Wednesday, September 26, 2012

Unions and Minimum Wage Laws

         When detectives investigate crimes, they look for motivation.  "Who benefits?" they ask.
         When unions push minimum wage laws, I ask the same question. 
         Answer:  the unions themselves.
         They won't admit it, of course.  That’s not the way unions talk about minimum wage laws and their support for them.
         Since the 1930s, unions have been the chief proponents of minimum wage legislation because it helps eliminate low-wage competition for jobs.  It does so through federal coercion from laws passed by union-bought-and-paid-for legislators.  By driving up the competition's wages, unions erase the chief advantage their unskilled competitors have -- the willingness to work for a lower price than their union counterparts.  After all, virtually no union worker in America works for minimum wage.  This is not about driving up union wages, but driving up the wages of the union’s competition.
         This marketplace power play is meant to create a de facto labor cartel by expelling non-union workers from the field by artificially driving up their wages, in this case, the non-union workers with the least skill, folks whom employers might be willing to hire and to train if the price for doing so were not unnaturally high.  When the price of low-wage independents is not artificially elevated, employers often prefer to hire and train them instead of higher-priced and protected unionists.  As the price of independents rises, their attractiveness to prospective employers shrinks and the attractiveness of unionists grows, which is why unions are historically the strongest advocates of minimum wage laws.  By such laws, unions drive up the price of their competition, advancing what amounts to compulsory unionism.  
         In the wake of minimum wage laws, employment in low-wage industries generally drops, which predictably injures the poor, those very persons with the least marketplace skill and experience.  In other words, when you judge them by their actual negative impact, minimum wage laws are anti-black, anti-woman, anti-immigrant, anti-elderly, and anti-young -- those who are the lowest workers on the pay scale.  They are the ones who lose the most when union-backed legislators enact a higher minimum wage.  That’s one more thing the unions won't tell you:  Unions injure the non-union poor.  Unions and their advocacy of minimum wage laws obstruct the working poor and make it more difficult for them to get the entry-level jobs by which they gain necessary marketplace skills like punctuality, team work, deference, appearance, public relations, accuracy, and dependability, skills that make getting the next job easier, skills that allow them to begin climbing the ladder of economic success -- outside of a union.
         Modern unions are the poor worker's worst enemy.  When unions push for a higher minimum wage, they're not looking out for the poor; they're looking out for themselves.
         An analogy will serve:  Imagine that, in an effort to aid portions of our lagging auto industry, we propped up the profits of our weakest carmaker (let us say, fictionally, Ford) with laws mandating a minimum price of $50,000 per vehicle sold.  That law would dramatically increase the profits Ford enjoyed from every sale.  But, despite that good intention, indeed because of it, Ford goes out of business because no matter how much we might want to “buy American,” very few folks can or will pay that much money for cars comparable to those available elsewhere at half the government-mandated price.  Ford dies.  Just like unions now do to their competitors, the people at competing automakers would love to pass laws requiring a minimum price for all Fords.  It won’t be good for Ford; it will be good for Ford’s competitors.
         By the same token, when that which is being sold is not a car but an unskilled worker’s work, a higher minimum wage helps that worker’s competition.  That’s why unions support this manipulative legislation, which makes it illegal for entry-level workers to sell their work at a lower price, no matter how badly they might need or want a job.   
         With minimum wages laws in force, the choice is often not a choice between the mandated wage and some other wage, but between the mandated wage and none at all.  Tragically, the latter option becomes increasingly attractive and commonplace.  A minimum wage helps only those with jobs; it cannot provide jobs or preserve jobs.  But it does hinder those without jobs from getting them, just as it hinders those with jobs from keeping them.
         If you have little or no skill and experience, but the government requires you to sell your services at inflated rates, you'll find no one willing to purchase them because, in order to pay for your services, your employer must raise his own selling price, which means his or her business is more likely to fail.  If it does, all the current employees, who are more skilled, more experienced, and more worth the money they earn, lose their jobs too because companies wise enough not to hire you at the government-mandated price can produce the same product your company does, but at a lower cost both to themselves and their customers.
         Here’s the bottom line:  Minimum wage laws create unemployment outside the union, which is precisely their intention.  When unions back minimum wage laws, it’s not about helping the poor; it’s about helping themselves.

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