I have begun reading Burt Folsom’s New Deal or Raw Deal: How FDR’s Economic Legacy Has Damaged America and it is interesting, as I often find it, how similar earlier times are to today.

One of the first “New Deal” measures pushed through in 1933 was the National Industrial Recovery Act, later shortened to National Recovery Act or NRA.  Among the many provisions of this act was the fixing of wages, not just minimums but all wages, for each industry.  This was unpopular among both businessmen and some workers who realized that if a business was working on a thin margin and their costs were artificially increased then they would likely be put out of work instead of working for less than the mandated wage.  This was also understood by many economists of the day.

For example, Harvard economist Edward Chamberlin is quoted in regards to the wage controls in the NRA:

There is no doubt that the tendency to substitute machinery for labor is strengthened by artificially high wages…. A rate of wages which is too high may work positive injury to the class it is supposed to benefit.

Here it should be understood that “artificially high” wages are simply those that are above the market rate, which is almost always the case with minimum wages for unskilled positions where many people get their first job experience.  Despite what liberals proclaim, wages are simply the price of labor and price controls always and everywhere lead to problems.