The following is a look into the dark history of the minimum wage. The minimum wage is the greatest barrier for the un-educated, disabled, and unskilled worker from making advancement into the labor market. Today we hear how the minimum wage should be raised for the good of those working, but they never tell you about how the minimum wage hurts the unskilled looking to break into the work force.
In his “Letter from Birmingham Jail,” Martin Luther King Jr. identifies the government as the enemy of the rights and dignity of blacks. He was locked up for marching without a permit. King cites the injustices of the police and courts in particular. And he inspired a movement to raise public consciousness against state brutality, especially as it involved fire hoses, billy clubs, and jail cells.
Less obvious, however, had been the role of a more covert means of subjugation — forms of state coercion deeply embedded in the law and history of the United States. And they were offered as policies grounded in science and the scientific management of society.
Consider the minimum wage. How much does racism have to do with it? Far more than most people realize. A careful look at its history shows that the minimum wage was originally conceived as part of a eugenics strategy — an attempt to engineer a master race through public policy designed to cleanse the citizenry of undesirables. To that end, the state would have to bring about the isolation, sterilization, and extermination of nonprivileged populations.
The eugenics movement — almost universally supported by the scholarly and popular press in the first decades of the 20th century — came about as a reaction to the dramatic demographic changes of the latter part of the 19th century. Incomes rose and lifetimes had expanded like never before in history. Such gains applied to all races and classes. Infant mortality collapsed. All of this was due to a massive expansion of markets, technology, and trade, and it changed the world. It meant a dramatic expansion of population among all groups. The great unwashed masses were living longer and reproducing faster.
This trend worried the white ruling class in most European countries and in the United States. As John Carey documented in Intellectuals and the Masses (1992), all the founders of modern literary culture — from H.G. Wells to T.S. Elliot — loathed the new prosperity and variously spoke out on behalf of extermination and racial cleansing to put an end to newly emerging demographic trends. As Wells summed up, “The extravagant swarm of new births was the essential disaster of the nineteenth century.”
The eugenics movement, as an application of the principle of the “planned society,” was deeply hostile to free markets. As The New Republic summarized in a 1916 editorial:
Imbecility breeds imbecility as certainly as white hens breed white chickens; and under laissez-faire imbecility is given full chance to breed, and does so in fact at a rate far superior to that of able stocks.
To counter the trends unleashed by capitalism, states and the national government began to implement policies designed to support “superior” races and classes and discourage procreation of the “inferior” ones. As explained by Edwin Black’s 2003 book, War Against the Weak: Eugenics and America’s Campaign to Create a Master Race, the goal as regards women and children was exclusionist, but as regards nonwhites, it was essentially exterminationist. The chosen means were not firing squads and gas chambers but the more peaceful and subtle methods of sterilization, exclusion from jobs, and coercive segregation.
It was during this period and for this reason that we saw the first trial runs of the minimum wage in Massachusetts in 1912. The new law pertained only to women and children as a measure to disemploy them and other “social dependents” from the labor force. Even though the measure was small and not well enforced, it did indeed reduce employment among the targeted groups.
To understand why this wasn’t seen as a failure, take a look at the first modern discussions of the minimum wage appearing in the academic literature. Most of these writings would have been completely forgotten but for a seminal 2005 article in the Journal of Economic Perspectives by Thomas C. Leonard.
Leonard documents an alarming series of academic articles and books appearing between the 1890s and the 1920s that were remarkably explicit about a variety of legislative attempts to squeeze people out of the work force. These articles were not written by marginal figures or radicals but by the leaders of the profession, the authors of the great textbooks, and the opinion leaders who shaped public policy.
“Progressive economists, like their neoclassical critics,” Leonard explains, “believed that binding minimum wages would cause job losses. However, the progressive economists also believed that the job loss induced by minimum wages was a social benefit, as it performed the eugenic service ridding the labor force of the ‘unemployable.’”
At least the eugenicists, for all their pseudo-scientific blathering, were not naïve about the effects of wage floors. These days, you can count on media talking heads and countless politicians to proclaim how wonderful the minimum wage is for the poor. Wage floors will improve the standard of living, they say. But back in 1912, they knew better — minimum wages exclude workers — and they favored them precisely because such wage floors drive people out of the job market. People without jobs cannot prosper and are thereby discouraged from reproducing. Minimum wages were designed specifically to purify the demographic landscape of racial inferiors and to keep women at the margins of society.
The famed Fabian socialist Sidney Webb was as blunt as anyone in his 1912 article “The Economic Theory of the Minimum Wage”:
Legal Minimum Wage positively increases the productivity of the nation’s industry, by ensuring that the surplus of unemployed workmen shall be exclusively the least efficient workmen; or, to put it in another way, by ensuring that all the situations shall be filled by the most efficient operatives who are available.
The intellectual history shows that whole purpose of the minimum wage was to create unemployment among people who the elites did not believe were worthy of holding jobs.
And it gets worse. Webb wrote:
What would be the result of a Legal Minimum Wage on the employer’s persistent desire to use boy labor, girl labor, married women’s labor, the labor of old men, of the feeble-minded, of the decrepit and broken-down invalids and all the other alternatives to the engagement of competent male adult workers at a full Standard Rate? … To put it shortly, all such labor is parasitic on other classes of the community, and is at present employed in this way only because it is parasitic.
Further, Webb avers: “The unemployable, to put it bluntly, do not and cannot under any circumstances earn their keep. What we have to do with them is to see that as few as possible of them are produced.”
Though Webb was writing about the experience in the United Kingdom, and his focus was on keeping the lower classes from flourishing, his views were not unusual. The same thinking was alive in the US context, but race, not class, became the decisive factor.
Henry Rogers Seager of Columbia University, and later president of the American Economic Association, laid it all out in “The Theory of the Minimum Wage” as published in the American Labor Legislation Review in 1913: “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.”
Further, he wrote, “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.”
Isolation and sterilization of less desirable population groups are a form of slow-motion extermination. The minimum wage was part of that agenda. That was its purpose and intent. The opinion makers of 100 years ago were not shy about saying so. The policy was an important piece of weaponry in their eugenic war against nonelite population groups.
Princeton University’s Royal Meeker was Woodrow Wilson’s commissioner of labor. “It is much better to enact a minimum-wage law even if it deprives these unfortunates of work,” Meeker argued in 1910. “Better that the state should support the inefficient wholly and prevent the multiplication of the breed than subsidize incompetence and unthrift, enabling them to bring forth more of their kind.”
Frank Taussig, who was otherwise a good economist, asked in his bestselling textbook Principles of Economics (1911): “How to deal with the unemployable?”
They “should simply be stamped out,” he stated.
We have not reached the stage where we can proceed to chloroform them once and for all; but at least they can be segregated, shut up in refuges and asylums, and prevented from propagating their kind.…
What are the possibilities of employing at the prescribed wages all the healthy able-bodied who apply? The persons affected by such legislation would be those in the lowest economic and social group. The wages at which they can find employment depend on the prices at which their product will sell in the market; or in the technical language of modern economics, on the marginal utility of their services. All those whose additional product would so depress prices that the minimum could no longer be paid by employers would have to go without employment. It might be practicable to prevent employers from paying any one less than the minimum; though the power of law must be very strong indeed, and very rigidly exercised, in order to prevent the making of bargains which are welcome to both bargainers.
These are but a small sample and pertain only to this one policy. Eugenics influenced other areas of American policy, too, especially racial segregation. Obviously you can’t have the races socializing and partying together if the goal is to gradually exterminate one and boost the population of the other. This goal was a driving force behind such policies as regulations on dance clubs, for example. It was also a motivation behind the proliferation of marriage licenses, designed to keep the unfit from marrying and reproducing.
But the minimum wage is in a special category because, these days, its effects are so little understood. One hundred years ago, legislating a price floor on wages was a policy deliberately conceived to impoverish the lower classes and the undesirables, and thereby to disincentivize their reproduction. A polite gulag.
As time went on, the blood lust of the eugenics movement died down, but the persistence of its minimum wage policies did not. A national minimum wage passed in 1931 with the Davis-Bacon Act. It required that firms receiving federal contracts pay prevailing wages, which meant union wages, a principle that later became a national minimum wage.
Speeches in support of the law were explicit about the fear that black workers were undercutting the demands of white-only unions. The minimum wage was a fix: it made it impossible to work for less. The sordid history of the minimum wage law is harrowing in its intent but, at least, realistic about what wage floors actually do. They stop upward mobility.
Eugenics as an idea eventually lost favor after World War II, when it came to be associated with the Third Reich. But the labor policies to which it gave rise did not go away. They came to be promoted not as a method of exclusion and extermination but rather, however implausibly, as a positive effort to benefit the poor.
Whatever the intentions, the effects are still the same. On that the eugenicists were right. The eugenics movement, however evil its motive, understood an economic truth: the minimum wage excludes people from the job market. It takes away from marginal populations their most important power in the job market: the power to work for less. It cartelizes the labor market by allowing higher-wage groups access while excluding lower-wage groups.
King wrote of the cruelty of government in his day. That cruelty extends far back in time, and is crystallized by a wage policy that effectively makes productivity and upward mobility illegal. If we want to reject eugenic policies and the racial malice behind them, we should also repudiate the minimum wage and embrace the universal right to bargain.
By Jeffery A. Tucker