Milton Friedman on the minimum wage

27 passages for “the minimum wage”, 15 checked against the source. Page 2 of 3.

Full topic page: Wages, unions, and the minimum wage

1. “A worker is protected from his employer by the existence of other employers for who he can go to work. An employer is protected from exploitation by his employees by the existence of other workers whom he can hire. The consumer is protected from exploitation by a given seller by the existence of other sellers from whom he can buy.”

2. “Over the period covered by these data, a drastic change has occurred in the responsibilities undertaken by the state to provide assistance to the aged, unemployed and otherwise dependent. This change has had divergent results on the particular data under discussion. The availability of assistance from the state would clearly tend to reduce the need for private reserves and so to reduce private saving—it is equivalent, in terms of our hypothesis, to a reduction in the variance of transitory components.”

3. “It is a tragic but undoubted legacy of the past—and one we must try to correct—that, on the average, Negroes have lower skills than whites. Similarly, teen-agers are less skilled than older workers. Both Negroes and teen-agers are only made worse off by discouraging employers from hiring them. On-the-job training—the main route whereby the unskilled have become skilled—is thus denied them.”

4. “When everybody owns something, nobody owns it, and nobody has a direct interest in maintaining or improving its condition. That is why buildings in the Soviet Union — like public housing in the United States — look decrepit within a year or two of their construction.”

5. “How much attention is paid to agreement between Galbraith and myself in opposing a draft and favoring an all-volunteer armed force, or in opposing tariffs and favoring free trade, or on a host of other issues? What is newsworthy is that Galbraith endorses wage and price controls, while I oppose them.”

6. “To state this conclusion differently, there is always a temporary trade-off between inflation and unemployment; there is no permanent trade-off. ( … ) The widespread belief that there is a permanent trade-off is a sophisticated version of the confusion between “high” and “rising” that we all recognize in simpler forms. A rising rate of inflation may reduce unemployment, a high rate will not.”

7. “"The strongest argument for free enterprise is that it prevents anybody from having too much power. Whether that person is a government official, a trade union official, or a business executive. If forces them to put up or shut up. They either have to deliver the goods, produce something that people are willing to pay for, are willing to buy, or else they have to go into a different business."”

8. “The well-meaning current sponsors of universal national service will recoil at that prospect. They would insist on letting the youngsters choose for themselves how they serve. That is what happens now, via the market system, in which market wages equate supply and demand. But universal national service is meaningless unless it involves equal pay—which also means control and direction of labor.”

9. “The elementary fact is that ‘business’ does not and cannot pay taxes. Only people can pay taxes. Corporate officials may sign the check, but the money that they forward to Internal Revenue comes from the corporation’s employees, customers, or stockholders.”

10. “Why would Congress do such a thing? Because the adverse effect on the poor is diffuse and its source misunderstood and hence produces little political pressure. Effective pressure is exerted by organized groups that welcome the effect of a high minimum-wage rate in strengthening unionized and skilled workers vis-a-vis nonunionized and unskilled workers and in protecting employers in high-wage areas (the North) from the competition of employers in low-wage areas (the South). These organized groups find ready allies in the liberal reformers whose lack of understanding of economics misdirects their sincere concern for the disadvantaged.”