Originally published in Flourishing July/August 2012
In the June edition of this newsletter I asked, “If things are so good, why is unemployment so stubbornly high?” I promised to give you my answer this month, but in fact, it will take me three months:
Human desires are unlimited. At least mine seem to be. I live at a substantially different level today than I did in my youth, or even as I did twenty years ago. If you look at your own lifestyle today, I’m sure you’ll find things that you can’t live without, that twenty years ago either didn’t exist or you thought you couldn’t afford.
Not only are my desires virtually unlimited, there are very few things I really like to do—or can do—myself. I’d prefer to hire other people to do them. I’d like to have a full-time gardener, for example.
It gets worse. I’m reasonably satisfied with the things I own now, but if I could afford them, I’d like to have a Rolls Royce and a chauffer to drive it for me, while I read Victor Hugo novels and sip fine French wines.
I once saw a beautiful teakwood sailboat with two diesel back-up engines. Sea-worthy, to say the least. Linda created a beautiful watercolor painting of it that now hangs in her home office. That boat would be really cool to own—if the price was right.
The only thing that prevents me from owning and doing these things is the price of the labor involved. If people would work for free, or almost free, I’d have all these things and more; virtually all my desires could be fulfilled. I could even (someday) fly to the moon on one of Richard Branson’s space ships. Weightlessness—I could handle that, I think.
But, even if I had unlimited wealth and/or people would work for nothing, I could still find many more things that need to be done than I could find people to do them. I think that’s true for most people and most businesses, too. Especially, businesses.
The point—to this point in my answer—is that there is always plenty of work to do, so a lack of work to do can never be the cause of unemployment. The cause of unemployment must be something else. But what?
The first and most obvious answer is that people sometimes voluntarily quit their jobs, and they may experience a delay before taking a new job.
That kind of unemployment is voluntary, and is perhaps the most common type of unemployment. Similarly, people retire from working altogether, but we usually don’t call that “unemployment”; we call it “retirement”.
The most common type of involuntary unemployment is that caused by minimum wage legislation. When I was about twelve years old, my dad “hired” me to “whip” weeds around sand piles and stacks of cinder blocks. At twenty-five cents an hour, I could earn two dollars a day1, and he didn’t have to pay his truck drivers to cut weeds. Delivering lumber, sand, and cinder blocks was worth more to him than weed-cutting. Anyway, at twelve years of age, he wasn’t about to put me behind the wheel of a fully-loaded REO Speedwagon.
Was he taking advantage of me? The correct answer, of course, is, “Who cares?” I had my two bucks – a lot of money for a twelve year old kid. I had to pick up nasty cups and cans at the Yankee Dollar Drive Inn for seven days to make that much money. But, that weed-cutting job – even with the latest string trimmer technology – couldn’t exist today; nor could the Yankee Dollar parking lot job; even allowing for child labor laws. Minimum wage legislation explains why teenage unemployment now hovers around 25% nationally; and even more sadly, for black inner-city teens it’s much higher, 39.3%2.
Minimum wage legislation also helps to explain self-service gas stations. Attendants—even teen-age attendants—can’t compete on price. Some people blame technology and our fast-paced lifestyles for the loss of these and other personal service jobs; but the real culprit is minimum wage legislation, which makes technological solutions comparatively more affordable than unskilled or low-skilled human labor. Who – but for the vast cost differences – would not rather be greeted by a smiling service station attendant than by a dirty LED screen?
I know some people won’t work for $2 a day—or even $7.25 an hour, the current minimum wage in Kansas—but some will, and in the process they’ll develop habits and skills that can help propel them toward higher paying jobs. (Did I mention that my girls paid for their college degrees by working in Dairy Queens and truck stops.) I have to ask: What are the values of personal independence, self-confidence, and pride worth? mh
(To be continued next month.)
1 In the late 1920’s, my dad performed the same work for his father (my grandfather) at seventy-five cents per day.
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