I came across this intriguing story out of Silicon Valley today:
SUNNYVALE (CBS SF) – Bloom Energy Corp. has been ordered by a U.S. District Court Judge to pay $31,922 in back wages and an equal amount in liquidated damages to employees from Mexico after the company was found to have willfully violated the minimum wage, overtime and record-keeping provisions of the Fair Labor Standards Act.
Bloom, a manufacturer of solid oxide fuel cells, has been paying 14 workers brought to the United States from Chihuahua, Mexico less than $3 per hour for refurbishing work performed at the company headquarters in Sunnyvale.
According to a press release from the Labor Department, Bloom Energy brought the workers in from Mexico to refurbish power generators alongside U.S. workers. Federal investigators found that the workers were paid in Mexican pesos the equivalent of $2.66 per hour. The FLSA requires that covered, nonexempt employees be paid at least the federal minimum wage of $7.25 per hour for all hours worked. California minimum wage is $8 per hour.
First off, any corporation or company guilty of knowingly breaking the law deserves whatever due punishment is prescribed by statute. Secondly, it appears that “progressive” and “green” businesses are just as susceptible to exploiting cheap labor from Mexico as any “Right-wing”-owned or supported company. I point this out purely because the association of any and all exploits found under our current “capitalistic” (term used loosely) system are always blamed on proponents of freer economic markets (and limited government). This perceived endorsement of perfidious behavior in the marketplace isn’t a minor point either. It is the rationale employed by many Americans – especially younger ones – to denounce, if not out-right reject, any association with free market capitalism.
Third, the minimum wage laws in this country are, on the whole, rubbish. Their real-world effects run in direction contradiction to the stream of well-intentioned hot air cascading forth from whichever bleeding-heart politician or community organizer happens to be singing their praises in front of a camera crew at the moment.
I’m not saying that the specific scenario detailed in the news report above is a pitch-perfect example of what’s wrong with labor laws in the United States, and I’m certainly not defending the actions of Bloom Energy. What I am saying is simply that the panic button and red-flashing light certain journalists, reporters and politicians want going off in the hearts and minds of the average American adult any time they hear about how few dollars/pesos other human beings are willing to work for need to be reigned in a bit. We must take a deep breath and decide to soberly investigate if something like the Minimum Wage Law has worked, is working, or can ever work.
Dr. Thomas Sowell (Hoover Institution) has a few thoughts on the subject:
Prior to the decade of the 1930s, the wages of inexperienced and unskilled labor were determined by supply and demand. There was no federal minimum wage law and labor unions did not usually organize inexperienced and unskilled workers. That is why such workers were able to find jobs, just like everyone else, even when these were black workers in an era of open discrimination.
The first federal minimum wage law, the Davis-Bacon Act of 1931, was passed in part explicitly to prevent black construction workers from “taking jobs” from white construction workers by working for lower wages. It was not meant to protect black workers from “exploitation” but to protect white workers from competition.
Even aside from a racial context, minimum wage laws in countries around the world protect higher-paid workers from the competition of lower paid workers.
Where minimum wage rates are higher and accompanied by other worker benefits mandated by government to be paid by employers, as in France, unemployment rates are higher and differences in unemployment rates between the young and the mature, or between different racial or ethnic groups, are greater.
Many reading this will be at least vaguely familiar with Dr. Sowell’s arguments, but are your friends? Your co-workers? Your grandchildren?
If they won’t read a blog-post from “some conservative” like yours truly, try a YouTube clip of Sowell discussing the topic with his pal Dr. Walter E. Williams!