The Horrific Origin of Progressive Minimum Wage Advocacy

Thomas C. Leonard writes:

During  the  second  half  of the  Progressive  Era,  beginning roughly  in  1908, progressive  economists and  their  reform  allies achieved  many  statutory  victories, including state  laws that  regulated working  conditions, banned child  labor,  insti- tuted   “mothers’   pensions,”   capped working  hours   and,  the  sine qua non,  fixed minimum wages. In using eugenics  to justify exclusionary immigration legislation, the race-suicide  theorists offered  a model  to economists advocating labor  reforms, notably  those  affiliated  with the  American  Association  for Labor  Legislation,  the organization of academic economists that  Orloff  and  Skocpol  (1984,  p. 726)  call the  “leading  association  of U.S. social reform  advocates  in the  Progressive  Era.”

Progressive  economists, like  their  neoclassical  critics,  believed  that  binding minimum wages would cause job losses. However, the  progressive  economists also believed  that  the  job  loss induced by minimum wages was a social benefit, as it

performed the  eugenic service  ridding the  labor  force  of  the  “unemployable.” Sidney  and  Beatrice  Webb  (1897  [1920],  p. 785)  put  it plainly:  “With regard to certain  sections of the population [the  “unemployable”], this unemployment is not a mark of social disease, but actually of social health.”  “[O]f all ways of dealing  with these  unfortunate parasites,”  Sidney Webb (1912,  p. 992) opined in the  Journal of Political Economy, “the  most  ruinous to  the  community is to  allow them  to  unre- strainedly  compete as wage earners.” A minimum wage was seen to operate eugen- ically through two  channels: by deterring prospective immigrants (Henderson,

1900)  and  also  by removing from  employment the  “unemployable,” who,  thus identified, could  be, for example, segregated in rural  communities or sterilized.

The  notion that  minimum-wage induced  disemployment is a social  benefit distinguishes its  progressive  proponents from  their   neoclassical  critics,  such  as Alfred Marshall (1897),  Philip Wicksteed (1913),  A. C. Pigou (1913)  and John Bates Clark  (1913),  who regarded job loss as a social cost of minimum wages, not  as a putative  social benefit (Leonard, 2000)...

For these  progressives,  race  determined the  standard of living, and  the  stan- dard  of living determined the  wage. Thus  were immigration restriction and  labor legislation, especially minimum wages, justified for their  eugenic effects. Invidious distinction, whether founded on the putatively greater fertility of the unfit, or upon their  putatively greater predisposition to low wages, lay at the heart  of the reforms we today see as the  hallmark of the  Progressive  Era.