WWFS: What would Friedman say about minimum-wage hikes?

By Jim Waters - Bluegrass Beacon

We’re closing in on the 103rd anniversary of the late Nobel laureate Milton Friedman’s birthday on July 31 while witnessing a maddening rush toward mammoth minimum-wage hikes, led by out-of-touch and economically illiterate do-gooders – from the White House to the Kentucky governor’s mansion and even to members of the Lexington-Fayette Urban County Council.

As I witness this economic and political madness, I can’t help but wanting to offer a remix on Simon and Garfunkel’s “Where have you gone, Joe DiMaggio? Our nation turns its lonely eyes to you,” to “Where have you gone, Milton Friedman? Our commonwealth needs your wisdom more than ever.”

Fortunately, while Friedman has “gone away,” YouTube remains.

So does our ability to answer: “What would Friedman say about the attempt to increase Lexington’s minimum wage by a whopping 40 percent – from $7.25 to $10.10 an hour?”

We don’t have to guess what Friedman, who was a mental giant despite being diminutive of stature, would say. He left it with us in his own words.

Friedman would call the misguided attempt in Lexington led by council member Jennifer Mossotti a misguided attempt to help the poor.

“You are doing nothing of the kind,” Friedman would say, as he did in a past interview on Public Television’s long-running “The Open Mind” with the late Richard Heffner. “What you are doing is to assure that people whose skills are not sufficient to justify that kind of a wage will be unemployed.”

The do-gooders point to studies showing that raising the minimum wage will not affect employment. But just like not all minimum-wage increases have the same impact on all areas of a nation, state or even a community, so not all reports on the issue dig deep enough.

Many take surface views and lack any historical perspective.

As a result, they have little or no interest in what history teaches concerning the minimum wage’s effect on particular groups and simply propagandize that raising the minimum wage doesn’t negatively impact employment.


He would bring economic and common sense – both of which he possessed in abundance – to the discussion, noting that such a conclusion fails to consider how raising the minimum wage affects young people.

“It is no accident that the unemployment rate among teenagers in this country is over twice as high as the overall unemployment rate,” Friedman said. “It’s no accident that that was not always the case. Until the 1950s, when the minimum wage rate was raised very drastically and very quickly, teenage unemployment … was nothing like the extraordinary level it has now reached.”

Not only is teenage unemployment suffering; so, too, is teenage employment.

Western Kentucky University economist Brian Strow, Ph.D., noted in a recent study that America’s youth-employment rate fell from 47 percent to 27 percent between 1990 and 2014.

“Youth employment is almost half of what it was 25 years ago,” he wrote.

Political advocates of raising the minimum wage, including council member Mossotti and her band of community organizing, entitlement-minded protesters, run away from discussing the impact of a minimum-wage hike on young people almost as fast as the Republican establishment is running away from presidential candidate Donald Trump.

The fact that you never hear them express any genuine concern about this aspect of the proposed policy should raise serious doubts among a group of elected council members in a city that includes 30,000 students bleeding University of Kentucky blue.

Common sense alone tells you: that’s a lot of potential unemployment and brings home an important point made by Friedman in a Newsweek column nearly a half-century ago: “The true minimum wage is zero—the amount an unemployed person receives from his nonexistent employer.”


By Jim Waters

Bluegrass Beacon

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

Jim Waters is president of the Bluegrass Institute, Kentucky’s free-market think tank. Reach him at jwaters@freedomkentucky.com. Read previously published columns at www.bipps.org.

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