[net.politics.theory] Minimum wages

carnes@gargoyle.UUCP (Richard Carnes) (12/17/85)

In a terse, 397-line reply to Jim Balter, Nat Howard mentions Milton
Friedman's *Free to Choose* as arguing against the minimum wage.
Friedman is associated with the conservative "Chicago school" of
economic thought.  Others associated with Chicago economics, notably
Gary Becker, have developed "the economic approach to human behavior"
in which economic analysis is applied to patterns of human behavior,
such as marriage and crime, that are not ordinarily treated by
economics.  In this approach one seeks to explain crime, for example,
as the result of people rationally maximizing their expected
utilities.  I don't know too much about this but the basic idea seems
to make a good deal of sense.

One implication of this viewpoint is that as prevailing wage rates
decline, more people will turn to crime, since crime becomes a
relatively more attractive method of "earning" a living.  So it
becomes a reasonable question to ask whether a minimum wage tends
to reduce crime, and if so to what extent.  I see no prima facie
reason for regarding this "crime effect" as either nonexistent or
insignificant.

So my question for our distinguished panel of experts is:  Could you
please discuss the "crime effect" with regard to the minimum wage, or
at least provide references to books or articles in which this
question is addressed by opponents of the minimum wage?
-- 
Richard Carnes, ihnp4!gargoyle!carnes

ark@alice.UucP (Andrew Koenig) (12/17/85)

> One implication of this viewpoint is that as prevailing wage rates
> decline, more people will turn to crime, since crime becomes a
> relatively more attractive method of "earning" a living.  So it
> becomes a reasonable question to ask whether a minimum wage tends
> to reduce crime, and if so to what extent.  I see no prima facie
> reason for regarding this "crime effect" as either nonexistent or
> insignificant.

> So my question for our distinguished panel of experts is:  Could you
> please discuss the "crime effect" with regard to the minimum wage, or
> at least provide references to books or articles in which this
> question is addressed by opponents of the minimum wage?

In this discussion, don't forget to examine Richard Carnes' unstated
assumption that lowering the minimum wage will raise prevailing wage
rates.  Since the wages of unemployed people are zero, and lowering
the minimum wage would surely decrease unemployment, this assumption
is far from obvious.

In fact, it is perfectly clear that increasing the minimum wage to
a trillion dollars per hour, thus causing 100% unemployment, would
decrease the prevailing wage rate to zero.

I don't have time to get involved in these long drawn-out discussions,
but I'm leaving this reminder for those who do.

laura@l5.uucp (Laura Creighton) (12/22/85)

In article <279@gargoyle.UUCP> carnes@gargoyle.UUCP (Richard Carnes) writes:
>
>So my question for our distinguished panel of experts is:  Could you
>please discuss the "crime effect" with regard to the minimum wage, or
>at least provide references to books or articles in which this
>question is addressed by opponents of the minimum wage?
>-- 

Here's how minimum wage laws can tend to increase crime.  

Take your average high school drop out.  He doesn't want to return to
school, but he is interested in working. *If* he can get a job, then he
can acquire on the job training, and thus have expereince which translates
into promotions, or a chance at getting a better job.  At the very least
he will have the satisfaction of earning money.

But, if there is a minimum wage law, nobody may be willing to employ him.
The employers will not be able to afford as many employees if they have
to pay minimum wage, and the unskilled and unschooled are first to go.

So what do you get?  A frustrated unemployable person.  And what percentage
of petty thefts are done by unemployed people? [Hint: it is a large percentage]

Next week, they promise me, my books will arrive.  then I can post the
references of several Black scholars who have concluded that minimum wage
laws, created with the very best of intentions, are the worst thing to ever
happen to Black youth as a whole.  Time and time and time again they list
cases where a minimum wage law was made law and within 5 years the Blacks
buying power had fallen dramatically with respect to the White buying power.

-- 
Laura Creighton		
sun!l5!laura		(that is ell-five, not fifteen)
l5!laura@lll-crg.arpa