? Our boy Kendrick says it best on why it keeps getting passed:
I am a sinner
Who’s probably gonna sin again
Lord forgive me
Things I don’t understand
Congress is a sinner and they will sin again (no doubt that’s true), but lord forgive them for things they don’t understand. Like the minimum wage, and how it kills the vibe of so many people they claim it helps.
Kendrick is also perplexed by this:
How can I paint this picture
When the color blind is hanging with ya
How can you paint a picture that minimum wage laws are bad to a bunch of congress men and women who literally (and I mean it by the actual definition not as an inflammatory statement) live so far above the minimum wage that they are color blind to the real picture in front of them. Why?
All because they need to get elected. It’s easier to say “everyone should be paid more” than face the reality that low-income families lose their jobs, have less opportunities for new employment, and are continuously hurt by this policy.
Businesses already voluntary raise wages
Over 97 percent of American workers work for above the minimum wage, which proves employers choose to pay above the legally required amount. But why?
It costs a lot of money to attract, train, and retain talent. And in order to not lose workers to their competitors, employers raise wages and add other perks for those who are adding value to the business in a profitable way. You don’t have to force businesses to pay employees more, they already do it.
Why raise the wage when only 2.4 percent of the work force is currently at that minimum threshold? If we bump it to $15 dollars, will it only be 1.4 percent of the labor force because the other 1 percent became too expensive to keep on staff?
To the soon-to-be newly-elected Congress, I think Kendrick has some final thoughts for you on minimum wage:
My new year’s resolution is to stop all the pollution
Talk too motherfucking much, I got my drink I got my music
I say, bitch don’t kill my vibe
Bitch don’t kill my vibe
Stop talking, you do to much of it already, it’s really word-pollution. Get a drink, throw on some Kendrick Lamar and stop killing our vibe with these minimum wage hikes.
Donald J. Boudreaux explains it even better than I could here in 3 minutes:
