“Want a job at the Pig?” asked my best friend Steve.
By my reaction, you would have thought he’d asked if I wanted a date with Kathy Ireland rather than inquiring about a job as a grocery sacker at the Piggly Wiggly. But I was living at Steve’s parent’s house rent-free, and needed to earn some money. And in Clarksville, Texas in 1985, the prospects of an inexperienced teen finding a good job were only slightly better than chances of dating a supermodel.
The elation was short-lived, though, and lasted only until I saw my first paycheck. As a full-time student working for a job that qualified for tips (I never, ever got tips) my employer was allowed to pay me the subminimum wage of $2.85 a hour (the equivalent of $5.87 in 2012). After FICA and Social Security took their cut, there wasn’t much left for me.
So if Ronald Reagan had announced in his State of the Union address that he was raising the minimum wage to $4.37 an hour (the equivalent in 1986 of Obama’s $9 minimum wage) I would have been ecstatic. Like all my fellow proletarian coworkers I was disdainful of Reagan’s economic policies, particularly his refusal to raise the minimum wage. Reagan’s was the only administration not to have raised the minimum wage since it was introduced nationally in 1938—a fact we often repeated in the breakroom as we looked at our paystubs and cussed the president.
Twenty-seven years later, though, I see the situation differently. I realize that I have not only my friend Steve but also President Reagan to thank for my getting hired at the Piggly Wiggly. Had the minimum wage been raised, the store owner could have never afforded to hire me. Since my labor was barely worth $2.85 an hour, having a government imposed price increase on wages of 52% would have priced me out of the market.
As William Graham Sumner explained in 1883, by attempting to do me a favor—by artificially raising the minimum wage I must be paid—the politicians were hurting both me and my potential employer: