John LaBeaume is a high school senior in University City, Missouri. He did find work in the summer of 1991.
During the summer of 1990, despite two months of intensive searching, I was unable to find employment. I could locate no employer willing to exchange $3.35 per hour, the “training” minimum wage, for my unskilled labor. In essence, I was legally priced out of the market.
This means that prospective employers and I were prevented, because of the minimum wage, from agreeing to mutually beneficial exchanges. After a few weeks of fruitless search, I was willing to work for one dollar per hour, which most well-meaning minimum wage proponents would declare “unjust.” One dollar per hour, however, was one dollar per hour more than I earned that summer.
Prospective employers deemed my services, quite rightly I suppose, worth less than the minimum wage. Anyone who hired me for the “training” wage most likely would have lost money. An employee’s output, after all, must exceed the employer’s total costs if the employer is to earn a profit.
The cost of hiring, we must remember, exceeds the employee’s wage. Other factors such as Social Security contributions, workers’ compensation, unemployment payments, insurance, uniforms, and parking increase the cost. It also is expensive to comply with the many regulations imposed on employers by the state.
Particularly expensive is compliance with child labor laws. These often-archaic rules restrict the number of hours a young person may work, when he may work, as well as the types of jobs he may seek. They drive up the costs of hiring unskilled youth, thus giving older competitors more leverage with prospective employers.
Perhaps I would have been more fortunate had I been looking for work in the summer of 1989 when employers and employees often skirted minimum wage and child labor laws, resulting in more jobs for minors. However, in early 1990, then-Secretary of Labor Elizabeth Dole launched Operation Child Watch, a crackdown on the violators of minimum wage and child labor laws, during which hundreds of thousands of dollars in fines were levied on employers defying these laws. In the summer of 1990, the hypersensitivity of employers was evident as they attempted to comply with these laws to avoid a $1,000 fine for each violation.
The defense offered by minimum wage proponents, including unionists interested in reducing competition from people willing to work for less than their artificially high, union-mandated wages, is that without the minimum wage, minors would be “forced” to toil as “slave labor.” This argument trivializes the seriousness of the concepts of force and slavery. A person is forced when another physically compels him to act; this is hardly the case here as the employee is free to leave his job at any time. Slavery is the state of one human living in the possession of another, and slave labor is forced labor without compensation; this is not applicable here because some compensation is made, however low, and neither party owns the other.
Extremely low wages won’t occur in a free market because of the low productivity that would ensue. A worker is unlikely to produce with quality if he decides that he isn’t receiving compensation that makes the job worth his while—if he accepts such a position at all. Thus it isn’t in the employer’s interest to offer wages so greatly unagreeable to the employee. And if he does, competing employers will be quick to offer higher wages so as to hire the worker away.
Minimum wage and child labor laws exclude unskilled young people from the labor market and increase teenage unemployment. At the same time, they undermine the rights of free association and exchange, and deny the lesson of self-responsibility which comes from getting that first job.