97 In support of this position Dr. Yale Brozen, Professor of Economics, University of Chicago and a director in the program of applied economics, pointed out that one of the arguments made for an increase in the minimum wage is totally inapplicable to students. The argument that the present minimum wages does not provide sufficient income in full time work to rise above the poverty line of $3,968 has nothing to do with the situation of the student, or for that matter the 16- and 17-year old nonstudent. This poverty line is established for a family of four in urban circumstances. Most, if not all, students do not support families of four nor are nearly all of them attending colleges in high cost metropolitan areas. The current minimum wage provides an income above the poverty line for a single person even in urban areas. In reviewing these matters with our colleagues, we are somewhat dismayed by their apparent unwillingness to consider some reasonable or realistic approach to the solution of the youth unemployment problem and the aggravation of that problem threatened by the increase in the minimum wage. The Committee does not deny the existence of the problem, but they have never offered a solution. Their reaction is simply to refuse to consider any youth differential. We must recognize the fact that in our most recent effort to enact minimum wage legislation this body voted 227 to 170 for a meaningful youth differential in the minimum wage. In summary, the consequences of inflation need to be reflected in the way minimum wage rates for marginal employees are increased. At the same time, however, we must not undo the many efforts being made to control inflation which hurts all of us, including the people intended to be helped by minimum wage rates; and we must encourage employment opportunities for our young people. We will, therefore, support H.R. 2831 as a substitute to the counterproductive measure approved by the Committee. ALBERT H. QUIE. JOHN N. ERLENBORN. EDWIN D. ESHLEMAN. WILLIAM A. STEIGER. JACK F. KEMP. DAVID TOWELL. RONALD A. SARASIN. ROBERT J. HUBER. SUPPORTING VIEWS OF MR. O'HARA In the first session of the 92nd Congress, this Committee reported to the House a bill, H.R. 7130, which like H.R. 7935, would have improved wages and working conditions for thousands of American workers. I supported H.R. 7130, as I support H.R. 7935, as a "significant step forward for most of the working men and women of this nation." When we reported H.R. 7130 to the House, I felt obliged to file separate views, emphasizing my support for the bill, but expressing deep concern that the bill, as reported, left intact the indefensible proposition that there must always be some gap between the farm worker's minimum wage and everyone else's. This time, in all fairness to my colleagues on the Committee, I feel I should file separate views to express my satisfaction over the fact that this bill, finally, after years of waiting and hoping and working and losing, puts a statutory end to the differential. For the first time, if H.R. 7935 is passed, the Congress will have decided that agricultural workers are first-class citizens of the world of work-worke who will, after a specified and finite period, be entitled by law to the same minimum wage protection as are their fellow workers. This is a small and hesitant step toward equality for the farm worker. But the fact that it has been taken once and for all puts an end to the myth that there are objective reasons for continuing to treat farm workers differently than other workers. The section I am discussing is not a major change in terms of the number of workers covered. All too many farm workers are still left outside the protections of this Act altogether. It is not a massive change in terms of the amounts of money involved. The four-year stretch-out of the provisions means its impact upon employers will be minimal. But its importance in terms of simple justice is beyond measure. And, as one who has for long years decried the unwillingness of the Congress to treat farm workers as though they were free men, I feel I must express my jubilation over the amendment, and my profound congratulations to the Chairman and members of the Subcommittee for having offered the amendment in Committee. (99) JAMES G. O'HARA. SEPARATE MINORITY VIEWS OF REPRESENTATIVE LANDGREBE ON H.R. 7935 H.R. 7935 is, as are all minimum wage laws, an attack on producers (workers and employers alike) and consumers. Wages, like prices, are determined by the law of supply and demand. Economic laws, although they involve human action, are as immutable as any other natural laws; they cannot be changed by arbitrary decree. Attempts to raise wages by government edict can only result in unemployment, the closing of businesses, and higher prices; thus harming the wage-earner far more than helping him. 1. UNEMPLOYMENT H.R. 7935 will, by further increasing the minimum wage, cause a further increase in unemployment. The arbitrary increase in wages will result in an increase in the cost of production for many businesses, and this in turn will increase the price of their products, resulting in less sales, necessitating a cutback in production and thus a layoff of employees. Those affected are the "marginal" employees-non-skilled workers whose wages are near or below the government decreed minimum. Hardest hit among the marginal employees are the young people of our Nation. Having dropped out of school or having just graduated from high school, a young person is in desperate need of employment. He (or she) is at a crucial point in his life-he has no skill and is unsure of his ability. A job, no matter what the wage, allows him to gain the self-confidence and skill he needs to proceed on to better employment and a better life. In a free country, there is no limit to how high he may climb. The government, however, in its great compassion for young men and women standing on the threshold of adulthood, passes laws such as H.R. 7935, sentencing a great number of them to permanent poverty. That H.R. 7935 will cause great numbers of persons to become unemployed is even admitted by its proponents. They attempted, for example, to add a provision granting income tax credits to persons employing domestic workers. They were aware that without this provision, H.R. 7935 would, by bringing domestic workers under the Fair Labor Standards Act for the first time, throw thousands out of work. 2. CLOSING OF BUSINESSES Another effect of H.R. 7935 will be to cause many businesses that depend on marginal and unskilled labor to close down. This not only causes further unemployment, but it curtails expansion and investment that would have provided more jobs at higher wages in the future. For example, I know of one manufacturer in Indiana that presently has two sets of plans for expansion: one calls for expansion by building 102 more plants and providing more jobs in the United States; the other calls for building the plants in Mexico. The management is holding up implementation of the plans pending the outcome of this minimum wage bill-if H.R. 7935 becomes law, they will build in Mexico; if H.R. 7935 is defeated, they will build in the United States. They are not doing this to gain vengeance against unjust laws; they are doing it out of economic necessity. How many other businesses will close down or curtail expansion as a result of this bill? It is, of course, impossible to compute. We can rest assured, however, that the same type of people who promote minimum wage laws will soon be complaining louder and louder that the free enterprise system (which they have shackled) has failed to provide a solution to the unemployment problem (which they have created). 3. HIGHER PRICES While H.R. 7935 will hit some immediately and directly by throwing them out of work, it will affect everyone eventually by causing a general rise in the price of those goods and services that remain on the market. Since some businesses will close down as a result of H.R. 7935, there will be less products available to the consumer than there otherwise would have been. Those products still on the market will have their price bid up since there is relatively a lesser quantity available. But this is just one factor that will cause prices to rise. The arbitrary increase in the cost of labor will be passed on to the consumer, as will the increase in unemployment compensation paid by employers as a result of being forced to layoff many of their marginal employees. Then, of course, there will be the increase in taxes (and/or inflation, it the government chooses deficit spending instead of increased taxation) to pay for the increase in welfare payments to the newly unemployed. Thus not only will prices rise, but wage-earners will have less to spend. 4. WHO BENEFITS But surely, one might ask, someone must benefit from such a law? There are two groups of potential beneficiaries. One would be a group of workers that is receiving a wage actually below its market worth. This is likely to happen only in special circumstances or localities where competitive forces do not operate freely. However, in such a case, the situation is easily remedied by unionization and the threat to strike. Since the wages are below market worth, the employer could not entice other workers to replace those he would lose, and thus he would be forced to grant higher wages. The only other potential beneficiaries would be those workers earning a wage near or below the present minimum wage, who would retain employment at the new minimum. They would then be receiving a wage above what they could earn on the free market. Their benefit would, however, most probably be short-term. For they too would soon be paying the higher prices and taxes. And their gain is nothing when considered in the context of the losses incurred by others. In fact, the greatest irony of minimum wage laws is the fact that it is the vast majority of wage-earners who suffer 103 from them. The number of marginal employees who may gain from these laws is quite small in comparison to the number who earn far above the minimum and thus have no possibility of benefiting from them. For they cannot escape their effects: the wage-earners must pay the higher prices and taxes that result. Thus if H.R. 7935 becomes law, the vast majority of wage earners in this country will have the real earning power of their wages arbitrarily reduced. (There is, of course, one other group that stands to gain from this law: the politicians eager to court the vote of union members who have been greatly misled on this issue. I suppose, however, that it is considered bad form to mention this). 5. THE QUESTION OF RIGHTS There is also the whole issue of the government's right to control the lives and actions of United States citizens when they are merely minding their own business, harming no one. Do U.S. citizens no longer have the right to choose the terms of their own employment? If a person wants to work at a wage that happens to be less than that arbitrarily set by politicians, does the government have the right to prohibit him from working? In a free country the government is supposed to protect its citizen's rights, not violate them; but then, maybe the goal of legislation such as H.R. 7935 is to destroy what freedom still remains in America. 6. HOW TO REALLY RAISE WAGES All of the foregoing does not mean that there is no way to raise wages; only that it cannot be done by government fiat. As Henry Hazlitt has observed: The best way to raise wages, therefore, is to raise labor productivity. This can be done by many methods: by an increase in capital accumulation-i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid. Real wages come out of production, not out of government decrees. (Economics in One Lesson, Harper & Row, 1946, p. 142.) The history of the United States, where workers enjoy higher wages and a higher standard of living than in any other country at any other time, is more than ample evidence to support Mr. Hazlitt's observation. The high wages were made possible only as a result of the economic freedom that is a precondition to the new inventions, discoveries and ideas that make capital accumulation-and thus the greater productivity of each worker-possible. Therefore, those who are truly concerned with raising wages will advocate greater economic freedom, not laws such as H.R. 7935 which help to eliminate it. |