In June 2026, Oklahoma voters will decide on State Question 832. If passed, the minimum wage in Oklahoma will go from the federal minimum wage of $7.25 to $15 by 2029, more than doubling minimum wage wages over the next three years. Economists and politicians will argue the pros and cons of this wage hike, but as a historian, I thought I would look to the past.
Looking to the source of economic thought, I turn to the father of economics, Scotsman Adam Smith (1723 1790). However, for Smith, the concept of a minimum wage was still centuries away. It’s more a modern idea. It’s a bit of educated guesswork to try to decipher what Smith might have said. In “The Wealth of Nations” he wrote, “A man must always live by his work, and his wages must at least be sufficient to maintain him.”
Smith was clearly sympathetic to workers’ plights and knew they needed a living wage for survival; however, it’s the way the wage was determined that seems to go against a minimum wage.
To him, “There is a certain rate both of wages and profit which is naturally paid to them in the ordinary course of things … when neither the workmen nor the masters have any particular advantage.” What he saw was a natural wage that benefited both employer and laborer, a perfect balance. If wages were artificially raised, say by minimum wage, then the perfect balance was destroyed.
For Smith, there were forces within the free labor market system, sometimes referred to as ‘the invisible hand’ to create the perfect balance.
In this system, employers compete for good workers, and workers compete for good jobs. Employers competing against one another must offer wages high enough to attract and retain workers. Workers choosing among employers will seek jobs that offer the best combination of pay and conditions. If the government interferes, then workers get laid off or employers must raise prices. If workers all are paid $15 whether good or bad at their job, there is no need to work harder, and it’s economically difficult for employers to incentivize better employees with even higher wages.
Probably the next most famous is German economist Karl Marx (1818-1883). While one would expect Marx to embrace minimum wage, it is much more complicated. My best assessment is that he would not support a minimum wage because it is still capitalism. To Marx, every aspect of capitalism exploits workers. A minimum wage might help workers survive, but it doesn’t free them from exploitation. To Marx, minimum wage would only set the lower boundary for wages, but it would not change who owns the means of production or who controls profits. Personally, as Marx’s theories have never worked in the real world, I find no reason to dig any deeper.
Next in line is British economist John Maynard Keynes (18831946). Finally, we arrive during a time when minimum wage was being discussed. His book, “The General Theory of Employment, Interest and Money,” came out in 1936, and the national minimum wage began in 1938. Yet, for some reason, even though minimum wage was being debated at the time, Keynes does not mention it, so once again we are left guessing.
Keynes falls between Smith and Marx in that he believes in capitalism but also in government intervention. He breaks with Smith over the idea of a perfect balance between wages and employers or, in better terms, he does not see that balance as possible.
Under Smith, wages fluctuate based on the economy, but Keynes calls wages “sticky” in that they do not go down well, based on contracts, unions and workers’ unwillingness. Minimum wage could be added to this list. So, in an economic downturn, if wages cannot go down, then employers must let employees go and not hire new unskilled workers, leading to increased unemployment. Yet at the same time, Keynes also fought against the idea that employers should reduce wages during downturns. A drop in wages would lead to a decrease in consumption only negatively impacting the economy more. In this sense, a minimum wage could help. Purely speculative, but I believe Keynes would support a modest minimum wage to guarantee a wage floor, but that it should not be too high as to outprice workers and cause unemployment.
Finally, we come to Milton Friedman (19122006). Friedman, an American economist who, without a doubt, is against minimum wage. We know because he is the first to say so. While overall Friedman disagrees with Keynes, they both agree with the possibility of minimum wage leading to increased unemployment. When the government sets a wage floor higher than what some workers can produce in value, employers will stop hiring those workers. In this sense, minimum wage hurts those who it is supposed to help.
In a 1973 interview with Playboy Magazine, Friedman asked, “How is a person better off unemployed at $1.60 an hour than employed at $1.50?” Friedman resurrected Smith’s ideas of market forces, that wages should be set through voluntary agreements between workers and employers, and not by government mandates. Friedman’s idea was that if you want to help the working class, help them by giving them more money through things like tax breaks instead of raising the cost of labor and putting employers out of business.
Smith, Marx, Keynes, and Friedman devoted their lives to studying and writing about economics, and summing up their works in a few paragraphs does each of them a huge disservice. Economics is a complex subject that is difficult to study. Rarely can you set up an experiment where x=y. In the real world, there are so many other variables that one cannot isolate the wage variable enough to truly know its effects. Yet, at the same time, as voters will soon decide whether Oklahoma needs an increased minimum wage, it is worth knowing what some of the world’s most prominent economists think.
James Finck is a professor of American history at the University of Science and Arts of Oklahoma.
