The racist roots of minimum wage laws (plus classic Ron Paul)

If there is one topic “progressives” are more reluctant to address during Black History Month than the role the second amendment played in the civil rights movement, is the racist roots of their beloved minimum and prevailing wage laws. These laws where enacted with the explicate goal of pricing black and other minorities out of the labor markets. Thomas Sowell elaborates:

Minimum-wage laws can even affect the level of racial discrimination. In an earlier era, when racial discrimination was both legally and socially accepted, minimum-wage laws were often used openly to price minorities out of the job market. In 1925, a minimum-wage law was passed in the Canadian province of British Columbia, with the intent and effect of pricing Japanese immigrants out of jobs in the lumbering industry. A Harvard professor of that era referred approvingly to Australia’s minimum wage law as a means to “protect the white Australian’s standard of living from the invidious competition of the colored races, particularly of the Chinese” who were willing to work for less. In South Africa during the era of apartheid, white labor unions urged that a minimum-wage law be applied to all races, to keep black workers from taking jobs away from white unionized workers by working for less than the union pay scale. Some supporters of the first federal minimum-wage law in the United States — the Davis-Bacon Act of 1931 — used exactly the same rationale, citing the fact that Southern construction companies, using non-union black workers, were able to come north and underbid construction companies using unionized white labor. These supporters of minimum-wage laws understood long ago something that today’s supporters of such laws seem not to have bothered to think through. People whose wages are raised by law do not necessarily benefit, because they are often less likely to be hired at the imposed minimum-wage rate. Labor unions have been supporters of minimum-wage laws in countries around the world, since these laws price nonunion workers out of jobs, leaving more jobs for union members. People who are content to advocate policies that sound good, whether for political reasons or just to feel good about themselves, often do not bother to think through the consequences beforehand or to check the results afterwards.

In the same column, Professor Sowell looks the policies behind so many African-American politicians support for polices that harm their low-income constituents:

Advocates of minimum-wage laws usually base their support of such laws on their estimate of how much a worker “needs” in order to have “a living wage” — or on some other criterion that pays little or no attention to the worker’s skill level, experience or general productivity. So it’s hardly surprising that minimum-wage laws set wages that price many a young worker out of a job. What is surprising is that, despite an accumulation of evidence over the years of the devastating effects of minimum-wage laws on black teenage unemployment rates, members of the Congressional Black Caucus continue to vote for such laws. Once, years ago, during a confidential discussion with a member of the Congressional Black Caucus, I asked how they could possibly vote for minimum-wage laws. The answer I got was that members of the Black Caucus were part of a political coalition and, as such, they were expected to vote for things that other members of that coalition wanted, such as minimum-wage laws, in order that other members of the coalition would vote for things that the Black Caucus wanted. When I asked what could the black members of Congress possibly get in return for supporting minimum-wage laws that would be worth sacrificing whole generations of young blacks to huge rates of unemployment, the discussion quickly ended. I may have been vehement when I asked that question.

Read the whole column here. The post child for economically destructive laws passed with racist intent–yet defended by “progressive” champions of economic equality– is the Davis-Bacon Act. Davis-Bacon requires federal contractors pay “prevailing wages:– as determined by Department of Labor bureaucrats, on federal construction projects. The law was passed in the 30s with the goal of protecting white union workers from competition from “cheap colored (non-union) labor.” When he was a member of the House Education and Workforce Committee, Campaign for Liberty Chairman Ron Paul introduced legislation repealing Davis-Bacon. In his official statement on the bill, Dr. Paul explained the racist intent and effect of the this bill. You can read Dr. Paul’s statement here and below:

 INTRODUCING THE DAVIS-BACON REPEAL ACT ______ HON. RON PAUL of texas in the house of representatives Thursday, October 23, 1997 Mr. PAUL. Mr. Speaker, I rise today to introduce the Davis-Bacon Repeal Act of 1997. The Davis-Bacon Act of 1931 forces contractors on all federally-funded construction projects to pay the local prevailing wage, defined as ``the wage paid to the majority of the laborers or mechanics in the classification on similar projects in the area.'' In practice, this usually means the wages paid by unionized contractors. For more than 60 years, this congressionally-created monstrosity has penalized taxpayers and the most efficient companies while crushing the dreams of the most willing workers. Mr. Speaker, Congress must act now to repeal this 61-year-old relic of the era during which people actually believed Congress could legislate prosperity. Americans pay a huge price is lost jobs, lost opporuntities and tax-boosting cost overruns on Federal construction projects every day Congress allows Davis-Bacon to remain on the books. Davis-Bacon artificially inflates construction costs through a series of costly work rules and requirements. For instances, under Davis- Bacon, workers who perform a variety of tasks must be paid at the highest applicable skilled journeyman rate. Thus, a general laborer who hammers a nail must now be classified as a carpenter, and paid as much as three times the company's regular rate. As a result of this, unskilled workers can be employed only if the company can afford to pay the Government-determined prevailing wages and training can be provided only through a highly regulated apprenticeship program. Some experts have estimated the costs of complying with Davis-Bacon regulations at nearly $200 million a year. Of course, this doesn't measure the costs in lost jobs opportunities because firms could not afford to hire an inexperienced worker. Most small construction firms cannot afford to operate under Davis- Bacon's rigid job classifications or hire the staff of lawyers and accountants needed to fill out the extensive paperwork required to bid on a Federal contract. Therefore, Davis-Bacon prevents small firms from bidding on Federal construction projects, which, unfortunately, constitute 20 percent of all construction projects in the United States. Because most minority-owned construction firms are small companies, Davis-Bacon keeps minority-owned firms from competing for Federal construction contracts. The resulting disparities in employment create a demand for affirmative action, another ill-suited and ill-advised Big Government program. The racist effects of Davis-Bacon are no mere coincidence. In fact, many original supporters of Davis-Bacon, such as Representative Clayton Allgood, bragged about supporting Davis-Bacon as a means of keeping cheap colored labor out of the construction industry. In addition to opening up new opportunities in the construction industry for small construction firms and their employees, repeal of Davis-Bacon would also return common sense and sound budgeting to Federal contracting, which is now rife with political favoritism and cronyism. An audit conducted earlier this year by the Labor Department's Office of the Inspector General found that an inaccurate data were frequently used in Davis-Bacon wage determination. Although the inspector general's report found no evidence of deliberate fraud, it did uncover material errors in five States' wage determinations, causing wages or fringe benefits for certain crafts to be overstated by as much as $1.08 per hour. The most compelling reason to repeal Davis-Bacon is to benefit the American taxpayer. the Davis-Bacon Act drives up the cost of Federal construction costs by as much as 50 percent. In fact, the Congressional Budget Office has reported that repealing Davis-Bacon would save the American taxpayer almost $3 billion in 4 years. Mr. Speaker, it is time to finally end this patently unfair, wildly inefficient and grossly discriminatory system of bidding on Federal construction contracts. Repealing the Davis-Bacon Act will save taxpayers billions of dollars on Federal construction costs, return common sense and sound budgeting to Federal contracting, and open up opportunities in the construction industry to those independent contractors, and their employees, who currently cannot bid on Federal projects because they cannot afford the paperwork requirements imposed by this Act. I therefore urge all my colleagues to join me in supporting the Davis-Bacon Repeal Act of 1997.