A few months ago, I was reading a fascinating paper by Thomas Leonard on “Eugenics and Economics in the Progressive Era.” The paper is full of interesting tidbits, but I was especially struck by the discussion of Progressive Era arguments for the minimum wage.

Most readers of this blog will be familiar with the argument that minimum wage laws create unemployment. And most of us, no doubt, regard this as a powerful argument against the minimum wage.

As Leonard’s paper shows, progressives like Sidney Webb were familiar with this argument. But rather than viewing additional unemployment as a cost of minimum wage laws, they actually regarded it as a positive benefit! After all, you see, the people most likely to be disemployed by a minimum wage were those who were among the least employable anyway – the drunks, the idiots, and the immigrants – especially those who were members of “low-wage races.” And, according to the grand progressive vision, anything we can do to identify such individuals and segregate them from healthy, productive white society was a step in the right direction for the human race.

Leonard’s article contains a number of shocking quotes:

“With regard to certain sections of the population [the "unemployable"] , this unemployment is not a mark of social disease, but actually of social health.” – Sidney and Beatrice Webb, Industrial Democracy

“[O]f all the ways of dealing with these unfortunate parasites, the most ruinous to the community is to allow them to unrestrainedly compete as wage earners.” – Sidney Webb, in The Journal of Political Economy

“The operation of the minimum wage requirement would merely extend the definition of defectives to embrace all individuals, who even after having received special training, remain incapable of adequate self-support…If we are to maintain a race that is to be made of up of capable, efficient and independent individuals and family groups we must courageously cut off lines of heredity that have been proved to be undesirable by isolation or sterilization ….” – Henry Rogers Seager, professor of economics at Columbia University and future president of the American Economics Association

Crazy, right? Look what a bunch of racist nuts progressives used to be! (See this short piece by Steve Horwitz and Art Carden for more) Thank God the debate about the minimum wage has evolved from that. At least today’s progressives want to help the poor, and simply disagree about whether the minimum wage is or is not an effective means to doing so.

Fast forward. Today on the way to work, I listened to Bryan Caplan’s Intelligence Squared debate on whether we should “Let Anyone Take a Job Anywhere.” Bryan and his partner, Vivek Wadwha, were arguing in support of the motion against Kathleen Newland and Ron Unz. So, Bryan’s making his usual arguments, claiming that immigration restrictions are unjust and inefficient, and that whatever concerns we have about them could be addressed in cheaper and more humane ways. And then this happened.

Ron Unz: “In other words, if we had a very large rise in the minimum wage, maybe to $12 an hour, that by itself would alleviate a lot of the problems associated with immigration because, in a sense, if you have a situation where American workers can’t be paid less than, say, $12 an hour, then even a huge amount of foreign competition would insure that ordinary American workers had a reasonable standard of living and maintained it.” (from the official transcript)

That sounded a bit fishy to me. So, curious, I looked to see what Unz has written on this topic. Turns out, there’s a lot. But his moral perspective is even clearer in his publishing writings than it was in the debate. Here’s Unz, writing in the American Conservative back in 2011:

The automatic rejoinder to proposals for hiking the minimum wage is that “jobs will be lost.” But in today’s America a huge fraction of jobs at or near the minimum wage are held by immigrants, often illegal ones. Eliminating those jobs is a central goal of the plan, a feature not a bug.

And:

“In effect, a much higher minimum wage serves to remove the lowest rungs in the employment ladder, thus preventing newly arrived immigrants from gaining their initial foothold in the economy.”

Plus ça change… Same argument, different side of the aisle.

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  • j r

    Is it correct to characterize Ron Unz as a progressive?

    Or am I misreading this?

    • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

      No, not at all. He just has the same obnoxious views as certain early 20th century progressives. But I should fix the OP to be clearer about that.

      • j r

        Yes. I’ve always thought that many progressives and many paleo-conservatives have very similar economic policy perspectives. They both tend to favor some form of nativist corporatism, with the big differences being between whether labor or capital ought to dominate the partnership.

        • SimpleMachine88

          everybody’s got their copy of “Road to Serfdom”, right?

        • Sean II

          Did you perhaps mean neo-conservatives? Because paleo-cons and corporatism…not so much.

          • jdkolassa

            Maybe not so much with corporatism, but they also don’t like capitalism very much.

          • j r

            People tend to associate corporatism with a certain kind, but the term itself can be applied to multiple forms. There is, for instance, ethnic corporatism or religious corporatism, All populist appeals rest on some form of corporatism. And i consider pale-cons to be populists.

  • http://economicthought.net/blog JCatalan

    According to 2003 data, ~¼ of low-wage immigrant workers make less than the minimum wage. My guess is that if we increased the min. wage to $12 an hour, that ratio would increase. That is, it makes illegal immigrants more attractive to hire.

    • Les Kyle Nearhood

      Yes, of course. The higher minimum wage will actually shift more jobs to illegal immigrants since, well, they are working here illegally anyway, so they can get a raise and still get paid less than minimum.

  • Libertymike

    “At least today’s progressive wants to help the poor”.
    Conclusion or premise?

  • SimpleMachine88

    Really, today the move is to push out younger and non-unionized workers from competition, for the benefit of labor organizations and educational institutions, DNC contributors.

    • Sean II

      The scary model for which is Europe, where large segments of the young adult population are pinned down in grotesquely prolonged adolescence.

      It would be difficult to overstate the harm of this. One of life’s greatest pleasures is that of building an economic life for oneself: working, buying things with earned money, not buying things so you can save and invest, and then over time, reaching a point when you can reap the rewards of delayed consumption. My personal favorite thing to do with those rewards is to buy frivolous shit for my substantially younger wife. Every gift allows me to re-trace the path that put me in a position to favor her thus. It’s just a incredible feeling.

      It saddens me to think that’s an experience which half the kids in Spain, a quarter of the kids in France just won’t get to know.

      Labor freedom is one of the few categories where the U.S. still scores well in economic freedom indices. It’s also one of the most important categories, because not having a job is one of the surest ways to miss out on whole the point of freedom.

      • Chris Bertram

        Even those making minimum wage in the UK are too poor to save and invest, and are earning below the level that would entitle them to sponsor a foreign spouse to join them in the UK or enable them (according to the British government) to “fully participate in society”. Suppose (for the sake of argument) that you are right about the employment effects of abolishing the minimum wage, it simply isn’t true to say that those in the new jobs would enjoy the benefits you describe.

        • Sean II

          I don’t doubt you, and I’m not surprised.

          Between a VAT that eats up 10% of a poor person’s income, and a tax system that dramatically steepens the total cost of employment, not to mention raising the cost of all goods produced, what else would you expect?

          Really, it’s the worst of both worlds. A regressive VAT that hits people when they’re down, and a progressive ladder of artificially imposed employment costs that helps keep them there.

          But you’re doing okay, aren’t you Chris? Middle of the 40% bracket, right? Plenty of security, nice perks, eh?

          Has the thought ever crossed your mind that this welfare state is actually a big, ugly, nasty contraption designed to benefit people like you at the expense of, for example, the boys who paint their faces down by the stadium?

          • Chris Bertram

            Oddly enough, Sean, considerations of what you imagine might not have “crossed my mind” and my personal financial position are irrelevant to the point at hand, which you were gracious enough to concede.

          • Sean II

            “my personal financial position [is] irrelevant…”

            Oh, but isn’t that what members of a protected class always say, Chrissy my boy?

  • Marty Faulkner

    Matt, I love your article but your premise that progressives used to be “a bunch of racist nuts” is academically dishonest. Eugenics was considered a scientific fact and the normative belief and policy of the US government and most of its white citizens until the middle 1940s. The assertion that we can, as you did, use modern moral ethical arguments to deride persons who lived in a different time is revisionist and unnecessary to making your point. Perhaps you meant the sentence to be humorous but came off a bit heavy handed to me so I thought I would mention it. Past that one sentence this blog was clear and to the point. Well done.

    • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

      Hi Marty,
      I’m less reluctant than you, I think, to make moral judgments about past actors. It’s true, of course, that belief in the scientific and moral tenets of eugenics were fairly widespread in the early 20th century, even (or especially) among the socially and intellectually upper class. But that by itself doesn’t get anybody off the moral hook. Even if they were blameless in accepting the scientific claims of eugenics, they’re still blameworthy for the moral inferences they drew from those claims – inferences that would still have been monstrous even if those claims had been true.

      But, yeah, the sentence to which you object exaggerated my reaction somewhat for rhetorical effect. I don’t disown it entirely. But I certainly didn’t want to give anyone the impression that I was tarring all progressives as racist, or that I was implying that these views were held only by a strange, radical fringe of society.

      • Marty Faulkner

        Rhetorical effects?
        What good are they?

        If we are going to go against the accepted “scientific” errors another generation held as truth then we must also damn Jefferson and Washington for owning slaves. We must damn the whole medieval world for believing in and burning witches. We must damn our parents, their parents and so on ad infinitum for myriad and sundry beliefs and actions we now know are mere superstition or a lack of knowledge. We must except that it is intellectually dishonest.

        Intellectual honesty is the only real argument we can raise against he rising tide of fallacy and diatribe that has become the nature of political speech. If we allow it in our discourse what difference is there between what we are trying to convey and the Rush Limbaugh’s or Al Sharpton’s of the world? Is it all just a matter of degrees? When one sounds like everyone else how is one’s voice and message unique? Why be intellectually dishonest for rhetorical effect when that is the excuse everybody else uses? If it is not honest, what good is it?

        • http://www.sandiego.edu/~mzwolinski Matt Zwolinski

          I disagree with your charge of intellectual dishonesty. There’s nothing dishonest about saying that people who advocated the sterilization of the poor, or who owned slaves, should have known better. They should have. Some people did. That doesn’t mean they’re damned and that we must therefore ignore whatever good they did in their lives. But, sorry, I’m not buying the “everybody else was doing it, so how can we blame them?” line of argument.

          • Marty Faulkner

            Sorry Matt, I was using the term “Academic Dishonesty” precisely how historians use it when applying modern norms to past actions. It was not meant to be pejorative and not worth discussing. Since you work for an educational institution as I do, you may question a friend in the history department to see if I used the term correctly. I will abide by whatever they say but I have been assured I am using it correctly since I too was once called out for a similar statement.

  • http://socioproctology.blogspot.co.uk/ windwheel

    Them old ‘Progressives’ sure were a nasty bunch. Compulsory sterilization for retards in Sweden (championed by the Myrdals) till the Seventies- now, of course, it’s only fetuses we’re against.
    Minimum wage laws have more complicated effects including
    1) triggering a switch to outsourcing and self-employment (which can be beneficial for immigrants, legal or otherwise)
    2) information signalling and ‘indicative planning’ – a high minimum wage attracts more immigrants and enables more resources to be devoted to circumventing barriers.

    3) it affects other Social Security benefits and influences damages in cases of negligence. Higher minimum wages should attract the litigious and suspiciously accident-prone immigrant.

    • Marty Faulkner

      “attract the litigious and suspiciously accident-prone immigrant” that the rest of #3 sounds like something you would accuse “Them old ‘Progressives’” as saying. Do you listen to Rush Limbaugh? Unless I am wrong, you are connecting dots that simply do not exist. Please explain how one thing leads to another and please do not ask others to fill in the steps between. BTW, none of the reasons (except possible #1 but it will need to be filled in properly to bridge the gaps) you use to describe the effects of minimum wage laws sound even remotely Libertarian. I am really sorry to tell you but you really sound like a neo-con.

      • http://socioproctology.blogspot.co.uk/ windwheel

        Neo-con? I’ve been called a moron- you say potato I say spuds.

        The effects of minimum wage laws on immigration are complex. Standard Econ Analysis faces a problem because Immigrants aren’t homogenous and exhibit heteroscedasticity. The dynamics of immigration- because immigrant groups have a totally different information set and also different costs/benefits of evading/complying with immigration regulations- is so complex that, in general, Policy makers are behind the curve.
        I don’t think normative considerations have much legitimacy in this field. Most people would now agree that Jewish immigrants are a good thing. We should have subsidized their entry instead of sending their ships back in the 30′s. Yet, back then, many people were prejudiced against Jews because some of their poorest were involved in crime. Jean Paul Satre, for example, writes about young Jewish kids who carried knives and worked as pimps.
        At the moment some groups- e.g. Romany ‘gypsies’ or people from War torn countries like Somalia- are considered ‘undesirable’ in certain quarters because there is a perception that they may get drawn to criminal activities. The truth is where a community has been uprooted or subjected to unbearable trauma and suffering, then their ‘moral economy’ can breakdown temporarily. Israel is a good example of a country which successfully integrated very diverse immigrants.

        I think the point of this post is that a sort of strategic deception can be used by people linking two very different issues- viz. minimum wage laws and immigration- and framing their argument using pseudo Economic arguments.
        Turning to the points you mention
        1) Immigrants often have superior information/market power w.r.t their own kin. They can set up as outsourcing contractors and themselves become a driver for additional immigration. If mimimum wage legislation is applied WITHOUT an effort by Institutions to remedy information asymmetry w.r.t. job market signals possessed by immigrants, then the amount of what Morishima called ‘duality’ in the Economy will increase. So this is a complicated story and we can’t say anything a priori but must make a model and fit it to the data.
        2) In a world of Globalized business processes, Minimum Wage Legislation serves a clear ‘Indicative planning’ signalling function. However, some Business processes are ‘immigrant hungry’ and others are ‘immigrant averse’. Yet both may have external location economies with respect to each other. Thus we are back with a case by case approach by trying to see what the ‘mix’ is likely to be.
        Immigrants, being heterogenous, react to minimum wages in different ways. A high minimum may deter some and attract others in a perverse manner. Suppose I’m an BHL Scientist from a War-torn country offered a relocation package to either
        1) Estonia- which has abolished minimum wages
        or
        2) Latvia- which has just introduced very high minimum wages.
        I predict that Latvia will be in the toilet in a decade- not a good place to bring up my kids- while Estonia will be booming.
        Stuff like this gets magnified because immigration decisions are of very high importance to certain types of immigrants but only of marginal importance to policy makers (and even then, mainly for bad political reasons)
        3) Minimum Wages influence Social Security levels and damages. However there can be ‘benefit tourism’ or other strategic or adversely selective behavior which is difficult to detect but which disproportionately affects public perceptions.

        I think a good reason to be a Libertarian is because Policy Makers just don’t have the information to do the sort of substantive stuff which raises our hackles- or because of hysteresis effects, or Goodhart’s Law type reflexivity, they are bound to make things worse if the act even on good information.
        Straussian ‘Noble Lie’ types tend to be Kojeve type Hegelians or something else equally elitist. Libertarianism based on the doctrine of the extreme stupidity of the soi disant ‘great and the good’ seems reasonable to me.
        True, Rush Limbaugh is as thick as shit but he has made pots of money for himself spewing shite which a lot of far better educated people wanna do for free.

        • Marty Faulkner

          Unfortunately I am busy this evening because I want to study your reply in more depth. Hell, I had to look up heteroscedasticity and I doubt I could use it in as sentence quite yet but I like that you are deeper than I believed at first reading. Your reply is well considered and I do not want to answer without spending more than a moment considering your points. Please grant me the opportunity to give it the rereading it deserves. I am happy you are not a neo-con with the same one size fits all banalities they tend to offer as a refutation for every argument. I am still not clear on why “Minimum Wages influence Social Security levels and damages” but I say that in hopes you will clarify the position so I can intelligently agree or disagree based on my education and biases. I look forward to answering you, hopefully some time tomorrow.

          • http://socioproctology.blogspot.co.uk/ windwheel

            Sorry, my writing is often unclear.
            Generally, the level of some Welfare benefits will be linked to the minimum wage. The idea is that the benefit/earning ratio shouldn’t increase or people will be tempted to quit their job on some excuse. Thus a Govt. may set a low minimum wage (thus having zero redistributional impact) for a strategic reason.
            In fact, the worst possible combination is very low minimum wages plus a negative income tax- a sort of modern ‘Speenhamland System’- it may look Bleeding Heart but is anything but.
            In Court Cases, involving torts, damages might be calculated on the basis of ‘lost earnings’. The lawyers for the culpable party will say ‘look this dude we killed was a real knuckle-dragger. He’d have earned only minimum wage.’ and Courts might be inclined to accept that. Of course, a lot of States just arbitrarily cap Damages so even this argument is becoming ineffective.

      • kathy B

        and you sound like an elite windbag

        • Marty Faulkner

          That is a informal logical fallacy called an ad hominem. It allows you to ignore everything I said because either it disagrees with your opinion or you don’t like the way I said it. Either way it is a cop out that allows you not to not have to state your position and that is lame. I would return the favor and call you something derisive but frankly it would accomplish nothing and only encourage you to keep writing.

          • kathy B

            gee you continually impress me with big words

          • Marty Faulkner

            It is good to know you have a sense of humor.

  • GTFOofNOLA

    There’s already a minimum wage and newly arrived immigrants already work for less than that wage. Jacking the minimum wage up even higher would encourage more of the economy to be “underground”.

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  • afisher

    In short – this article says nothing. It is a russian doll game – I read and learned that another guy wrote this about another guy and so it is all bad! Note the quotes to see where the shift occurs.

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