Milton Friedman Right Again

Milton Friedman, the Nobel-prize winning economist who was one of the intellectual leaders in the rise of free market economics in much of the world over the past 35 years, once described minimum wage laws as among the most racist laws in America.

He said this because by artificially raising wages above what they would be in a free market, minimum wages laws reduce the demand for labor - and hence keep people unemployed who would otherwise be employed. The people most likely effected by minimum wage laws are those with less job experience and skills, which tend to be disproportionately from minority groups.

Recent data from the Bureau of Labor Statistics as published in the Wall Street Journal illustrates this terrible problem. The federal government raised the minimum wage by 40%, from $5.15 to $7.25 per hour, from 2007 to 2009.

This huge percentage increase, at a time of recession, has led to an entirely predictable result. The teen unemployment rate (a good proxy for unskilled workers who tend to be most impacted by minimum wage laws) rose from 15% to over 25%. Even worse, the black teen unemployment rate rose from about 28% to 45%.

Teenage employment provides critical skills that are important for improving a person's job prospects throughout one's lifetime. Minimum wage laws reduce the development of such skills through the unemployment they create.

The Democrats do the unions' bidding on minimum wage laws, and in return hurt all unskilled workers, particularly minorities, by denying them employment opportunities.