The Minimum Wage

I bought a Santa Claus suit a couple years back. I failed at every opportunity convincing the kids I’m the fat man from the North. I go the distance: enlarge the mid-section by stuffing a pillow; bellowing ho ho ho as best as I can; using gloves and tall boots to really send the message, but still, all in vain. So I finally asked, and was told – “Daddy, Santa Claus is not brown.” What an honest discriminatory remark, I thought. Then I went further along this road. What else is not brown, or black, or white? Flip it, and what is brown or black or white. My attention at that point drifted to the TV. YouTube is streaming live, a Trump rally in Pennsylvania. Back on the road of thoughts: Trump is not brown. Is racism white or black? The following was written with this idea in mind, that racism is not endemic to a particular people but it is a socioeconomic construct, with its many tools, used to oppress the weak among us. And one such tool used today is called the minimum wage.

The H-1B visa is a temporary permit allowing a person with at least a bachelor’s degree to travel to the United States and gain employment for a period of time. Not too long ago the Trump’s administration revised the requirements for the H-1B visa program. Among the many new stipulations was the order for American companies to pay a higher wage to anyone seeking a H-1B visa. These visas, 85,000 of them, are given out yearly by the United States administration to companies here at home that express a need for foreign talent. That need is justified by a single basic claim – there is not enough talent in science, technology, engineering, and mathematics (STEM) from among our local pool of applicants. That claim is political.

As the most powerful nation on earth, the United States of America (that, too, is a political claim) wants the best of everything. And the world’s talent is no exception. But the talented are not in abundance. So when we find that American companies are bringing that high number of foreign talent every year and we still can’t cure cancer or the Russians are able to break into our networks and “meddle” in our elections, we know there is something else in play.

From the 1990s (the time the law was enacted) to now, many revisions of this program were conducted. At every junction, the program expanded and became more liberal. For example, during the early 2000s, the quota was expanded to as much as 195,000. And even though that number would return to normalcy in the coming years, the program began including applicants with graduate degrees from a United States institution. It also provided extensions to applicants with a pending green card application. Of all the nationalities in the world, Indians benefitted the most. Today there are CEOs of leading American companies that are beneficiaries of this program. Sundar Pichai of Google and Satya Nadella of Microsoft are worthy examples.

With this increased liberal approach to the H-1B visa program came a noise, faint at first, but audible with time. A case was being made: foreign talent is coming to the United States at the expense of local talent. American companies are able to obtain cheap labor via the H-1B visa. The Indians (though not exclusively) are competing with American workers for jobs in America.

The Trump administration, in its attempt to restrict foreign labor thereby giving more opportunities to those at home, raised the minimum wage that employers must pay if they want foreign labor. And sure enough, arms were up in the air against Trump and his administration but it is worth knowing that he is only borrowing an economic policy, proven to work, from those long before him.

In the late 19th century, the Japanese were moving into British Columbia for a better life. Like any new group of faces, they endured hostility from the locals. The locals observed that the Japanese were willing to work for wages that they won’t accept. So, by 1925, they lobbied for and were successful in introducing a minimum wage. The Japanese were soon unemployed.

In 1931, Congress passed the Davis – Bacon Act which mandated that contractors pay its workers a wage that was higher than what it paid majority of the laborers at the time. Many black laborers lost their jobs. What was happening here, in all of these examples, is what the renowned economist Thomas Sowell observed: “The net economic effect of minimum wage laws is to make less skilled, less experienced, or otherwise less desired workers more expensive — thereby pricing many of them out of jobs.”

Let’s dwell here for a few lines because economic terms, definitions, and examples are not our staple. More so we’re at the Street Corner, if we do not understand it here, we will not understand what they say on TV.

For instance: one may want to know, given the examples above, how exactly did the Japanese and the blacks lost their jobs? How can you price someone out of something?

Well, like the Japanese in British Columbia, the blacks were unskilled. These were the years before the Civil Rights Act of 1964. Black people got the second best everywhere they went, and that included education and vocational training. The employers knew this and in the interest of cheap labor were willing to take them on. The black laborers did not mind the meager wage for they worked with the highly skilled tradesmen and had an opportunity to learn new skills. However, when the minimum wage came into play, the employers were forced to pay the laborers a wage much closer to that of the skilled tradesmen. The black laborers were sent into unemployment.

But the Civil Rights Act was around the corner. Soon black people would be given the same opportunities as white people. The world would be a better place and we’ll all live happily ever after. The southern democrats saw this picture. And they didn’t like it one bit. A plan was developed. It was well calculated and so subtle that most black people participated subliminally as it was executed, driving them to their own destruction. And that plan was articulated by Lyndon B. Johnson, the 36th President of the United States – “These negroes, they’re getting pretty uppity these days and that’s a problem for us since they’ve got something now they’ve never had before, the political pull to back up their uppityness. Now we’ve got to do something about this, we’ve got to give them a little something, just to quiet them down, not enough to make a difference.”

“We got to give them a little something, just to quiet them down,” audacious, aye? The little something that was given was not the Civil Rights Act of 1964. That was huge; however, while it formally made it unlawful to discriminate, it did not make it unlawful to discriminate by unconventional means. You can still price people out of jobs and restrict their upward mobility by minimum wage mandates. In the years to follow, the minimum wage law (not enough to make a difference) was widely cheered and the welfare (a little something) resoundingly encouraged. The hallmark of this post 1964 approach was that it got the very people it intended to oppress onboard with the plan. For, Lyndon Johnson’s secretary of labor, Daniel Moynihan, unearthed something startling: the black nuclear family was beginning to fall apart. According to Thomas Sowell, that would be the last time an honest report on race would be issued by the United States government.

Walter Williams, an economist at George Mason University, reminiscing about his early days in Philadelphia said, “We lived in the Richard Allen housing projects. My father deserted us when I was three and my sister was two. But we were the only kids who didn’t have a mother and father in the house. These were poor black people and a few whites living in a housing project, and it was unusual not to have a mother and father in the house. Today, in the same projects, it would be rare to have a mother and father in the house.” The Moynihan report was thrashed by some because it included many examples akin to Walter Williams. The notion was that you cannot blame the victim. Sadly such a conclusion highlights either the readers’ inability to comprehend or their political tailwind.

In laying out the oppressive nature of the minimum wage, I first noted the Indians, followed by the Japanese. There are others, like, the Hispanics, and the poor white majority. This last group is hardly referenced. Probably due to the doctrine of racism, if you’re white, you’ve got it all. You are privileged. You cannot possibly be poor and struggling. It was this group that gave Obama a historic 2008. And it was this same group that gave Trump a memorable 2016. You see, this form of oppression has affected everybody, across all religions and skin colors, and while the aforementioned groups managed to keep their heads above the water, black people are encouraged to think that the system is rigged; that it is systemic racism. No, it is much more nuanced than that.

The support that Trump got from white America was because that base understands, among the many grievances, that their children are competing with foreign workers (non-immigrants) for jobs in the STEM fields. And they realize if corporations are allowed to flood the market with foreign talent, the wages for these positions would drop to a level that’s unacceptable given the cost of living in most American cities. When I call for tech support and Ravi Venkatesh shows up, a heavy-accented lad from Uttar Pradesh, it is not because our boys and girls are less smart than those in India. It is because the wage offered by Google is considerably attractive to him than it is to our children. Why would a young man or woman in America want to get into a STEM field when the upfront cost (opportunity cost + college fees) is so high and the payout unattractive? Yet, given all of the above, we still find many Americans who are on Wall Street. We find many who are scientists, computer engineers, and doctors. When we look closer though, majority of these Americans are not black.

“While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from,” said Charles Scharf, CEO of Wells Fargo. Mr. Scharf would later be given the proverbial shaft in the Social Media Court of Justice. He later apologized, for what exactly, I do not know. Of all the groups that the minimum wage has affected, black America is positioned the worst. Most black people are not even competing for STEM. And that’s because they do not have the luxury of a nuclear family. Yes, the Moynihan report, again. When the average black kid from a terrible neighborhood struggles in school, mom is too busy trying to make ends meet to stop and answer his academic need. She is that busy because her partner, the child’s father, left long ago. The family is so important. It is because the nuclear family is intact in other oppressed households that the young ones are able to find their footing in trying times. When that young white or brown graduate is given a wage that’s less than ideal, mom and dad provides a brace while the young one gains the experience necessary to be more competitive. Denzel Washington, speaking on the importance of a mother and father in a home said, “I think it is more important to make headway in our own house. By the time the system comes into play, the damage is done. Where is the father?”

There is no father. Among the many hurdles, the minimum wage priced him out. And the government welfare check replaced his. “The welfare state has done to black Americans what slavery couldn’t do, what Jim Crow couldn’t do, what the harshest racism couldn’t do, and that is to destroy the black family” – Walter Williams. Somehow, the Democrats think they’ve got what it takes to help the black family. Believe me, I’ve checked, they’ve got nothing beyond the little something Lyndon Johnson talked about. What they have is the similitude of giving the black family a fish; keeping them hostage. Imagine the possibilities if the oppressed were taught to fish. This is not to infer that the Republicans have the answer though I’m yet to see remarks as brazen. So, what should the black people do? I can speculate but for the first time in these couple of pages, if I do, it will purely be my opinion.

Homework

Did you know that booming economies like Singapore, Denmark, Norway, Switzerland (to name a few) doesn’t have a national minimum wage? Read up on GDP and unemployment rates. Look at the quality of life in these nations.

Geneva was pressured for years to institute a minimum wage. Earlier this month they did. Do you know how many thousands of Germans, French, and Italians commute to Switzerland every day for work? Who felt oppressed in Geneva and who will soon be priced out?

Do you think the Swiss are racist?