I used to love to dig with my dad's army shovel. I enjoyed the physical labor of digging all day. When my dad arrived home from work, he'd say, "You won't get rich digging a ditch." I understood that I wouldn't find a treasure or strike oil. My dad meant that anyone could dig a ditch and I would never command a high wage. If my wages were high for whatever reason, then my employer would substitute a machine for me. He meant I would be dirt poor.
I have watched many minimum wage workers work two jobs in order to live. These workers aren't lazy but hard working. How come they don't earn a high wage? Like little Mikey digging a ditch, there's just so many people who can do the minimum wage work that they are paid a subsistence wage. Is this one reason why increasing the minimum wage leads to unemployment? As the minimum wage increases, employers substitute machines for labor. Displaced workers increase the supply of labor in illegal markets driving wages in those markets down. Because there's now a higher demand for skilled labor to operate the machines, the wages in the skilled market increases. Voila! You have wage inequity. Since black workers and teenagers are the first to be let go after a minimum wage hike, is it any wonder why some wage differential exists?
and as the demand for skilled and unskilled workers go in opposite directions, is it any wonder our lorenz curve just keeps growing? When will it end?? What we NEED is an increase in supply of skilled workers, so maybe subsidizing education could increase the education and skills of teens in high school. subsidize edu --> inc supply skilled, decrease unskilled --> more employed, lower wages (good? bad?)
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