Milton Friedman On The Unholy Coalitions Of The Minimum Wage

Tyler Durden's picture

This week we were told that, by the magic of a non-deficit-increasing wave of our President's hand, the minimum wage should be increased to $9 (a 24% rise from the current $7.25 federal minimum wage) and anchored to inflation going forward. The rabbit-holes of whether this is a good or bad thing run deep and in very different directions. However, in three short minutes, Milton Friedman provides some critically clarifying truthiness on the unholy coalitions between 'do-gooders', 'special interests', 'trade unions', and the vicious circle that this non-market-based decision will create. "Do-Gooders believe passing a law saying nobody shall get less than [a minimum wage] is helping poor people (who need the money). You're doing nothing of the kind. What you're doing is to ensure that people whose skills do not justify that wage will be unemployed." It is no accident that youth unemployment is almost double the overall unemployment rate. We never learn... and as Friedman concludes, "it is the exact people who the do-gooders are trying to help that are hurt the most - the poorest!"


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A Nanny Moose's picture

As opposed to drinking K00l-Aid without question. I know a good 12-step program when you are ready.

EnslavethechildrenforBen's picture

Jew trolls on this site can go blow yourselves.

LetThemEatRand's picture

Printing trillions of dollars and ZIRP are inflationary far more than raising min wage.

nope-1004's picture

The two aren't exclusive.  In fact, QE and ZIRP are a direct cause of minimum wage needing to be raised.  And it's not just "minimum wage", it's all wages.  We have widespread dollar destruction going on now.

As more dollars are printed, the value of each dollar declines.  The argument about minimum wage has nothing to do with labor value, and everything to do with the government admitting that inflation is eating away at earning power.  With no mimimum mandated, corporations would then each have to have a policy of raising wages commensurate with inflation.  How would that be monitored or enforced?

IMO, minimum wage laws are in place at the request of the FED with the goal of masking dollar destruction.  They know if they don't institue a law regarding currency devaluation as it pertains to income, then the cat is out of the bag and dollar devaluation becomes headline news such as "company X increased wages by 20% because last year our dollar lost 20%."  Can you imagine headlines like that coming from McDonalds, Wal-Mart, or Target?

It is way easier to keep the masses numb by having a "mimimum wage law" under the guise of helping J6P.

I believe this is not a labor value argument, but a dollar value argument.


dick cheneys ghost's picture my wage to me in a form of money that does not depreciate year over year.....SILVER or GOLD


fuck debt (fiat) Money

spanish inquisition's picture

Your post brings up most of what I was thinking about this article in the last day or so. Highly likely a FED request.

I am also thinking about the possibility that this is proactive and meant to push all the newly printed money into service to jump start the economy. The short term hope is that the wage increase will last long enough before inflation kicks in from the poor spending their excess wages. (I think this is a very plausible explanation because it is wrong, stupid, how an economist would think, wouldn't last 6 months and reeks of desperation) 

Long term, the employers will be crushed by this and Obamacare and the people by inflation. But, every long term problem will allow the governemnt 2 or 3 good kicks at a can....


Stuffs And Stuff's picture

Well said, my friend. It sure as hell isn't possible for anyone to live on minimum wage; as a minimum wage worker, you have two options - Work at minimum wage and get government assistance, or just not work and collect government assistance. 

Some of my facebook friends are saying to bless Obama for this, they're saying AMEN! It's like DAMN, don't they realize that while minimum wage workers might get paid a little bit more, companies are also going to increase their prices to make up for lost revenue, meaning there's really no effective difference in pay, and then everyone else will essentially be getting a pay reduction because prices go up but their wages aren't!

It's the same reason college tuition is so expensive - There's so much government assistance available that it justifies continually raising the price. I know people who are $30,000 in debt just from college; if the prices keep going up, soon you're going to have kids $50,000 in debt, $100,000 in debt, you're going to have people in their 80s, still not retired, paying off the student loans from their 20s and shit!

And now I heard Obama wants to make everyone go to community college. In a few years, the price for that is going to skyrocket because of it, and it's going to make it impossible to find a job without a degree, eseentially making you pay just to get a job. You're going to have people applying for jobs at McDonalds... Competiting with college graduates for a minimum wage position!!! 

DCFusor's picture

I have survived on min wage or less - one part time job - so you're full of it.  Sure, you can't live in silicon valley for that, it depends where you are.  And you can't have bling and fancy new stuff, but you can have plenty to eat, 3 hots, a cot in a dive (or in my case, a small building in the country).

It was good disipline for when I got rich (after starting a company), actually.


Stuffs And Stuff's picture

You're right, I guess it depends on where you live. What I want to know... is where the fuck do you live?!

I live in over-priced Maryland - Everything is over-priced here. You may say to just move, but... this is where my job was.

I was working full-time for $9.25, and most of my income was going to rent, utilities, food, and internet. I wasn't living in a nice place, either; I was living with my girlfriend in the cheapest one-bedroom apartment we could find in an area that allowed us both to get to work at reasonable distances. My hours were variable so sometimes I would have no money for the week after bills - I would be lucky just have to $50 for the week.

With this $50, I had options.

I could save it and do nothing for the week except sit in the house, but why the fuck am I going to just sit there all week so I can save 50? What the fuck am I going to save up for with $50? Especially since I wouldn't know if I would have more money to add to that the next week, because again, my hours were variable.

I would try to save as much as possible whenever possible, but honestly I would often end up buy drugs if I had extra money - I would self-medicate because I was fucking depressed. It was more economic to buy drugs than go out with friends. I could go out for a night or two or I could self-medicate for 5 days.

I want to know where you live that you can live on minimum wage part-time. It's NOT possible here unless you live with your parents... I mean, I guess you can SURVIVE, but you're going to live a really shitty uneventful life, you're just going to work and do nothing else!!!

Cow's picture

Anybody who lives on minimum wage for a long time, deserves it. You could a) get two jobs, b) get more education/experience to make yourself more valuable to someone, c) sit on your ass and get high, or d) work hard at your current job so your employer thinks you are worth more than the minimum.

Stuffs And Stuff's picture

It wasn't minimum wage, first off.

Second, my hours were completely variable, between 30-60, so theres no way I could have another job at the same time. Also, even if I could have worked two jobs at once, considering I occasionally had 60-hour weeks, you think I really want to work another 20?!

I was a great worker, Cow. I was fucking amazing and the entire staff there loved me for it, with the exception of the general manager - The manager, though, she was a complete sociopath!

The manager used to huff dust off at work for fucks sake!

I was written up from her before for literally not being able to be in two places at once.

I worked there full-time and she told me I wasn't eligable for their health insurance because I wasn't full-time.

She used to make huge mistakes and then blame other people! She fucked up this one time and threatened to fire an entire department for something she fucking caused!

She used to straight up lie to people, it was a vet and you would need equipment to do your job, and if your equipment needed repaired or replaced, she would tell you she just ordered it then a month later she would say she forgot to order it.

I remember when I was bitten by a cat and I was wrapping it up so I could do my job without risking infection. The manager came up to me and said I should wear a cone collar on it so I don't bite at it. I wanted to slap that bitch for saying that!

The manager drove to work on some type of medication you aren't supposed to drive on, then fell asleep at the wheel, crashed into a power line, taking out power for the entire block, totalled her car and broke her leg.

The list goes on and on, man, this is just the tip of fucking ice-berg. The owner, however, ALWAYS had her back. So don't tell me to work harder motherfucker, as if I'm some lazy chode.

object_orient's picture

Oh come on. Real life experiences are way less credible than platitudes. Work hard and get ahead. The early bird catches the worm. And so on.

Stuffs And Stuff's picture

I suppose they are; it's like people assume you're some lazy piece of shit just because you're poor. It doesn't matter that the system is actively holding you down, no, it's your fault. Not trying to play the victim here, I'm just saying.

I eventually did get a dollar raise, though; not because my hard work convinced her, but because she didn't have a choice - I was going to severely cut back my hours so I could find a second job, if she didn't. She could've found another worker, sure, but the people I work with didn't want that - They wanted me, and they made sure the manager knew it. If I cut back my hours, many of them were going to do the same.

It's really sad when you have to rely on threats and mutiny just to get some fucking decency from those in charge; if it's left up to them, they'll gladly exploit you as much as possible and throw you under every bus available, I've come to learn. I'd rather just work together and be friendly and respectful to everyone, but I was forced to make the manager scared of me to get any sense of respect from her. Fucking sad.

Stuffs And Stuff's picture

Anyway, this story is very reminiscent of the state of things in general. The people in charge of this country, both the people officially in charge and the people who are actually in charge, are completely unstable and insane. The only way we'll get any justice is if we stand the fuck up together and demand it.

(Also, the manager I was talking about has since lost her job, and also lost her boyfriend and daughter because her man came home one day and found his gun safe was open with the gun missing, and he found empty boxes for horse tranquilizer laying around (She worked at a vet). He broke up with her and took the kid with him. I'm not the vindictive type, but this really made my day.)

sadmamapatriot's picture

Frankly, you sound like a spoiled brat to me. Get busy living or get busy dying, dumbass.

Henry Chinaski's picture

A wage is the price of labor.  The federal government has no more right setting the price of labor than it has setting the price of gas, steel, water, or any other commodity.  If there were no minimum wage, more people would be employed. Our liberal friends have a hard time comprehending this as they spend all of their brain power trying to come up with ways to pay people for not working.  When I was a teen in the late 70's, I had a sub-minimum wage job and I was glad to have the work and the money.  I didn't stay there for a career.  Employment opportunities are much worse for teens today.  Kids are growing up unemployed and end up unemployable.  Then, with no work experience, they grow up and get stuck in some minimum wage job.  It is sickening to go into a fast food joint these days and see people who are middle aged and older working jobs that used to be done by slack-jawed teenagers.  That's the collateral damage of minimum wage.

James_Cole's picture

"If there were no minimum wage, more people would be employed."

Only if your margins are so tight that labour costs directly affect how many units you can sell. Otherwise it's just a way to pay the same amount of workers less money. 

No one who has any brain in business would hire more people simply because wages have gone down slightly. Nor would they start firing people if wages go up slightly. In any well managed business people get hired and fired as demand and overall margins go (marginal increase in minimum wage almost certainly having no noticeable affect on company margins). 

Any business that employees more or less people than are necessary is doing it wrong. McDonald's is a well managed business, they might bitch and whine about a tiny minimum wage hike but their margins will remain intact. 

Usually when you're talking about companies with a lot of emloyees earning minimum wage they are very concious of having the smallest workforce necessary and also keen to pay as little as required by law, see Wal-Mart. 

the grateful unemployed's picture

and we're headed for a jobless society, so pretend you're a politican, just what do you do to see that the economy keeps running, because the situation is that soon the financial oligarchs will control the means of production (robotics) with very little need for human interaction, and they've reduced that in most cases to the lowest common denominator (now cars that drive themselves, hell you can't even be a cab driver in this society) their problem is where do they find consumers? nobody has a job, and population growth is already peaking in industrial nations (so you have to sell mexicans and muslims on the consumer society. you need to give them a leg up, somehow, don't you? and you make the point that seniors are stealing their path to becoming fully vested consumers) politics is like trying to screw a cat in the ass, right chinaski?

Edmon Plume's picture

Just to cheer you and your friends up, your payroll taxes just increased.

Go to college, take out loans, live on a thread.  Use excess loans to buy PM's.

But don't get a queer studies degree or something  useless.  Tax your brain with a math degree or engineering, something useful.  That way, you'll feel good about yourself even when you can't find a job, which might be for the rest of your life.

DRT RD's picture

This is in addition to why governrments raise the minimum wage.  It's a tax increase!.  The more an individual makes, the more SSi and medicare taxes are levied. And I don't even have a Harvard MBA, just a few c-stores.

keesooi's picture

"the ridiculously low minimum wage is very responsible for many people not bothering to look for work and instead choosing welfare".
You just pointed out the second reason why the labor market is not allowed to clear. There are plenty of jobs out there, but Americans are not allowed to compete for them, so they are taken by illegals. Raising the minimum wage even further just means illegals will be flooding in even more. It must be pointed out that nobody is forced to work for minimum wage. It's a choice, and a choice many unskilled and inexperienced folks are happy to make. I worked minimum wage jobs, and I am grateful for the opportunities, the experience and the skills I was able to obtain. They have proven to be more valuable than my education (compliments of the government). It's outright immoral to deny marginal workers this opportunity.
Why can't you just leave people to be free to make up their own mind what wage they are willing to work for?

DangerClams's picture

No, they're choosing welfare because it pays more than the prevailing wage for unskilled labor.  If welfare went away (in all of its versions), do you think there would be less or more unemployment?

When it boils down to not eating and a minimum-wage job (or 2 of them), people will work.  Then they will hopefully start learning to appreciate their own inherent value, regardless of their skills.  Instead, they're handed a check for simply existing - which is, in a lot of ways, what spoiled rich kids get, and everyone knows how sweet those dicks are, right?

ATM's picture

There is no poverty among legal citizens in the US either. In fact the standard of living is much higher than in NW continental Europe. Everyone eats, have a cell phone, cable, a much bigger house than anyone in Europe and cars.

However, it is all a mirage made possible only by unsustainable borrowing from the future. Once the borrowing is stopped, as it has to be since borrowing cannot continue ad infinitum, the real standard of living will be realized and the poverty you claim doesn't exist will show it's head.

NW Europe is broke just as is the US. Keep beleive what you see is real and you will wake up one day in a daze with someone ass raping you with a hammer for your socks.


alien-IQ's picture

"There is no poverty among legal citizens in the US either"


ATM's picture

Have you ever been to a place where there is ACTUAL poverty?  


CheapBastard's picture

<<crime is low>>?


I was in downtown Brussels recently. Crime is not low, especially at night and super esp near the central train station.

Even in my favorite town, Bruges, I was assualted by several Moroccan Do-Badders. Bank guy, you gots to get out more often and rub shoulders with the hoi poloi.

css1971's picture

Come to Glasgow, socialist (and knife) capital of the UK. Go out of a Friday evening and enjoy running gang fights between rival unemployables; swords, machetes and so on.

847328_3527's picture

Diversity can be a Bitch.

Archduke's picture

these are the disenfranchised white working class.
same goes for limerick (stab city) liverpool, etc.

none of these places are what I would describe as
socialist. these are the dejected descendants of migrants
whose land was cleared and who eeked under a different
yoke in the mills of the industrial revolution.

it's because of that squallor and misery that labour
and social movements got organized, the result of
which was a thriving middle class. but as you can see
structural changes take generations to affect.

not everybody wants out. not everyone has the chance,
but in the aggregate average prosperity has gone up.
glasgow is bad now, but it's better than in dickensian
dystopia days.

glenlloyd's picture

Enforcing a minimum wage does nothing but create higher unemployment. It's all in the math..

Max Labor Component = $100 / $7.25 (current minimum wage) = 13.79 employees

Take the same $100 labor and divide it by $9.00, as a biz you can only afford to hire 11.11 employees.

Since labor is a fixed input cost the above scenario would result in 3 people losing their jobs......

Anyone who says or 'believes' fixing minimum wages is good have a serious logic deficiency.......


Skateboarder's picture

Ding ding ding! We aint know how ta reckon, remember? More money for the minimum wage worker? Surely that's a good thing!

alien-IQ's picture

11 people earning a living wage do more to benefit the economy than 13 people who do not earn enough to make ends meet.

Increased wages create increased demand for products which in turn creates the need for additional employees to create product.

The argument you present is the argument presented by corporations that simply want to keep more of their profits rather than pay employees a living wage. It's bullshit.

LawsofPhysics's picture

Sure, as long as you don't mind the other two people starving.  Please, humanity is a fucking ponzi itself, the laws of nature and physics will fix this, please stand by...

alien-IQ's picture

but don't you amercians love seeing people starve? especially if they are a little brownish or have an accent? history certainly does suggest that.

Skateboarder's picture

Picture for a moment a little girl or boy who doesn't know what it's like to be a child...

p.s. cough up the money pal.

Matt's picture

But why are their parents creating excess children they cannot afford to care for?

Taint Boil's picture



Spot on. The only thing disrupting / pausing nature at this point is welfare, cheap oil, etc, etc. Just a hunch but I think nature will win in the end. 

Imagine if the flow, not the supply, of oil was stopped for say … 3 months. Where is that tube of mystery meat going to come from? A banana …. think Juan is going to canoe one over the ocean to you? 

You got food and my kids are starving - scary possibilities huh. Oh don’t worry, the herd will be culled. What a way to go ….. aaah yes just my luck as always LOL. 


Ain&#039;t No Sunshine's picture

Then increase them wages to $100/hour!!

Hell yea!!  A Real friggin' "Living Wage".


Edmon Plume's picture

Hey, that's not playing fair.  It's like telling a keynesian to double down on spending next year, because if you can spend your way out of debt, then spending more and/or faster will really make the economy roar.

chunkylover42's picture

Think about your statement - 11 people earning $100 is more productive for the economy than 13 people earning $100.  At the end of the day, it's still $100 in total wages entering the economy.  All you've done under your scenario is make sure that 2 people can't afford to buy anything at all.

By extension of you argument we should just pay 1 worker $100 and let everyone else fuck off and die.

A Nanny Moose's picture

If enough people cannot afford stuff, prices for that STUFF, fall. Demand destruction.

DRT RD's picture

it sounds wonderful, your hope for utopia, but I will raise the price of my full serve car was from $21.00 to $26.00.  I imagine that most business would do the same.  So, now who is better off.  No matter what, and you need to remenber this because it's important, there will always be a certian % of poor working people, because as demand for products increase, so does price.  The demand for products and services would increase because of increased disposable income.  You guys that push this living wage seem to forget this.  Also a huge tax increase!!

Henry Hub's picture

***Anyone who says or 'believes' fixing minimum wages is good have a serious logic deficiency***

So let me get this straight. If we raise the minimum wage by $1.75 (7.25 to 9.00) then all of a sudden the burgers are going to flip themselves. All the toilets are going to clean themselves. All the chickens are going to pluck themselves. Bullshit!

If they have hired someone to do these shit jobs, it's because the job need to be done. They are not going to suddenly not have the task done because they have to pay a little more.

Milton Friedman was an asshole.

knightowl77's picture

No dipstick, but the burgers will now cost more to flip...Therefore they will cost the public more to buy....That same phenomena will ripple across the that shortly, even though you are making more, you will not be able to buy any more.....that in turn will lead reductions in the workforce

Henry Hub's picture

Actually what might happen if the minimum wage was raised to a real subsistence level is that these people might have enough money to buy their own food and wouldn't need food stamps. Food stamps are a subsidy to major corporations such as Wall-mart and McDonald's and allow them to pay subsistence wages.

chunkylover42's picture

You've got it backwards - rising wages are a result of wealth creation, not a cause of it.

Everybody likes to point out that Henry Ford paid his workers $5 a day back in 1914 arguing that he created a middle class that could afford to buy his products.  Those people overlook that Ford installed the first moving assembly line in 1913, dramatcially increasing productivity (a fancy way of saying he created wealth).  He paid his workers because he could afford to and because he needed them to help churn out lower-priced product (which more people could afford).

object_orient's picture

And when McDonalds increases efficiency in burger assembly, raising worker productivity, the employees get raises? Nah. Productivity gains these days go to the top, not the bottom.

And that's fine. When times are tough cash registers are short and inventory goes missing.

chunkylover42's picture

everyone get raises in real terms because those burgers are cheaper to make, freeing up capital (at the margin) to buy other things

Edmon Plume's picture

It's not hard to get by because food costs more; it's hard to get by because each dollar you earn is worth less.  Giving everyone more dollars makes all dollars worth less, and eventually worthless.  Saying food is more costly should make you ask why the same food "costs" more.  A 2013 loaf of bread is not only not any better than one made in 1913, but it's less wholesome, yet it "costs" a lot more than a nickel.  Why?

Blame 1913.