Call it the law of unintended consequences, but often times government policies that are intended to help people wind up hurting them in the long run.
That’s the case made by George Mason University conservative economist Walter E. Williams in his new book “Race and Economics: How Much Can Be Blamed on Discrimination?” On the Fox Business Network Wednesday Williams explained how minimum-wage laws prevent the employment of black teenagers.
“Many times we have a lot of economic policies that are based on intentions and I ask people to look at effects,” Williams said. “And the minimum-wage law is one of those policies that has a very, very harmful effects and you see the effects if you put yourself in the place of an employer and ask, ‘If I must pay $7.25 an hour to no matter whom I hire, which is minimum wage, does it pay me to hire a person who is so unfortunate that has skills that would only enable him to get $4 or 5 of worth of value an hour?’ And for most employers, they would see that as a losing economic proposition. So, the minimum-wage law has the effect of discriminating against the employment of low-skilled people and it happens that many, many of low-skilled people are black teenagers.”
However, hikes in the minimum-wage are often supported by labor unions and Williams’ theory on the matter is that such raises protect one segment of the labor force by eliminating competition.
“Oh yes that is, it is a redistribution of income and opportunity from low-skilled people to higher-skilled people and if you ask the question – who are the major supporters of the minimum wage law who spent millions and millions of dollars lobbying for its increase, it turns out to be labor unions. And you have to ask ‘Well, how come labor unions are the major supporters of the minimum-wage law when their members make $40 or $50 an hour often?” Williams said. “Why should they be concerned about a $5 or $7 wage? It turns out the minimum-wage law helps eliminate some of the competition. But, there are other economic laws on the books, such as in your city, in order to own and operate one taxi, a license they call a medallion in New York, last year sold for $603,000. And that discriminates against people getting into the cab business.”
Host Charles Payne asked whether Williams was inferring that unions have been part of a “covert plan” to keep black people from getting the better paying jobs? Williams said yes.
“Well, they always have done that,” Williams said. “If you look at the justification for the David-Bacon Act, which is the federal minimum wage or super minimum-wage if you look at the legislative debate in 1931 unions were major supporters and they want to protect white workers from having to compete with black workers in construction.”
Overall, Williams emphasized his point that government rules and regulations are an enemy of working people.
“If Congress thinks that way, I think that they are mistaken,” Williams said. “The biggest enemies of poor people and people in general is the United States government — that is making rules and regulations that systematically handicap people.”