September 30, 2006
One Man’s Sacred Cow Is Another Man’s Meal Posted by Joshua Zeitz at 04:45 PM EST Apropos of our three-way exchange on the minimum wage, John Steele Gordon wrote: “Both Mr. Smoler and Mr. Zeitz do not seem to grasp that the minimum wage is not a sacred, unquestionable concept to be defended at all costs.” Let’s leave aside for the moment Mr. Gordon’s habitually dismissive and snide tone. (If Fred Smoler and I disagree with John Steele Gordon, it only goes to follow that we “do not seem to grasp” some very elementary but vital fact of life.) I suppose I’m happy to seize this opportunity to defend sacred-cow status for the minimum wage. Before its introduction on the federal level in 1938, American workers in many industries suffered tremendously low wages and punishing work days. The 12-hour shift and seven-day work week at U.S. Steel stands out as a prime example of pre-New Deal labor exploitation. In the prosperous postwar years—say, 1945 to 1970—America did just fine by the minimum wage. Ours was something approximating a full-employment economy, and by keeping corporate taxes low (they got lower in the early 1960s, when the Kennedy-Johnson tax cuts were enacted) we provided business with a perfectly reasonable tradeoff: generous public subsidies in the form of federal highways, resource grants, and tax incentives, in exchange for a basic, humane agreement to treat workers with a bare minimum standard of decency. This was an arrangement that worked. In the absence of evidence that the minimum wage—currently at its lowest real value in several decades—has truly created meaningful unemployment over the past decade, why scrap it? Mr. Gordon makes much of my (and Fred Smoler’s) blind attachment to the minimum wage. But his stubborn insistence on Adam Smith and the invisible hand should be subject to the same scrutiny. There are plenty of sacred cows to go around.
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