Alex Adrianson of the Heritage Foundation’s “Insider Online” shines some light on a little-discussed fact surrounding the history of the government-mandated minimum wage.
In the early part of the 20th century, a number of intellectuals and scholars understood very well that minimum wage laws produced unemployment. There was, in fact, a movement that expected people to lose their jobs as a result of the policy—and for that reason this movement favored minimum wages. These were the eugenicists who believed government policy should make it difficult for the “undesireables” of society to reproduce. In The Freeman Jeffrey Tucker tells the story of the forgotten dark origins of minimum wage laws:
To understand why [unemployment] wasn’t seen as a failure, take a look at the first modern discussions of the minimum wage appearing in the academic literature. Most of these writings would have been completely forgotten but for a seminal 2005 article in the Journal of Economic Perspectives by Thomas C. Leonard.
Leonard documents an alarming series of academic articles and books appearing between the 1890s and the 1920s that were remarkably explicit about a variety of legislative attempts to squeeze people out of the work force. These articles were not written by marginal figures or radicals but by the leaders of the profession, the authors of the great textbooks, and the opinion leaders who shaped public policy.
“Progressive economists, like their neoclassical critics,” Leonard explains, “believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’” […]
