Unholy Coalition

In his classic discussion of minimum wage laws Milton Friedman described an unholy coalition between well-meaning sponsors, and special interests. The special interests use the well-meaning sponsors as front-men to promote minimum wage laws to the public at large. However, the special interests are not well-meaning themselves. One of the primary motives for labor unions to promote minimum wage laws is to reduce competition for jobs—particularly low-wage competition that creates pressure for lowering wages. Another motive is that some union contracts are tied to minimum wages. So if a statutory minimum increases, so does their own contracted wages.

A recent and deviously clever innovation in minimum wage laws is to include a waiver in the statute, such that the minimum wage itself can be waived, if set forth in a collective bargaining agreement. In other words, the workers must be unionized. This creates the perverse incentive that the higher the minimum wages the more likely it is for companies to unionize, in order to bargain-down the wages. Neither the employer nor the employees are happy, but it is preferable to going out of business entirely and losing jobs. The only real winners are the union officials, who then have a larger membership base, more dues, and more power.

But to make this unholy coalition effective, the union leaders must convince the well-meaning sponsors, whom Friedman calls “do-gooders,” that the only reason anyone could possibly object to minimum wage increases is a greedy desire to keep the poor subservient to the wealthy. It’s the “class struggle” excuse that Karl Marx used to justify socialism, yet it still works amazingly well today. Another less flattering but more accurate description for the do-gooders is “useful idiots,” which is also a term employed by Socialists. Useful idiots are manipulated by union leaders to do their bidding—convinced that those who favor minimum wages are compassionate towards the poor, while equally convinced that those who are opposed are greedy. And the supreme irony is this: Those two roles are actually reversed.

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