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The Hidden Cost of a Raise in the Minimum Wage

By: Joseph Winning

Blog Category: Minimum Wage & the Economy 

Unemployment rates among black teenagers in the United States have been, and will likely continue to be, on the rise. This is a relatively recent phenomenon, according to a news article by Walter Williams of the Columbia Daily Tribune. Up until the late-1950s, black teenagers played a more prominent role in the labor market than their white counterparts. In fact, as far back as 1910, before implementation of the minimum wage, “71 percent of black males older than 9 were employed, compared with 51 percent for whites.” These numbers are starkly contrasted with unemployment rates today among black teens, which are estimated at roughly 40 percent, with some cities reporting unemployment rates among black teens at over 50 percent. By comparison, the unemployment rate among white teenagers today is reported at about 20 percent.

The explanation, according to Williams, is the establishment of minimum wage law in 1938 and the subsequent increases which have followed. This explanation is especially alarming in light of the Fair Minimum Wage Act and state-level pressures to increase the minimum wage. Based on the evidence above, it may come as a surprise to learn that supporters of this recent push for an increase in the minimum wage include the Congressional Black Caucus, President Barack Obama, and black state and local officials. There is no doubt that these political entities are aware of the impact that the minimum wage has on employment opportunities among black teenagers. An explanation for this support, proffered by Williams, is that political pressures from powerful interest groups like labor unions, environmental groups, and business groups have led to trade-offs that block access to labor markets and condemn many black youths to a higher rate of unemployment. Despite paternalistic arguments which might suggest otherwise, it is conceivable that a raise to the minimum wage would do more harm than good by cutting employment opportunities for the many in order to benefit the few.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.


Walter Williams, Minimum Wage Hikes Costs Blacks Jobs, Columbia Daily Tribune, available at http://www.columbiatribune.com/opinion/columnists/minimum-wage-hikes-cost-blacks-jobs/article_83751386-3c01-11e3-845b-10604b9f6eda.html.

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