How Jobs Are Destroyed (from the “Cliff Notes” version of “Healing Our World”)

Sometimes, in our eagerness to help the disadvantaged, we violate the non-aggression principle. Since means and ends are related, we end up keeping the disadvantaged from taking their first step up the economic ladder.

In the past, immigrants, the unskilled, blacks, and women got on-the-job training by working for a pittance. For example, when I started out in biomedical research in the late 1960s, I was able to work for less than the current minimum wage, because the student lab assistant jobs weren’t yet covered. I had to be trained, which required expensive lab supplies as well as extensive supervision, so I wasn’t much help—at first.

My fellow college students thought I was crazy working for “slave wages.” However, I wasn’t just working for money.  I was working for the experience and the references.  This allowed me to jump start my laboratory thesis when it came time to begin my graduate work.  Consequently, I had publications by the time I received my Ph.D., which made me much more marketable than my predominantly male competition.

My anti-discrimination program (most people back then thought women went to graduate school to get their “Mrs.”) was to make prospective employers salivate when they saw how much I could accomplish for them.  This strategy worked admirably, but only because I was able to get a foothold on the economic ladder through a job not covered yet by the minimum wage laws. Indeed, by the time I received my B.S., the option of getting on-the-job training this way had been closed by the regulators.

Blacks and immigrants tried to get their foot in the economic door by working for a training wage as well. However, many of them weren’t as lucky as I was.  As the number of job covered by minimum wages increased, black teenage employment, which was comparable to that of whites in 1955, declined in parallel (Figure 3.1 from the 2015 edition of Healing Our World).

Our intention wasn’t to hurt the disadvantaged; indeed, minimum wages were supposed to help them by giving them a higher wage.  Instead, employers figured if they were going to have to pay blacks the same wage as whites, they’d hire whites instead. Young blacks were priced out of the job market.  Instead of having a low-paying job that would give them experience, references and a foothold on the economic ladder that would allow them to work their way up, they often found themselves with no job, no references, and no position at all on the economic ladder.

Since 90-95% of all U.S. employees are paid more than the minimum wage, getting any job that provides training, experience and/or references generally results in greater pay down the road.  Studies show that poverty isn’t caused by low wages; instead, it’s caused by no wages at all. That’s why getting that first job, even if it initially pays poorly, is so important.

We’d never go to our neighbor, put a gun to his head, and insist that she pay her babysitter more.  We are Good Neighbors (libertarians) when we relate one-on-one. Somehow, we feel perfectly comfortable telling our government to punish employers—at gunpoint, if necessary—if they don’t pay new employees more than they are worth. Instead of helping the disadvantaged, minimum wage laws compromise them further. When we violate the Good Neighbor Policy in an attempt to help people, it backfires.

Blacks, immigrants, and other disadvantaged individuals, for a short time, had another way to climb on the starting rung of the economic ladder.  Many already knew a craft, because of Old World experience (immigrants) or because such work was part of their duties as slaves (blacks).  Unfortunately, as we’ll see in the next post, their ability to start their own business was often thwarted—sometimes deliberately—by the aggression of licensing laws.

The next post will be “How Small Businesses Are Destroyed.” If you’d like to learn more about how minimum wage laws hurt the very people they are meant to help before the next post, check out Chapter 3 of the 1993 edition of Dr. Ruwart’s book, Healing Our World, in her Free Library at https://ruwart.com/product/healing-our-world. You can also buy the updated