Tuesday, June 17, 2014

Freiling on a Little Known Exemption from the Minimum Wage

One of my former students, Nick Freiling, has a revealing piece at Mises.org today about the minimum wage. He shows how even those mandating the wage floor demonstrate they know a minimum wage above the market wage reduces employment opportunities. Freiling reminds us that the 1938 Fair Labor Standards Act, the law that put the national minimum wage in place, exempted and continues to exempt employees who are disabled. 

In light of that exemption, Freiling raises a very good question:

When Congress passed the 14(c) exemption along with minimum wage in 1938, they did so, as quoted above, “to prevent curtailment of opportunities for employment” of people with disabilities. The authors of the bill understood that minimum wage leads to unemployment for those “whose earning or productive capacity is impaired.” So in order to avoid the negative publicity associated with putting people with disabilities out of work, they exempted such people from minimum wage.

But this begs a question. If people with disabilities are exempt from minimum wage because their earning capacity is impaired and finding employment might otherwise be impossible, why don’t people without disabilities whose earning capacity is equally low also qualify for an exemption?

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