Economist Walter Williams has called the minimum wage “one of the most effective tools in the arsenal of racists everywhere in the world.”
Yet today’s “Fight for $15” has placed a federal minimum wage increase at center stage.
“The federal minimum wage of $7.25 is a starvation wage,” Sen. Bernie Sanders tweeted. “If you work 40 hours a week, you should not live in poverty.”
Legislation to increase the federal minimum wage to $15 an hour also gained the support of 2020 Democratic Presidential nominees including Elizabeth Warren, Kamala Harris and Cory Booker.
Today’s progressives deny that minimum wage hikes cause unemployment, specifically for low-skill and minority workers. But in the Progressive Era that initiated the first minimum wage laws, they considered such unemployment to be a feature and not a bug.
The Minimum Wage’s Beginnings
As documented in this Cato Institute research paper, the first minimum wage law, the Davis-Bacon Act of 1931, had racist origins. According to researcher David E. Bernstein, the story begins in 1927 when a contractor from Alabama “won a bid to build a Veteran’s Bureau hospital in Long Island, New York. He brought a crew of black construction workers from Alabama to work on the project. Appalled that blacks from the South were working on a federal project in his district, Representative Robert Bacon of Long Island submitted H.R. 17069.”
This bill was the precursor to the legislation known as the Davis-Bacon Act that was eventually passed into law. The act mandated a minimum wage to any workers on construction projects part of a contract with the U.S. or District of Columbia governments that exceeded $2,000.
As Walter Williams has further noted about the Act, “Among the widespread racist sentiment was that of American Federation of Labor President William Green, who complained, ‘Colored labor is being sought to demoralize wage rates.’”
In practice, the mandated minimum wage in Davis-Bacon “was almost universally determined to be the same as the union wage,” wrote then-Harvard law student John Frantz in this 1994 article for the Foundation of Economic Education.
“Most major union construction unions excluded blacks. This was an effective tool to fight against what some legislators openly complained about, cheap black laborers from the south,” Frantz continued.
Representative John Cochran from Missouri laid bare the motivation behind the act when he stated, “I have received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.”
The minimum wage being used as a means to discriminate against minorities was not exclusive to the U.S., however.
Economist Thomas Sowell points out how the minimum wage has been used to keep minorities and immigrants from accessing jobs in several nations across the world for generations.
In 1925, a minimum wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry, Sowell wrote.
In 1912, Sowell notes, Harvard professor Arthur Holcome referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less.
Minimum Wage as a Means of Social Control
These days, you can count on media talking heads and countless politicians to proclaim how wonderful the minimum wage is for the poor. Wage floors will improve the standard of living, they say.
But back during the Progressive Era, they knew better. They understood that minimum wages exclude workers — and they favored them precisely because such wage floors drive people out of the job market. People without jobs cannot prosper and are thereby discouraged from reproducing. Minimum wages were designed specifically to lock “racial inferiors” out of the workforce and keep wages for white natives high enough to prevent immigrants and minorities from out-breeding the native population.
Princeton University’s Thomas C. Leonard wrote about this extensively, including in a 2003 issue of the History of Political Economy academic journal. Leonard’s research led him to conclude “Progressive economists, like their marginalist interlocutors, believed that binding minimum wages would result in job losses.” Those progressive economists, however, viewed these job losses as a benefit.
Leonard further noted that progressives in the early 20th century didn’t reject the prevailing notions that “blacks, Asians, Southern and Eastern Europeans, and mental and physical ‘defectives’ should be seen as innately different and inferior.” Indeed, progressives at the time embraced the notion and sought measures of social control to weed them out of the labor force, and ultimately society.
Moreover, progressives were concerned that immigrants and other “inferior stock” like blacks could outcompete natives and whites for work because they were willing to accept lower wages.
“Low-wage ‘races’ are depicted as innately disposed to endure a low standard of living,” Leonard wrote. “Racial theories were flexible enough to found a willingness to accept low wages on racial causes that ran from laziness to greed.”
The willingness of these “low-wage races” to accept low wages would drive down the wages of native whites, progressive economists feared at the time. Because of these lower wages, the native whites would be less able to afford larger families, and the blacks and immigrants would reproduce in greater number. Over time, the “inferior stock” of races would overwhelm the native white population and create a new ethnic majority in the country, according to progressives. This process of “race suicide” became a genuine concern.
One way to combat this process, the progressive economists theorized, was to create minimum wage laws to prevent a fall in wages and to effectively block low-skilled immigrants and minorities from the labor force.
For instance, progressive Princeton economist Royal Meeker favored the minimum wage for its effective means of culling out the least productive workers, Leonard wrote. Once separated, the ‘unemployables’ become easy to identify and in turn to be managed by the state.
There is little debate that the Fight for $15 is a fight to increase unemployment among low-skilled workers. Particularly hardest hit would be minorities and immigrants.
Today’s minimum wage advocates, however, naively deny any such negative economic consequences. Perhaps this denial is a manifestation of a guilty conscience created by the racist motivations of progressives a hundred years ago who disturbingly viewed such unemployment as a social benefit.
Either way, we should all agree that there is no place for the criminalization of voluntary labor agreements in a free society. The minimum wage’s racist roots serve to underscore its destructive nature.