Advocates for the Australian minimum wage system must contend not only with its harmful effects today, but with the burden of its unpalatable historical legacies.
The Abbott government asked the Productivity Commission recently to conduct an inquiry into the performance of the Australian workplace relations policy framework.
The inquiry, set to deliver its final report late this year, will investigate many aspects of the Fair Work Act, such as "fair and equitable pay and conditions for employees, including the maintenance of a relevant safety net".
This task has already rekindled the largely emotional debate about the adequacy of employee pay and conditions, with the federal opposition and unions already labelling the Productivity Commission inquiry effectively a reincarnation of the demonised Howard-era WorkChoices policy.
An important element of investigations the commission will surely undertake surrounds the economic and social impacts of the minimum wage regulatory regime, imposing the condition that bosses must pay workers at least $16.87 per hour.
Standard economic theory makes it clear that a government imposing a minimum wage rate, in effect a price floor applied to the labour market, would exert two reinforcing effects that are felt simultaneously.
There is a supply-side effect, where the minimum wage would induce existing employees to offer to work longer hours, and also encourage some people to re-enter the labour force to find work.
There is also a demand-side effect, where the implied increase in the cost of hiring staff would discourage employers from hiring additional staff, or asking current staff to work for longer hours.
A more plentiful supply of labour relative to demand at the minimum wage rate and we contend with unpalatable unemployment, as too many workers chase the too few positions available.
But much of the heated academic and policy debates hinge on the existence of empirical confirmation that the minimum wage leads to job losses.
Advocates for the Australian minimum wage system often point to analyses concluding that the economic effects of minimum wages on employment are negligible or zero.
Some even refer to a much-discussed 1993 study by American economists David Card and Alan Krueger pointing to positive employment effects of minimum wages in fast-food restaurants in New Jersey and Pennsylvania.
On the other side of this debate are economists citing evidence of large disemployment consequences, or indicating the bulk of studies confirm the hypothesis that imposing, or increasing, minimum wages will cost some people their jobs.
Another pair of American economists, David Neumark and William Wascher, used empirical techniques to warn policymakers about the job-destroying properties of minimum wages.
One could accept the notion that small changes in regulated minimum wages tend to yield small economic impacts, and there are plenty of analysts and pundits proclaiming this, but there remains something of an outstanding puzzle regarding the debate.
The minimum wage advocates of today would agree that unemployment is undesirable, but dismiss the charge that the minimum wage induces unemployment.
By contrast, the minimum wage advocates of yesteryear generally conceived that the minimum wage induced unemployment, and that this was desirable because such a policy would screen perceived "undesirables" out of the workforce.
Victoria is the birthplace of the international minimum wage policy movement, where in 1896 Liberal Premier George Turner, supported by the likes of Alfred Deakin and Henry Higgins, introduced "minimum wages boards" advising the government on appropriate minimum wages for certain industries.
Following the abolition of slavery in the Western world, minimum wages were considered necessary so that people offering their labour services in the marketplace would never experience the meagre rewards previously allotted to slaves.
But these sentiments were expressed through the prism of racialist concerns of the era, particularly the fear that the white male worker of British descent would suffer as a result of the influx of migrants adjudged to be accustomed to working for much lower wages.
Trade unionists and manufacturing business concerns often joined political forces in decrying the harmful effects allegedly exerted by Chinese workers plying their trade, for example, in Melbourne's furniture-making and clothing industries.
In testimony to a Victorian parliamentary inquiry in 1895, cabinet maker and unionist Henry Harwood said a minimum wage "is a perfectly fair suggestion, because it would protect the scrupulous contractor as against the unscrupulous ... the system at present ... starves out the good men and rewards the inferior".
Favouring labour market discrimination, Henry Higgins, later the presiding judge of the famous 1907 Harvester national "living wage" case, remarked during the parliamentary debates "we did not want to have our workers degraded to the position of the people who lived in China".
It should also be remembered that the Victorian debates were also influenced by the notion that men could also become priced out of the labour market by women, if a uniform minimum wage was not fixed.
One parliamentarian, John Hancock, tellingly supported a minimum wage for all because "the principle ought to be to make the wages of the men so high that there would be no necessity for women or children to work at all".
Using minimum wages and other regulations to exclude groups of people deemed undesirable to participate in the workforce was influential during the late 19th and early 20th centuries, with similar arguments heard in Britain, Canada, New Zealand, and the United States.
The defenders of the status quo today would dare not speak in favour of minimum wages on such racist and sexist grounds, as their political and unionist forebears did unrepentantly.
But the evidence suggests the minimum wage now, as it did then, remains discriminatory in its effect.
Andrew Leigh's 2003 Australian minimum wage study shows, for example, that young women in particular are more likely to be detrimentally affected by minimum wage increases than men.
A sentiment is often publicly expressed that we must recognise racism and sexism to end these blights on our society.
I agree with this, and this is another reason why I believe Australia should abolish its minimum wage.
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