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The minimum wage did not increase during the eight years that Reagan was president, a term that began in 1980. That was the same year that Friedman and his wife, Rose Friedman, published a book that was so popular that it led to a PBS series and videos that are even now popular on YouTube.

In “Free to Choose,” an examination of economics and liberty, the Friedmans wrote that minimum-wage laws require employers to discriminate against unskilled workers. That argument and others made by Friedman have informed a generation of Republicans and Libertarians who now face the challenge of defending a longstanding principle in light of growing income inequality and public sentiment that has bent toward increasing the minimum wage.

Democrats’ efforts to include the wage increase in a COVID-19 relief bill were stalled Thursday when Senate parliamentarian Elizabeth MacDonough, a nonpartisan official, ruled that it is not permissible as written, The Washington Post reported.

Utah Republican Sen. Mitt Romney is among those seeking to identify a compromise that would avert stalled legislation of the past that has left the minimum wage unchanged since 2009, when it was set at $7.25 an hour.

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Romney, along with Sen. Tom Cotton, an Arkansas Republican, crafted a bill introduced Thursday that would gradually increase the minimum wage to $10 an hour over four years with a slower phase-in for businesses with fewer than 20 employees.

Unlike some of his fellow Republicans, who oppose a minimum wage in principle, Romney believes that legislation to increase the wage should reflect changes in the cost of living while seeking to avert negative effects, such as job loss.

“There may be philosophical debates about whether or not we should have a minimum wage, but the reality is, we’re going to have a minimum wage,” said Romney, who also pushed for smaller increases than Democrats wanted when he was governor of Massachusetts.

Republican Sen. Josh Hawley of Missouri, meanwhile, has said he would support the Democratic proposal for a $15 minimum wage, but only for employees of large companies. He has proposed a “blue-collar bonus” that would provide refundable tax credits for people making below $16.50 an hour.

Lost in much of the debate is how relatively few Americans would see an increase in pay, if the federal minimum wage is increased. According to the Bureau of Labor Statistics, in 2020, about 1.5% of hourly workers in the U.S. earned the minimum wage or less.

The history of the minimum wage begins with Franklin D. Roosevelt and the National Industrial Recovery Act of 1933, which launched a series of guaranteed wages that ranged from $12 to $15 — a week. But it’s the time period between Reagan’s inauguration and Romney’s proposal that Republican thinking on the minimum wage became more entrenched. Here’s why the minimum wage has caused so much angst for the Republican Party, and where it may be headed this year.

A minimum wage of zero?

Survey any number of conservative pundits and podcasters, and you’ll find sharp-tongued resistance to President Joe Biden’s proposal to incrementally raise the minimum wage to $15 an hour by 2025. Daily Wire commentator Matt Walsh, for example, recently wrote on Twitter that “competent adults” aren’t working for minimum wage.

Walsh and other conservative pundits argue that most people who earn minimum wage are young and unskilled, and they may not need more money (for example, if they are students still living at home) or don’t deserve more because they provide little value to their employer. That thinking is at the heart of the Friedmans’ assertion in “Free to Choose” that “the minimum wage law requires employers to discriminate against people with low skills.”

“No one describes it that way, but that is in fact what it is,” the Friedmans wrote, adding that a poorly educated teen with no work history might only be worth $2 an hour to an employer, and unless the employer is willing to throw in another 90 cents of “charity” to reach the then-minimum wage of $2.90, the teen wouldn’t have a job at all.

“It has always been a mystery to us why a young person is better off unemployed from a job that would pay $2.90 an hour than employed at a job that pays $2.00 an hour,” the Friedmans wrote.

The Friedmans also said that low-paying jobs and apprenticeships provide other value than money to the unskilled worker, such as the chance to learn new skills and acquire experience.

More than 100 studies have shown that increases in the minimum wage result in fewer available jobs, said Steve Hanke, a professor of applied economics at Johns Hopkins University in Baltimore, who was a senior economist on President Reagan’s council of economic advisers.

A new report from the nonpartisan Congressional Budget Office projects that if the Raise the Wage Act of 2021 is enacted as written, there would be 1.4 million fewer jobs in the U.S., a decline of 0.9%.

“The people the minimum wage is designed to help, it hurts, because they don’t get the minimum wage. They don’t have a job. If you jack the minimum wage up higher than someone is worth, they’re not going to be hired,” Hanke said.

Mark J. Perry, a scholar at the American Enterprise Institute and economics professor at the University of Michigan-Flint, agreed, saying that people often think the minimum-wage debate pits an employee against an employer; in fact, he said, it’s about employees competing against each other.

What would Reagan do?

With his proposal, Romney has again established himself as an outlier. He has previously said that Republicans are “nuts” to not want to raise the minimum wage, adding “I think, as a party, to say we’re trying to help the middle class of America and the poor and not raise the minimum wage sends exactly the wrong signal.”

Yet proponents of a higher minimum wage, such as Sonn at the National Employment Law Project, are unhappy with the Romney-Cotton plan, which also requires employers to verify the employment status of their workers through E-Verify.

Sonn called the stipulation a “punitive anti-immigrant measure masquerading as a minimum-wage increase.”

Romney also finds himself outside the tent of people like Hanke, who considered Friedman a friend and mentor and who also was friends with another economist widely admired by conservatives, Friedrich Hayek.

Romney, Hanke said, is “off the reservation” when it comes to the minimum wage. “The government should not be in the business of setting prices, whether they’re for labor or for goods and services,” he said. “The market should be determinant, with sellers and buyers voluntarily agreeing what price they pay. … From my point of view, it really is immoral for the government to be coming in and setting prices of things.”

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Hanke doesn’t think much of Hawley’s proposal, either. “Milton Friedman would scold him and give him a quick lesson in economics, and so would I,” he said.

And what would Hanke’s former employer, Ronald Reagan, do, if he’d been confronted with legislation to raise the minimum wage, which was $3.35 during his administration, to $15, as Democrats propose today?

“I don’t think he would have abolished it all together, because Reagan was principled, but pragmatic,” Hanke said. “I don’t think he would think the abolition of the minimum wage would be worth the political cost of doing it, even though he would be very happy to have gotten rid of the whole thing.

“I think he would have remained as quiet as possible on raising it, as he did.”

Ep. 4 – From Cradle to Grave [6/7]. Milton Friedman’s Free to Choose (1980)

March 11, 2021

President Biden c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

Thank you for taking time to have your office try and get a pulse on what is going on out here in the country. I wanted to let you know what I think about the minimum wage increase you have proposed for the whole country and I wanted to quote Milton Friedman who you are familiar with and you made it clear in July that you didn’t care for his views! Let me challenge you to take a closer look at what he had to say!

Also published in Daily News (Los Angeles)

Minimum wage laws hurt the low-skilled workers they are intended to help. Raising the minimum wage hurts these workers even more. No matter how many ways economists say it, politicians, even those supposedly sympathetic to free markets, are content to peddle this harmful policy again and again. California’s Democrat-dominated Assembly and Senate and its Republican Governor Schwarzenegger are the latest culprits pandering this economic nonsense.

California’s legislature passed a bill that would raise the minimum wage from its current level of $6.75 per hour to $7.75 per hour over the next two years. The bill also mandates automatic yearly wage increases tied to the rate of inflation. In 2004 Schwarzenegger vetoed a bill that would have hiked the wage by $1, but now he favors the increase and is only opposed to future automatic increases. But whether tied to the rate of inflation or not, when the minimum wage is increased low-skilled workers lose.

Deep down everybody knows it. We all know that if the government raised the minimum wage by $20 an hour, many employees would be laid off. Businesses are not charities; they hire workers only when the workers create more revenue for the business than they cost in wages and compensation. We know that many workers’ productivity is less than $26.75 an hour and that they would be laid off if the minimum wage were that high. Yet people kid themselves when they believe smaller increases won’t harm employment.

Some workers, particularly teenagers in part-time jobs, have very low productivity that makes it unprofitable to pay them more than $6.75 an hour. For these workers the politicians’ proposed 15 percent increase in the minimum wage will mean unemployment. In 2004 the Employment Policy Institute studied the impact of raising California’s minimum wage by $1. They found that approximately 18,600 Californians would lose their jobs and in the process would miss out on $220 million in total income.

Governor Schwarzenegger should know that increasing the minimum wage hurts young low-skilled workers. He claims Milton Friedman is one of the two economists that most influenced his thinking on economics and that he even gives people Friedman’s economic primer “Free to Choose” as a Christmas present. If he remembers reading the book he should recall that Friedman writes, “The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws.”

One need not look only to economists known for supporting free markets to find opponents of the minimum wage. Paul Samuelson, a strongly left-leaning Nobel Prize winning economist from MIT, wrote in 1970, “What good does it do a black youth to know that an employer must pay him $2 an hour if the fact that he must be paid that amount is what keeps him from getting a job?”

Youths, minority youths in particular, are hardest hit by minimum wage laws because often they have not yet built up the skills to be profitably employed at higher wages. Many work part-time while in school. Others have just entered the workforce and are acquiring skills on the job that will help them earn higher wages in the future. Studies reflect this when they find that only 20 percent of all minimum wage earners are single earners who are heads of households. Unfortunately, by making would-be workers unemployed early in their lives, minimum wage laws undermine the very process of on-the-job learning that eventually leads to higher wages.

Minimum wage laws may hurt low-skilled workers, but they benefit union workers. Virtually no union worker earns the minimum wage, so how do they benefit? Minimum wage laws enhance the demand for union workers by unemploying their low-cost, low-skilled competitors. It is no accident that unions and their politicians are often the biggest supporters of increasing the minimum wage. But it’s dishonest for them to claim they support increasing the minimum wage for the benefit of the poor.

Governor Schwarzenegger should veto any minimum wage increase, whether it’s tied to inflation or not. If he’s really interested in strengthening our economy and helping low-skilled workers earn more income, he should pursue policies that enhance our productivity. As our economy expands, a free and competitive labor market will ensure that workers earn as much as possible.

BENJAMIN POWELL is a Senior Fellow at the Independent Institute and Director of the Free Market Institute at Texas Tech University.

Email

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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your commitment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733

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By WALTER WILLIAMS

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