PO Box 130
West Shokan, NY 12494
September 24, 2015
The Honorable Kevin Cahill
One Albany Avenue
Kingston, NY 12401
Dear Mr. Cahill:
In the course of a project that I have pursued over the past
few months, I have reviewed the contents of 540 academic articles in the three
leading industrial relations journals: Industrial
and Labor Relations Review, Industrial
Relations: A Journal of Economy and Society, and Journal of Labor Research.
The field of industrial relations was established as a left-wing
response to mainstream economics, and its support for the minimum wage was one
of the key reasons.
Nevertheless, the majority of the studies that appeared between
2008 and 2013 found that the minimum wage is associated with increased
unemployment. That is not surprising
because the majority of mainstream economists have long agreed that the minimum
wage causes unemployment. The reason is
that an enforced wage floor above the market rate increases the supply of labor
but reduces demand. The reduction in
demand comes about because employers leave the state; higher wages lead to
higher prices and customers leave the state; moreover, employers find new
production methods that reduce demand.
The reduction in demand forces unskilled labor into permanent
unemployment and dependency.
Until 2014 Germany did not have a federal minimum wage. Its youth unemployment rate has been half
that of Great Britain. Britain, which has had a lower minimum wage
than France, has had a slightly lower youth unemployment rate than France. France, with its suburbs or Banlieue overflowing
with unemployed minority youth who live lives of desperation and violence, has
the one of the highest minimum wages.
Until a few years ago the US minimum wage was low enough
that modest increases had limited effect on unemployment. Nevertheless, Walter
Wessels, an economist at North Carolina State University, realized that the minimum
wage has led to a decline in training and the end of the great American
tradition of working one’s way up from the bottom. That has occurred because in
order to compensate for the minimum wage without layoffs, employers reduced
what Wessels has called “fringe benefits”: training investments and other benefits.
They spend less on low-wage employees
and they replace them with capital investment. The result has been increasing income
inequality because minimum wage employees are locked at the bottom.
At a meeting of the Labor and Employment Relations
Association this past May, I asked a panel that was held concerning the minimum
wage, including two of the zealots advocating the minimum wage here in New
York, what the effect on business startups is.
The countries with high minimum wages are not famous for dynamic
economies, innovation, or progress. No
one on the panel knew what the effects on innovation or startups will be. Andrew Cuomo, the HUD chief who required that
banks make subprime loans, may not be the best one to ask.
The claim that the minimum wage is benevolent, progressive,
liberal, altruistic, generous, or kind is false. The
minimum wage forces a section of the public into permanent unemployment and
dependency. The workers who cannot earn the $15 per hour
that the minimum wage will require are among
the most vulnerable in society.
Compelling a large share of them to remain permanently unemployed and
dependent on welfare because that’s what the SEIU and social democrats whose
ideas have driven New York’s economy into the ground for the past century want is
illiberal, reactionary, and vicious.
Sincerely,
Mitchell Langbert
