The secret history of the minimum wage: the eugenicists' favorite economic regulation.

• Author: McCloskey, Deirdre Nansen
• Position: 'Illiberal Reformers: Race, Eugenics & American Economics in the Progressive Era,' by Thomas C. Leonard - Book review

Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era, by Thomas C. Leonard, Princeton University Press, 264 pages, $35

What to do with George, your dear progressive friend who stoudy defends the minimum wage? One idea is to point out how it excludes low-productivity workers from jobs. (To the smart-aleck supposition that "monopsony" is widespread, and so the minimum wage raises employment, Cafe Hayek's Don Boudreaux has challenged George to pick up the unlimited profits implied by the supposition. No dice so far.) Another idea is to try to explain the difference between a minimum wage, which interferes in voluntary deals, and a minimum income, which economists such as Milton Friedman and James Tobin have proposed. If you don't like the income that poor people have, then tax yourself to give them money; don't make it impossible for them to get employment by making it illegal to offer them the amount their labor is worth.

In his elegant and persuasive book Illiberal Reformers, the Princeton economist Thomas C. Leonard presents a third idea: Tell him where the minimum wage came from. After all, George uses the historical argument that the Industrial Revolution was caused by exploiting workers, and he thinks that we got rich subsequently by struggling against the exploitation. As 1066 and All That put it, "Many remarkable discoveries and inventions were made [in the early 19th century]. Most remarkable among these was the discovery (made by all the rich men in England at once) that women and children could work for 25 hours a day... without many of them dying or becoming excessively deformed. This was known as the Industrial Revelation." It's mistaken, but no matter. George clearly believes a history is relevant to the assessment of a present result.

All right. Leonard shows in detail that the minimum wage arose in the early 20th century as a Progressive policy designed to screw low-wage workers. Designed. And unlike many other laws "designed" to achieve a result (for example, protective tariffs designed to enrich America), the minimum wage achieved what it was after.

The first minimum wage was in Victoria, Australia, in 1894, but it quickly spread to other places. The minimum wage, writes Leonard, was "the holy grail of American progressive labor reform, and a Who's Who of progressive economists and their reform allies championed it." The inability to command a wage 50 percent above the going unskilled rate would...