18th - 20th Century Quotes on Minimum and Living Wage

"It is not the actual greatness of national wealth, but its continual increase, which occasions a rise in the wages of labour. It is not, accordingly, in the richest countries, but in the most thriving, or in those which are growing rich the fastest, that the wages of labour are highest. England is certainly, in the present times, a much richer country than any part of North America. The wages of labour, however, are much higher in North America than in any part of England."

Library Topic

"A man must always live by his work, and his wages must at least be sufficient to maintain him. They must even upon most occasions be somewhat more; otherwise it would be impossible for him to bring up a family, and the race of such workmen could not last beyond the first generation."

Library Topic

"'The real wage-fund was, first, the brain-work of the original conceiver of the whole design; secondly, the brain-work of the capitalist who estimated the degree of confidence to be placed in his conception; and, thirdly, the mental appreciation of the public as regarded the beauty of the ware.'

And so, in many enterprises, there cooperate the conceiving mind, the constructive mind, the risking and self-denying capitalist, and, lastly, the manual laborers, who, blind to all but the visible and material, are prone to exaggerate their own importance and overlook the contributions of the other cooperators. The laborers must be taught that in the brain of the conceiver lies the great source of their wages, and must abandon the dangerous fallacy that those who toil visibly with their hands are the just owners of the product."

Edward A. Ross
Political Science Quarterly, Vol. 8
1893
Library Topic

"To the second end, we hold that minimum wage commissions should be established in the Nation and in each State to inquire into wages paid in various industries and to determine the standard which the public ought to sanction as a minimum; and we believe that, as a present installment of what we hope for in the future, there should be at once established in the Nation and its several States minimum standards for the wages of women, taking the present Massachusetts law as a basis from which to start and on which to improve."

President Theodore Roosevelt
August 1912
Library Topic

"We stand for a living wage. Wages are subnormal if they fail to provide a living for those who devote their time and energy to industrial occupations. The monetary equivalent of a living wage varies according to local conditions, but must include enough to secure the elements of a normal standard of living--a standard high enough to make morality possible, to provide for education and recreation, to care for immature members of the family, to maintain the family during periods of sickness, and to permit of reasonable saving for old age."

President Theodore Roosevelt
August 1912
Library Topic

"In the second case the appellee, a woman twenty-one years of age, was employed by the Congress Hall Hotel Company as an elevator operator, at a salary of $35 per month and two meals a day. She alleges that the work was light and healthful, the hours short, with surroundings clean and moral, and that she was anxious to continue it for the compensation she was receiving and that she did not earn more. Her services were satisfactory to the Hotel Company and it would have been glad to retain her but was obliged to dispense with her services by reason of the order of the board and on account of the penalties prescribed by the act. The wages received by this appellee were the best she was able to obtain for any work she was capable of performing and the enforcement of the order, she alleges, deprived her of such employment and wages. She further averred that she could not secure any other position at which she could make a living, with as good physical and moral surroundings, and earn as good wages, and that she was desirous of continuing and would continue the employment but for the order of the board. An injunction was prayed as in the other case."

Mr. Justice Sutherland
U.S. Supreme Court
April 1923
Library Topic

"The statute now under consideration is attacked upon the ground that it authorizes an unconstitutional interference with the freedom of contract included within the guaranties of the due process clause of the Fifth Amendment. That the right to contract about one's affairs is a part of the liberty of the individual protected by this clause, is settled by the decisions of this Court and is no longer open to question."

Mr. Justice Sutherland
United States Supreme Court
April 9, 1923
Library Topic

"It seems to me to be equally plain that no business which depends for existence on paying less than living wages to its workers has any right to continue in this country. By 'business' I mean the whole of commerce as well as the whole of industry; by workers I mean all workers, the white collar class as well as the men in overalls; and by living wages I mean more than a bare subsistence level-I mean the wages of decent living.

Throughout industry, the change from starvation wages and starvation employment to living wages and sustained employment can, in large part, be made by an industrial covenant to which all employers shall subscribe. It is greatly to their interest to do this because decent living, widely spread among our 125,000,000 people, eventually means the opening up to industry of the richest market which the world has known."

President Franklin D. Roosevelt
The American Presidency Project
June 16, 1933
Library Topic

"With the establishment of these rudimentary standards as a base we must seek to build up, through appropriate administrative machinery, minimum wage standards of fairness and reasonableness, industry by industry, having due regard to local and geographical diversities and to the effect of unfair labor conditions upon competition in interstate trade and upon the maintenance of industrial peace. ...

We know that over-work and under-pay do not increase the national income when a large portion of our workers remain unemployed. Reasonable and flexible use of the long established right of government to set and to change working hours can, I hope, decrease unemployment in those groups in which unemployment today principally exists.

Our problem is to work out in practice those labor standards which will permit the maximum but prudent employment of our human resources to bring within the reach of the average man and woman a maximum of goods and of services conducive to the fulfillment of the promise of American life."

President Franklin D. Roosevelt
The American Presidency Project
May 24, 1937
Library Topic

"We have already seen some of the harmful results of arbitrary governmental efforts to raise the price of favored commodities. The same sort of harmful results follows efforts to raise wages through minimum wage laws. This ought not to be surprising; for a wage is, in fact, a price. It is unfortunate for clarity of economic thinking that the price of labor’s services should have received an entirely different name from other prices. This has prevented most people from recognizing that the same principles govern both.

Thinking has become so emotional and so politically biased on the subject of wages that in most discussions of them the plainest principles are ignored. People who would be among the first to deny that prosperity could be brought about by artificially boosting prices, people who would be among the first to point out that minimum price laws might be most harmful to the very industries they were designed to help, will nevertheless advocate minimum wage laws, and denounce opponents of them without misgivings."

Henry Hazlitt
Foundation for Economic Education
1946
Library Topic

"Yet it ought to be clear that a minimum wage law is, at best, a limited weapon for combatting the evil of low wages, and that the possible good to be achieved by such a law can exceed the possible harm only in proportion as its aims are modest. The more ambitious such a law is, the larger the number of workers it attempts to cover, and the more it attempts to raise their wages, the more likely are its harmful effects to exceed its good effects."

Henry Hazlitt
Foundation for Economic Education
1946
Library Topic

"All this is not to argue that there is no way of raising wages. It is merely to point out that the apparently easy method of raising them by government fiat is the wrong way and the worst way.

This is perhaps as good a place as any to point out that what distinguishes many reformers from those who cannot accept their proposals is not their greater philanthropy, but their greater impatience. The question is not whether we wish to see everybody as well off as possible. Among men of good will such an aim can be taken for granted. The real question concerns the proper means of achieving it. And in trying to answer this we must never lose sight of a few elementary truisms. We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces.

The best way to raise wages, therefore, is to raise labor productivity. This can be done by many methods: by an increase in capital accumulation – i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees."

Henry Hazlitt
Foundation for Economic Education
1946
Library Topic

"If one sees in the wage earner merely a chattel and believes that he plays no other role in society, if one assumes that he aims at no other satisfaction than feeding and proliferation and does not know of any employment for his earnings other than the procurement of those animal satisfactions, one may consider the iron law as a theory of the determination of wage rates. In fact the classical economists, frustrated by their abortive value theory, could not think of any other solution of the problem involved. For Torrens and Ricardo the theorem that the natural price of labor is the price which enables the wage earners to subsist and to perpetuate their race, without any increase or diminution, was the logically inescapable inference from their untenable value theory. But when their epigones saw that they could no longer satisfy themselves with this manifestly preposterous law, they resorted to a modification of it which was tantamount to a complete abandonment of any attempt to provide an economic explanation of the determination of wage rates. They tried to preserve the cherished notion of the minimum of subsistence by substituting the concept of a 'social' minimum for the concept of a physiological minimum. They no longer spoke of the minimum required for the necessary subsistence of the laborer and for the preservation of an undiminished supply of labor. They spoke instead of the minimum required for the preservation of a standard of living sanctified by historical tradition and inherited customs and habits. While daily experience taught impressively that under capitalism real wage rates and the wage earners’ standard of living were steadily rising, while it became from day to day more obvious that the traditional walls separating the various strata of the population could no longer be preserved because the social improvement in the conditions of the industrial workers demolished the vested ideas of social rank and dignity, these doctrinaires announced that old customs and social convention determine the height of wage rates. Only people blinded by preconceived prejudices and party bias could resort to such an explanation in an age in which industry supplies the consumption of the masses again and again with new commodities hitherto unknown and makes accessible to the average worker satisfactions of which no king could dream in the past."

Ludwig von Mises
Yale University Press
1949
Library Topic

"This [minimum wage] legislation, passed by the 81st Congress at its first session, is an important addition to the laws we live by. It is a measure dictated by social justice. It adds to our economic strength. It is founded on the belief that full human dignity requires at least a minimum level of economic sufficiency and security."

President Harry S Truman
The American Presidency Project
January 24, 1950
Library Topic
Library Topic: Social Justice

"Until 1933 the objective of providing for the general welfare had been implemented primarily through State and Federal legislation to foster and protect business enterprise. There had been few successful attempts before 1933 to protect our people as individuals. Even the first Federal attempt to provide a floor under wages in various industries failed when the National Industrial Recovery Act was declared unconstitutional in 1935. We felt, however, that a government which could, for example, protect business from the unfair competition of monopolistic practices was not powerless to protect the individual from the social and economic evils of low wages. Therefore, we enacted, in 1938, a Federal wage-hour law. In so doing, we declared our purpose to eliminate from the channels of commerce all competition based on labor practices detrimental to the health and well-being of the Nation's workers.

Three basic provisions were written into the statute to achieve that goal. The law set a firm floor under wages. This meant that a man would no longer need relief money for food after he worked a full week. Then the law encouraged the spreading of employment by requiring overtime pay after a man worked 40 hours. No longer would one man toil 60 or 70 hours a week while another man was looking for a job. The law also sought to prevent the employment of boys and girls under 16 in industry. No longer was the world of tomorrow to be endangered by impairment of the health and curtailment of the educational opportunities of the youth of today.

This law was a great achievement. It had a highly beneficial effect upon our entire economy. Despite the prophesies of disaster, this law did not hurt business. On the contrary, it helped all segments of our population. When the test came, employers who had feared they could not stay in business under the law found, in fact, that they could successfully meet its requirements. The law added to the purchasing power of our lowpaid workers, and by encouraging the spreading of work put more people on payrolls. This law thus gave great impetus to the revival of our economy."

President Harry S Truman
The American Presidency Project
January 24, 1950
Library Topic

"This is the first time since the [Fair Labor Standards] act came into existence under the administration of President Franklin Roosevelt in 1938 that we have been able to expand the coverage. I don't believe that there's any American who believes that any man or woman should have to work in interstate commerce, in companies of substantial size, for less than a dollar twenty-five cents an hour, or fifty dollars a week. That itself is a very minimum wage, and I therefore want to commend the Members of the Congress in the House and the Senate, the Chairmen of the Subcommittees who were particularly involved, under the leadership of the House and Senate, for their untiring efforts.

I also want to commend the leaders of organized labor, the AFL-CIO, who are here today with Mr. Meany, for their long interest. Every member, pretty much, of their unions is paid more than a dollar and a quarter, but they have been concerned about unorganized workers who have been at the bottom of the economic ladder who have not benefited from our growing prosperity in this country as a nation over the long number of years and who need our help."

President John F. Kennedy
The American Presidency Project
May 5, 1961
Library Topic

"The thing that I particularly want to mention is then, as now, most of the enlightened members of organized labor have never been personally affected by the minimum wage laws. As a result of their bargaining, they have all, generally speaking, been above the minimum levels. But union after union and leader after leader in the workers' movement in this country have spent time to see that their colleagues and their fellow workers had the benefits of this legislation.

It is my humble pride as President to see that this declaration of decency has been made real in millions of lives and homes-for as we meet here this afternoon, a new minimum wage has become effective in this country. It will mean a great deal to a great many people--none of whom are here. It will help them to carry on."

President Lyndon B. Johnson
The American Presidency Project
February 1, 1967
Library Topic

"The minimum rate for most workers-those 30 million previously covered--becomes, today, $1.40 an hour. This still means less, for a year's work, than what we count as a poverty wage. But this brings minimum wages closer in line with minimum decencies than they have ever been before.

An additional billion dollars will go, this year, into those pay envelopes where it is needed most--and this will be for services rendered, for work performed.

If this means very small increases in prices--that we have heard a good deal about--and in costs--and I believe it does mean increases in both--the American people will accept this as a better answer than denying human beings a decent wage."

President Lyndon B. Johnson
The American Presidency Project
February 1, 1967
Library Topic

"H.R. 7935 would raise the wage rate to $2.00 for most non-farm workers on November 1 and 8 months later, would increase it to $2.20. Thus in less than a year, employers would be faced with a 37.5 percent increase in the minimum wage rate.

No one knows precisely what impact such sharp and dramatic increases would have upon employment, but my economic advisors inform me that there would probably be a significant decrease in employment opportunities for those affected. When faced with the decision to increase their pay rates by more than a third within a year or to lay off their workers, many employers will be forced to cut back jobs and hours. And the worker will be the first victim."

President Richard M. Nixon
The American Presidency Project
September 6, 1973
Library Topic

"Sharp increases in the minimum wage rate are also inflationary. Frequently workers paid more than the minimum gauge their wages relative to it. This is especially true of those workers who are paid by the hour. An increase in the minimum therefore increases their demands for higher wages in order to maintain their place in the structure of wages. And when the increase is as sharp as it is in H.R. 7935, the result is sure to be a fresh surge of inflation.

Once again, prudence dictates a more gradual increase in the wage rate, so that the economy can more easily absorb the impact."

President Richard M. Nixon
The American Presidency Project
September 6, 1973
Library Topic

"The minimum wage destroys the best kind of training programs we’ve ever had: on-the-job training. The main way people have risen in the labor force is by getting unskilled jobs and learning things. Not merely technical skills: They learn such things as being at a job on time, spending eight hours a day at a job rather than standing around on street corners, having a certain element of responsibility, letting their employer know when they’re not going to come in. All of those traits are very important. In an attempt to repair the damage that the minimum wage has done to traditional on-the-job training, you now have a whole collection of programs designed to take up the slack."

Milton Friedman
Playboy Magazine
1973
Library Topic

"How is a person better off unemployed at a dollar sixty an hour than employed at a dollar fifty? No hours a week at a dollar sixty comes to nothing. Let’s suppose there’s a teenager whom you as an employer would be perfectly willing to hire for a dollar fifty an hour. But the law says, no, it’s illegal for you to hire him at a dollar fifty an hour. You must hire him at a dollar sixty. Now, if you hire him at a dollar sixty, you’re really engaging in an act of charity. You’re paying a dollar fifty for his services and you’re giving him a gift of 10 cents. That’s something few employers, quite naturally, are willing to do or can afford to do without being put out of business by less generous competitors. As a result, the effect of a minimum-wage law is to produce unemployment among people with low skills. And who are the people with low skills? In the main, they tend to be teenagers and blacks, and women who have no special skills or have been out of the labor force and are coming back. This is why there are abnormally high unemployment rates among these groups."

Milton Friedman
Playboy Magazine
1973
Library Topic

"I first came into the labor force in 1941 when the minimum wage was 40 cents an hour, and that was my first job. And each time that we've tried to boost the lower level of salary for the most underpaid workers, there have been predictions of catastrophe. But each time, in [m]y opinion, the change has helped our Nation and its economic strength."

President Jimmy Carter
The American Presidency Project
1977
01
Library Topic

"But one of the barriers to more jobs for youth is the single minimum wage system, because the cruel truth is, while everyone must be assured a fair wage, there's no compassion in mandating $3.35 an hour for startup jobs that simply aren't worth that much in the marketplace. All that does is guarantee that fewer jobs for teenagers will be created and fewer young people will be hired.

So, we're proposing youth employment opportunity wage legislation that can create more than 400,000 new summer jobs for youth. Our bill would allow employers to hire young people at a lower minimum wage during the summer months. And our legislation would do this without displacing adults. The bill explicitly prohibits employers from displacing adults in order to hire youth at the summer wage."

President Ronald Reagan
The American Presidency Project
May 19, 1984
Library Topic

"H.R. 2710 balances the widespread sentiment for an increase in the minimum wage with the very justifiable concerns of employers, particularly small businesses, about the effects of higher costs, and at the same time provides protection for young workers' job opportunities. On average, our growing economy has created a quarter million jobs a month, every month, for the last 7 years -- most of them in small businesses. By expanding and increasing the FLSA small business exemption, we have done much to preserve the admirable capacity of American entrepreneurs to grow from today's small employers into the larger employers of tomorrow. That is good for the economy; it is good for America's work force.

Similarly, increasing the tip credit will enhance job security for those so employed and increase job opportunity for those seeking such work."

President George Bush
The American Presidency Project
1989
17
Library Topic

"A general flat minimum-wage law for all industry is permissible, but I do not think that it is a particularly wise method of achieving the end. I know much better methods of providing a minimum for everybody. But once you turn from laying down a general minimum for all industry to decreeing particular and different minimum for different industries, then, of course, you make the price mechanism inoperative, because it is no longer the price mechanism which will guide people between industries and trades."

F. A. Hayek
Psychology Press
1994
Library Topic

"Labor, in a market system, is just another commodity; the wage a man or woman can command has nothing to do with how much he or she needs to make to support a family or to feel part of the broader society. Some conservatives have managed to convince themselves that this poses no moral dilemma, that whatever is, is just. And one supposes that there are still unrepentant socialists who believe that one can do away with market determination of incomes altogether. But after a century marked by both the Great Depression--which basically ended unalloyed faith in markets--and the fall of communism, most people support some version of the welfare state: a system that is based on markets, but in which the government tries to prevent too unequal a distribution of income.

But how is that to be accomplished? The standard economist's solution, which is also the main way the U.S. welfare state operates, involves 'after-market' intervention: Let the markets rip, but then use progressive taxes and redistributive transfers to make the end result fairer. However, many liberals have always felt that this solution is unsatisfactory. Instead, they want to increase 'market' wages, notably through support of collective bargaining, and through the imposition of minimum wage standards.

The 'living wage' movement, which has attracted considerable support in several major U.S. cities, is a variant on this tradition."

Paul R. Krugman
September 1998
Library Topic

"Now to me, at least, the obvious question is, why take this [living wage] route? Why increase the cost of labor to employers so sharply, which--Card/Krueger notwithstanding--must pose a significant risk of pricing some workers out of the market, in order to give those workers so little extra income? Why not give them the money directly, say, via an increase in the tax credit?

One answer is political: What a shift from income supports to living wage legislation does is to move the costs of income redistribution off-budget. And this may be a smart move if you believe that America should do more for its working poor, but that if it comes down to spending money on-budget it won't. Indeed, this is a popular view among economists who favor national minimum-wage increases: They will admit to their colleagues that such increases are not the best way to help the poor, but argue that it is the only politically feasible option."

Paul R. Krugman
September 1998
Library Topic

"In short, what the living wage is really about is not living standards, or even economics, but morality. Its advocates are basically opposed to the idea that wages are a market price--determined by supply and demand, the same as the price of apples or coal. And it is for that reason, rather than the practical details, that the broader political movement of which the demand for a living wage is the leading edge is ultimately doomed to failure: For the amorality of the market economy is part of its essence, and cannot be legislated away."

Paul R. Krugman
September 1998
Library Topic
Library Topic

More About This Topic...

Click thumbnails below to view links

Quote Page

Commentary or Blog Post

An article about the living well and its potential to kill jobs because of its strict requirements.

"Moreover, as employers are forced to pay low-skilled workers a higher wage, they are less likely to hire such workers. Citing a study by Michigan State University's David Neumark, Horowitz writes that a living wage set at 50 percent above the minimum wage increases the average wage for workers in the bottom tenth on the pay scale by 3.5 percent. However, the same wage increase reduces the...

"The media are never better at displaying their economic illiteracy than when they report on the minimum wage. ... They assume that if politicians declare that workers should get a raise, they will actually get it. But the idea that government can increase wages by decree with only good consequences rests on a serious economic fallacy: that employers set wages arbitrarily. If wages are very...

Passage by the House of Representatives of the Fair Minimum Wage Act of 2007, as part of the Democrats' first 100-hour agenda for 'A New Direction for America,' was a step in the wrong direction.

Alan Reynolds takes out the U.S. Statistical Abstract and points out only 0.4 percent of the workforce is making the minimum wage. A great many more are making less than the minimum wage due to an array of loopholes that exempt different types and sizes of businesses.

"The measure has sparked strong opposition from business leaders, who say it would deter retailers from moving into the city. But it has drawn support from labor activists, who say many workers do not earn enough money to support their families."

This article is meant to address the gaping holes in Spurlock's arguments as well as the problems in the arguments that I often hear when I explain how unnecessary our minimum-wage laws are.

"If Santa Fe is anything like other resort towns here in the West, it is incredibly difficult to build anything in the town since the existing residents don’t want any high density housing for the workers mucking up their perfectly planned and controlled community. Thus, the city council’s approved zoning and building requirements drive up the cost of living and it becomes impossible for the...

Liberal economist and Nobel prize winner Joseph Stiglitz was in Hong Kong Thursday and gave his support to the recently passed minimum wage, a first for the supposed bastion of market freedom.

Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers.

Just because lawmakers raise the minimum wage, doesn't mean it won't come back for debate a few years down the road. The reason is that the minimum wage is not automatically adjusted for inflation. Every year it becomes less valuable.

I've always thought that the minimum wage was perfect liberal economics, in the sense that it perfectly encapsulates the liberal philosophy.

"And yet there is a problem with markets: They are absolutely and relentlessly amoral. Labor, in a market system, is just another commodity; the wage a man or woman can command has nothing to do with how much he or she needs to make to support a family or to feel part of the broader society. Some conservatives have managed to convince themselves that this poses no...

On the surface, it would seem that raising the minimum wage paid to workers would help them out. But statistics tell a different story ....

One widely accepted policy — the minimum wage — is appropriately reflected in Karl Marx's dictum, 'To each according to his needs, from each according to his ability.'

The idea that minimum wage legislation is an anti-poverty tool is simply sheer nonsense.

Here are some numbers related to minimum wage in America.

"Minimum-wage earners in 31 states and the District of Columbia can soon expect slightly bigger paychecks thanks to the third and final installment of a federal rate hike that raises the wage floor from $6.55 an hour to $7.25 an hour effective Friday (July 24)."

"If we wish to increase the incomes of the working poor (which we might well wish to do) we are forced to consider after market methods of doing so, not interventions directly into the market. That might include benefits, tax credits, all sorts of things really: but perhaps the best and most obvious would be to stop taxing them so damn much in the first place."

In three recent pieces on this page, James Glassman has inveighed against the proposal to increase the minimum wage from $4.25 to $5.15. Unfortunately, his arguments (and those of other opponents) have been based on outdated information and a simplistic analysis of how the low-wage labor market functions.

"Councilman Ricky Burgess introduced the legislation Tuesday that would implement an amended version of a 2002 living wage ordinance that guarantees city employees earn a high enough hourly rate to support their families if they are the sole provider...

A press release describing the findings of two recent studies that examined the economic impact of the minimum wage, as presented by the authors. "An increase in the minimum wage could help bolster the sluggish economic recovery, according to two new, groundbreaking studies."

An article covering the projected costs of the "living wage."

"There are plenty of people who can tell you the 'benefits' of a living wage. Of course, these benefits are very shallow and short-term. A deeper economic and social analysis demonstrates the appalling costs of such regulation."

In this piece, Paul Krugman reviews a book on the concept of "living wage." Krugman makes some interesting statements about the living wage, most notably his admission that the push for a living wage is largely a political tactic.

"The heat under the 'living wage' debate has been turned up a notch. The Public Policy Institute of California has just published an extensive study by Michigan State economist David Neumark, the main conclusion of which is that, despite causing increased unemployment among the lowest-wage workers, 'living wage laws raise the wages of low-wage workers.'"

The minimum wage law is based on the assumption that some minimum hourly rate of pay should be legislated so that people will have a minimum income to support themselves and their families.

Congress can easily mandate higher wages, but they cannot mandate higher worker productivity or that employers hire a particular worker in the first place.

The minimum wage is a classic example of a good intention and a bad idea. The idea behind minimum wage legislation is that government, by simple decree, can increase the earning power of all marginal workers.

In 1987, the New York Times editorial board penned this piece on minimum wage. According to this piece, raising the minimum wage level prices the poor out of the labor market.

Just as a worker will only offer his labor time for a wage he finds beneficial, so an employer will only be willing to pay workers a wage that permits him to earn a profit. The higher the wage, the fewer workers the employer will employ.

I wasn’t in the mood Friday to celebrate the 73rd birthday of the federal minimum wage, created under the Fair Labor Standards Act of 1938. Looking at youth unemployment numbers can be a little depressing.

It seems that more and more Serious People (and Fox News) are rallying around the idea that if Obama really wants to create jobs, he should cut the minimum wage.

"Over the last decade, a savvy left-wing political movement, supported by radical economic groups, liberal foundations, and urban activists, has lobbied for a government-guaranteed 'living wage' for low-income workers considerably higher than the current minimum wage. The movement has scored enormous success: 80 cities nationwide, from New York to San Francisco, now have living-wage...

Chart or Graph

A closer look at workers who make the minimum wage illustrates why LWOs are ineffective at relieving poverty. According to the Bureau of Labor Statistics, minimum wage workers are largely unmarried workers who tend to be young. About half the workers earning minimum wage are under age 25.

There are two factors affecting the ability of a minimum wage increase to reduce poverty: poor target efficiency and job reductions.

Table 3 shows the demographic characteristics of private sector workers (including federal contract workers) earning less than a living wage. The table shows that these workers are mostly female, adult, full-time workers, and they are disproportionately minorities.

Estimates of the characteristics of those workers who would be affected if the minimum wage were raised to $7.00 under the Fair Minimum Wage Act of 2004 are shown in Table 1.

Table 1 again shows that, for people inclined to participate in such a survey, going to college is not correlated with economic enlightenment.

The final section of the questionnaire took the minimum wage as a concrete setting to explore people’s thinking about the meaning of 'liberty' and 'coercion.'

Many surveys have put the 'young and unskilled' question to economists outside the United States.

Beginning with the landmark 1976 survey by Kearl et (1979), many surveys have asked economists whether they 'generally agree,' 'agree with provision,' or 'generally disagree' with the statement: 'A minimum wage increases unemployment among young and unskilled workers.' Over time, economists have become less favorable to the statement, as shown in Table 3.

This simple graph shows the direct impact of a minimum wage on the demand for young and unskilled workers.

Because the minimum wage is not indexed, inflation affects the value of tax credits for minimum-wage workers. The effect can be positive or negative.

"Detroit workers under the 'living wage' ordinance must be at least 60% more productive than minimum wage earners to give job providers an economic incentive to employ them."

As figure 1 shows, a parent would need to work full time at wages up to 3.9 times the current federal minimum wage (and up to 3.2 times the new, higher minimum wage for 2009) to afford housing in markets like San Francisco and New York ....

"After accounting for inflation, the current minimum wage is at its lowest level since 1954."

The minimum wage law is an artificial floor on wages that attempts to raise wages of low income earners to more acceptable levels. In imposing a minimum wage that firms must pay for labour, the government is legally assigning a minimum value of wages (P1) as the feel the equilibrium wage rate (P) is too low.

As shown in Figure 1, in the 1950s and 1960s the minimum wage averaged 50% of average hourly earnings. That number decreased to 44% in the 1970s and hovered around 39% in the 1980s and 1990s.

Minimum-wage earners in 31 states and the District of Columbia can soon expect slightly bigger paychecks thanks to the third and final installment of a federal rate hike that raises the wage floor from $6.55 an hour to $7.25 an hour effective Friday (July 24).

Tax credits can provide significant subsidies to minimum-wage workers, particularly those with children.

The graph shows the number of ordinances concerning living wage passed each year from 1994 to 2005.

The federal minimum reached its peak value in 1968, at $9.86 expressed in 2009 dollars, about 37 percent higher than where it stands today.

The magnitude of simulated job losses from the current proposal are much larger than from the last increase, because the last increase affected far fewer workers (see Table 7).

For those who truly care about reducing unemployment, ... the first thing we can do is recognize that a large part of the problem is being driven by the massive spike in youth unemployment, which the data suggests is partly being driven by the minimum wage.

Analysis Report White Paper

"Detroit workers under the 'living wage' ordinance must be at least 60% more productive than minimum wage earners to give job providers an economic incentive to employ them."

"A closer look at workers who make the minimum wage illustrates why LWOs are ineffective at relieving poverty. According to the Bureau of Labor Statistics, minimum wage workers are largely unmarried workers who tend to be young. About half the workers earning minimum wage are under age 25."

"Adam Smith’s outlook still inspires and informs modern sensibilities and argumentation. It is of interest beyond Smith aficionados whether a particular line of modern thought 'fits' Smith."

"For decades, the U.S. Census Bureau has reported that over 30 million Americans were living in 'poverty,' but the bureau’s definition of poverty differs widely from that held by most Americans."

"[T]hat every man should earn a 'family wage' that allows his family to live in reasonable comfort is a desirable social goal."

A simple supply and demand framework is used to analyze changes in the U.S. wage structure from 1963 to 1987.

This study advances proposals to substantially strengthen minimum wage laws and the federal Earned Income Tax Credit (EITC) program in the United States, so that, in combination, they can guarantee decent living standards for all full-time U.S. workers and their families.

"This study looks at the effects of the introduction and subsequent uprating of the minimum wage on the prices of UK goods and services, comparing the prices of goods produced by industries in which UK minimum wage workers make up a substantial share of total costs with the prices of goods and services that make less use of minimum wage labour."

The report relies on an impressive array of empirical evidence showing that, however one views the data, in the United States, state and federal minimum wages have not reduced poverty.

We present results of a December 2008 Zogby International nationwide survey of American adults, with 4,835 respondents. We gauge economic enlightenment based on responses to eight economic questions.

"Economists across the political spectrum have pointed out that for many sweatshop workers the alternatives are much, much worse. In one famous 1993 case U.S. senator Tom Harkin proposed banning imports from countries that employed children in sweatshops. In response a factory in Bangladesh laid off 50,000 children."

"The minimum wage law is an artificial floor on wages that attempts to raise wages of low income earners to more acceptable levels. In imposing a minimum wage that firms must pay for labour, the government is legally assigning a minimum value of wages (P1) as the feel the equilibrium wage rate (P) is too low."

"Typically, a living wage is set anywhere from 50 percent to 100 percent above the current federal minimum wage of $5.15 an hour and often higher if employers do not provide health benefits. Thus far, there has been only modest resistance, even from local governments for which the cost of doing business inevitably rises."

The National Employment Law Project has compiled a list of places that have a living wage ordinance in place. The list also details the level(s) of the wage and who is eligible for coverage under the ordinance.

"A large percentage of American families have low incomes, which lead to a host of challenges and disadvantages for both parents and children. In 2006, one out of every three families with children had incomes below twice the federal poverty level (FPL): $40,888 for a family with two adults and two children...."

In this essay, Acs and Turner outline their proposals to enhance low-income families' purchasing power and reduce unusually high housing costs through a package of reforms and policy initiatives that tackle both the income side and expenditure side of family budgets.

An international survey of the minimum wage policies of 48 different countries.

Minimum wage laws set legal minimums for the hourly wages paid to certain groups of workers. In the United States, amendments to the Fair Labor Standards Act have increased the federal minimum wage from $.25 per hour in 1938 to $5.15 in 1997.

"On April 1, 1992, New Jersey's minimum wage rose from $4.25 to $5.05 per hour. To evaluate the impact of the law we surveyed 410 fast-food restaurants in New Jersey and eastern Pennsylvania before and after the rise."

"In this paper we ... analyz[e] administrative employment data from a new representative sample of fast-food employers in New Jersey and Pennsylvania."

We review the burgeoning literature on the employment effects of minimum wages - in the United States and other countries - that was spurred by the new minimum wage research beginning in the early 1990s.

Attempts to raise the minimum wage often focus on the purported poverty-alleviating results of these policies. Economic research, however, has found little connection between changes in poverty and increases in the minimum wage.

Full-time workers who put in a full day’s work should receive enough wages to purchase the goods and services necessary to meet their most basic needs. The federal minimum wage, originally passed as part of the Fair Labor Standards Act, was established to ensure that low-income workers earn sufficient wages.

The city of New York hired Charles River Associates to study the impact of a proposed living wage bill in NYC that would require a wage of $10.00/hr with health benefits and $11.50 without.

"In October 2006, the Economic Policy Institute released a 'Raise the Minimum Wage' statement signed by more than 650 individuals. Using an open-ended, non-anonymous questionnaire, we asked the signatories to explain their thinking on the issue."

A criticism of the methodology used by Charles River Associates in their May 9, 2011 impact study on a proposed living wage bill.

"This study, by Dr. Aaron Yelowitz of the University of Kentucky, utilizes government collected data to examine the labor market effects of Santa Fe’s living wage increase. Dr. Yelowitz finds that the living wage in Santa Fe significantly increased unemployment and decreased hours worked for those who were able to keep their job."

This analysis shows that increasing tax credits enough to substitute for raising minimum wage is probably infeasible because of both the cost and the high marginal tax rates required.

"The modern living wage movement was born in Baltimore in 1994, when the city passed an ordinance requiring firms to pay employees a rate above the minimum wage while working on city contracts. …[O]ver 120 communities have followed suit, some setting wage floors more than twice the federal minimum wage, and some requiring various benefits."

"Over four decades of empirical studies leave no doubt that increases in the minimum wage do reduce employment to some extent. Yet by most counts, the number of lost jobs is trivial in the aggregate. Only for teenagers are statistically significant negative effects on employment consistently observed."

"Although arguments for and against the minimum wage are the same today as when the Fair Labor Standards Act was passed forty years ago, they are now accompanied by more sophisticated approaches to the measurement of the law’s impact. Moreover, the increase in minimum wage coverage makes the issue more important."

"The authors' results [confirm] the theoretical agreements and offers evidence for increasing minimum wage elasticity, especially in the case of subjects defined as immigrants and teenagers."

"The number of cities, counties, and school districts with living wage ordinances across the United States has swelled to nearly 100."

This paper provides evidence on a wide set of margins along which labor markets can adjust in response to increases in the minimum wage, including wages, hours, employment, and ultimately labor income, representing the central margins of adjustment that impact the economic well-being of workers potentially affected by minimum wage increases.

"Pressure on federal agencies to reduce the size of their workforce has created incentives for contracting for goods and services to private businesses. Most of the workers employed by these private businesses do not enjoy wages and benefits comparable to federal workers."

Noting that proponents of minimum wage increases generally cite single mothers as beneficiaries of the policy, this paper sets out to present data on whether or not this assumption is true. According to Sabia's findings, increases in minimum wage standards...

We find no evidence indicating that minimum wages reduce the average hours of training of trained employees, and little to suggest that minimum wages reduce the percentage of workers receiving training.

Henderson outlines six negative effects of the minimum wage, including unemployment, teen dropouts, reduced competition, and harm to the poor.

"In the past few years, though, as the federal minimum wage has remained fixed at $5.15 and the cost of living (specifically housing) has risen drastically in many regions, similar campaigns have produced so many victories (currently, 134) that Kern speaks collectively of 'a widespread living-wage movement.'"

Burkhauser and Sabia, professors of economics at Cornell University, find that the majority of the beneficiaries of a minimum wage hike are not in poverty, a fact which makes the minimum wage highly inefficient and often an ineffective means of combating poverty.

"The ineffectiveness of a minimum wage in Germany is mainly due to the existing system of means-tested income support."

Video/Podcast/Media

In this podcast, economist Peter Van Doren discusses low-skill workers and the minimum wage. According to Van Doren, many of those working for minimum wage are often teenagers living in middle class homes, not breadwinners living in poverty conditions.

In this podcast, Richard Epstein discusses the difficulties that result because of the minimum wage. Epstein believes that allowing the government to regulate the minimum wage "causes public harm."

As Congress eyes an increase in the minimum wage, experts discuss the implications of such a policy, focusing on how it would affect workers and business as well as other facets that lawmakers must address.

"Bryan Caplan, of George Mason University and blogger at EconLog, talks about his book, The Myth of the Rational Voter: Why Democracies Choose Bad Policies. Caplan argues that democracies work well in giving voters what they want but unfortunately, what voters want isn't particularly wise, especially when it comes to economic policy. He outlines a series of systematic biases we often have on...

Katherine Newman talks with EconTalk host Russ Roberts about Newman's case studies of fast-food workers in Harlem. Newman discusses the evolution of their careers and fortunes over time along with their dreams and successes and failures.

A slideshow depicting several of those workers affected by the Santa Fe "living wage" law.

"People don't like to think that anyone's labor is worth less than the minimum wage. Someone might end up flipping burgers for $5.00 an hour. You might think the minimum wage is a way of paying some sort of dignity premium -- hence language like 'living wage.' People with such good intentions look at the direct beneficiaries of these policies, say, burger flippers now making $7.50 an hour. They pat themselves on the back. But they rarely count the invisible costs: willing human beings who never get hired in the first place."

"Living wage is very different from minimum wage. In this episode we chat about the difference and the feasibility of implementing a living wage policy in the City of Calgary."

"Moderator Bob Liff and a panel of experts debate the highly controversial 'living wage' bill, which is currently being considered in the New York City Council. In May 2010, a major economic revitalization project in the Bronx—at the Kingsbridge Armory—was scuttled by a requirement that its developers and tenants pay a higher hourly wage than the Federal and City minimum. Elected officials and...

"Naturally, workers are concerned about wages, fringe benefits, and job security. Many people feel vulnerable, at the mercy of the 'system.' One response has been the development of a variety of unions, professional organizations, and other groups dedicated to looking after the interests of members. There is evidence that working people have made significant progress over the past two...

"'Newtown' just outside Birmingham is looking dirty, rundown and old. 50 % of its citizens are unemployed, living in grey towerblocks overlooking the urban devastation. The flats are poorly equipped with basic furnishings. All people can do is watch television. As the rich people get richer, the poor get poorer. Chris Pond from the Lay Pay Unit blames poverty and hardship on the Conservative...

In this clip, James Dorn engages in a debate over the pros and cons of the minimum wage. Dorn believes that the U.S. should abolish the federal minimum wage, citing Hong Kong's economic success without one.

Dr. Walter Block and Dr. Boyd Blundell debate the merits and ill-effects of minimum/living wage legislation. Dr. Block opposes it, while Dr. Blundell defends it as necessary.

Milton Friedman discusses the disadvantages and consequences of minimum wage laws, and of social security.

Pedace presents his research concerning the impact of minimum wage on job training and unemployment. He finds that minimum wages cause workers with the least amount of skills to be unemployed for longer periods of time.

An interview with Jeannette Wicks-Lim, who has a proposal to help minimum wage earners with a higher wage rate and a broader, more effective Earned Income Tax Credit.

"In the latest 'Economics 101' video released today by the Center for Freedom and Prosperity Foundation (CFP), Orphe Divounguy, a graduate student from the University of Southampton in England, explains that minimum wage laws hinder the ability of low-skilled workers to get jobs. Entitled 'The Job-Killing Impact of Minimum Wage Laws,' this video examines how the minimum wage hurts young...

In this episode of FPTV, Freedom Party of Ontario leader Paul McKeever explains why increasing the minimum wage would be both immoral and economically hazardous...particularly to employees in Ontario.

"Throughout history, women and men in the labor movement have struggled to gain power in an economy that often seems to work against them, placing profit over people. For the past hundred years, the United States has seen great strides in workers' rights, from the formation of unions, the eight-hour workday, child labor laws, and the creation of a minimum wage. Despite these gains, there...

Walter E Williams and Thomas Sowell discuss how minimum wage is used to protect organized labor from the competition of unskilled labor.

Primary Document

In the interview, Friedman expresses his views on inflation, price controls, and the minimum wage. In regards to the minimum wage, Friedman argues that it actually hurts rather than helps those in the low-income bracket.

An address by President Franklin D. Roosevelt regarding social justice towards workers the year before Congress passed the Fair Labor Standards Act.

"Our nation so richly endowed with natural resources and with a capable and industrious population should be able to devise ways and means of insuring to all our able-bodied working men and women a fair day's pay for a fair day's work. A...

Teddy Roosevelt lays out his platform before the Convention of the National Progressive Party in Chicago, including a call for minimum and living wages.

"Ultimately we desire to use the Government to aid, as far as can safely be done, in helping the industrial tool-users to become in part tool-owners, just as our farmers now are. Ultimately the Government may have to join more...

"The question presented for determination by these appeals is the constitutionality of the Act of September 19, 1918, providing for the fixing of minimum wages for women and children in the District of Columbia. 40 Stat. 960, c. 174."

The court ruled this law unconstitutional.

This economic classic is noted for providing us with terms for and expositions of such key economic ideas as the division of labor, "invisible hand," self-interest as a beneficial force, and freedom of trade.

People who work for the minimum wage often don't get a chance to see the White House. ... And they need a raise, and as you saw, they deserve a raise.

The U.S. Department of Labor annually publishes tables of statistics identifying the demographics of those earning the minimum wage. Over half of those making minimum wage are under 25 years old.

"This document intends to present in a complete and systematic manner, even if by means of an overview, the Church's social teaching, which is the fruit of careful Magisterial reflection and an expression of the Church's constant commitment in fidelity to the grace of salvation wrought in Christ and in loving concern for humanity's destiny. Herein the most relevant theological, philosophical,...

Tulip finds the NAIRU (Non-Accelerating Inflation Rate of Unemployment), the rate of unemployment needed to hold down inflation, is very likely correlated with increases in the minimum wage.

"An English translation of Bastiat's series of short essays in which he tries to correct common misunderstandings about the free market."

Henry Hazlitt's classic primer outlines a straightforward and accessible portrayal of free-market economics. An unshackled market, Hazlitt says, is the only path to "full production".

A bill introduced by MP Christopher Chope to the House of Commons in the U.K. that would allow individuals to voluntarily opt-out of the national minimum wage.

"The Fair Labor Standards Act of 1938, as amended 29 U.S.C. 201, et seq."

The federal law detailing the federal minimum wage.

A proposed amendment to New York City's administrative code that would require a living wage be paid to those employees working on publicly-funded development projects.

"We have not only seen minimum wage and maximum hour provisions prove their worth economically and socially under government auspices in 1933, 1934 and 1935, but the people of this country, by an overwhelming vote, are in favor of having the Congress—this Congress—put a floor below which industrial wages shall not fall, and a ceiling beyond which the hours of industrial labor shall not rise....

The law I have just signed was passed to put people back to work, to let them buy more of the products of farms and factories and start our business at a living rate again.

All but the hopelessly reactionary will agree that to conserve our primary resources of man power, government must have some control over maximum hours, minimum wages, the evil of child labor and the exploitation of unorganized labor.

Today I am pleased to sign H.R. 2710, the 'Fair Labor Standards Amendments of 1989.' This law will increase the minimum wage, in two increments, to $4.25 an hour beginning April 1, 1991.

As we work with Congress in the coming year to chart a new course in Iraq and strengthen our military to meet the challenges of the 21st century, we must also work together to achieve important goals for the American people here at home. This work begins with keeping our economy growing.

Today the minimum wage is 40 cents an hour. Tomorrow the new 75-cent minimum rate goes into effect for the 22 million workers who are protected by the Fair Labor Standards Act, our Federal wage-hour law.

Henry Hazlitt writes a letter to an unknown individual discussing the flaws of Alvin S. Johnson’s (Founder of New York’s New School) arguments about minimum wage, including the effects on immigration.

Mises explained economic phenomena as the outcomes of countless conscious, purposive actions, choices, and preferences of individuals, each of whom was trying as best as he or she could ... to attain ... wants and ... avoid ... consequences.

In 1938, which was 39 years ago, President Roosevelt, in the presence of Senator Jennings Randolph and also in the presence of President George Meany, signed the first Fair Labor Standards Act.

I WANT TO EXPRESS my great satisfaction in signing the bill to increase the minimum wage to a dollar twenty-five cents an hour, and to extend the coverage to three million, six hundred thousand people today who are not covered by this most important piece of national legislation.

"The Living Wage Act of 2006 is Title I of the 'Way to Work Amendment Act of 2006' D.C. Law 16-118 (D.C. Official Code §2-220.01 to .11), which became effective June 8, 2006.   Recipients of new contracts or government assistance (grant, loan or tax increment financing) shall pay affiliated employees and subcontractors who perform services under the contracts or assistance no less...

The minimum rate for most workers-those 30 million previously covered--becomes, today, $1.40 an hour.

Man, Economy and the State provides a sweeping presentation of Austrian economic theory, a reconstruction of many aspects of that theory, a rigorous criticism of alternative schools, and an inspiring look at a science of liberty that concerns nearly everything and should concern everyone.

"This is a habeas corpus case originating in the Supreme Court of New York. Relator was indicted in the County Court of Kings County and sent to jail to await trial upon the charge that, as manager of a laundry, he failed to obey the mandatory order of the state industrial commissioner prescribing minimum wages for women employees."

A testimony before the New Haven Board of Alderman regarding and encouraging legislation that would update New Haven's existing living wage ordinance.

Then-presidential candidate Barack Obama addresses a working class group and discusses the economy and his plans to improve it.

"But through hard times and good, great challenge and great change, the promise of Janesville has been the promise of America – that our prosperity can and must be the tide that lifts every boat; that we rise or fall as one nation; that our economy is...

The federally legislated minimum wage for most American workers has remained static for 6 years despite a number of increases in the cost of living. Raising the minimum wage is now a matter of justice that can no longer be fairly delayed.

I am returning today, without my approval, H.R. 7935, a bill which would make major changes in the Fair Labor Standards Act.

Pope Leo XIII critiques socialism and capitalism, defends property rights, and lays out guidelines for justice in society within the Catholic traditions of human nature and Western Civilization. He places responsibilities upon how labor and employers behave toward each other. Additionally, he outlines the roles of the individual, the family, fathers, the church, society, etc. 

Full...

I want to talk to you today about our young people and what we can do to provide them an all-important opportunity—a summer job.

"The use of taxpayer dollars to promote sustenance and creation of living wage jobs will increase consumer income, decrease levels of poverty and reduce the need for taxpayer funded social programs in other areas; and When City funds are used to contract for services such contracts should demonstrate an effort to promote an employment environment that enhances the general quality of life...

President Clinton outlines his New Covenant and calls for a phased-in, higher minimum wage to partially match the inflation experienced since the previous raise.

"Wages and Benefits under San Francisco laws...

Requires $9.14 per hour with an increase each year on January 1 in an amount corresponding to the prior year’s increase in the Consumer Price Index for urban wage earners for the San Francisco-Oakland-San Jose metropolitan area."

All credible research has come to the same conclusion: raising the minimum wage hurts the poor. It takes away jobs, keeps people on welfare, and encourages high-school students to drop out.

"To revise, codify, and enact without substantive change certain general and permanent laws, related to public buildings, property, and works, as title 40, United States Code, 'Public Buildings, Property, and Works'."

"The scheme of the book, which is displayed in more detail in the Analytical Table of Contents, is as follows. In Part I. it is argued, subject, of course, to a large number of qualifications, that the economic welfare of a community of given size is likely to be greater (1) the larger is the volume of the national dividend, and (2) the larger is the absolute share of...

Although the wage issue may now have been momentary settled, the [minimum wage] act includes other provisions that have been subject to legislation through the years and may again become the focus of legislative consideration.

The enactment of a minimum wage statute in Minnesota makes necessary a present and local discussion of the minimum wage question.

An explanation of the source of wages and a common fallacy concerning that source, based on work by the Duke of Argyll.

This case is generally said to have ended the Lochner era of Supreme Court decisions protecting economic liberties utilizing substantive due process reasoning. It upheld a "statute of the State of Washington ... providing for the establishment of minimum wages for women."

Books

Link