Saturday, June 4, 2011

A Solution to the Minimum Wage Problem

Economist Walter Williams discusses, with John Stossel, the effects of minimum wage laws on the very low skilled, especially blacks:

Essentially, blacks get trapped in a cycle of poverty because they're not initially worth enough to be paid minimum wage and without work they can't learn the skills. The obvious result is high unemployment among blacks.

In theory, a lot of Americans support the minimum wage. Of course, in practice even the most ardent liberal supporters don't support it in practice.

Although pointing out hypocrisy is fun, the point here is that the minimum wage isn't absolute. It only applies to hourly work. This is a good thing. It means we can employ low skilled workers and teach them the skills they need to move up the ladder.

So the solution? Contract work.

For example, instead of paying a kid $7.25 an hour to stock your grocery store, pay him $25/job or even $.10/box.

If you need help in a barber shop, $.000001/hair swept, or something like that.

This may even be better because not only are they learning skills and earning experience they're learning about entrepreneurship and self-employment. They may even stretch the limits of their creativity coming up with new ways to get paid.

Of course, knowing the quality of the public schools most of these kids are imprisoned in, I'm not sure how they will learn about this idea. But fatalism doesn't help. It's time to get creative in fighting back against the good intentions of bad policies.

1 comment:

  1. I also suspect that "They may even stretch the limits of their creativity coming up with new ways to" avoid paying taxes. Not saying this because of their race, education, or any other reason. Once someone is a net payer for government, rather than a net consumer of government, one of the first things people tend to do is try to minimize how much they pay. And I say, good for them.