Minimum Wage’s Discriminatory Effects


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As if more proof were needed about the minimum wage’s devastating effects, yet another study has reached the same conclusion. Last week, two labor economists, Professors William Even (Miami University of Ohio) and David Macpherson (Trinity University), released a study for the Washington, D.C.-based Employment Policies Institute titled “Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases.”

During the peak of what has been dubbed the Great Recession, the unemployment rate for young adults (16 to 24 years of age) as a whole rose to above 27 percent. The unemployment rate for black young adults was almost 50 percent, but for young black males, it was 55 percent.

Even and Macpherson say that it would be easy to say this tragedy is an unfortunate byproduct of the recession, but if you said so, you’d be wrong. Their study demonstrates that increases in the minimum wage at both the state and federal level are partially to blame for the crisis in employment for minority young adults.

Their study focuses on 16-to-24-year-old male high school dropouts, understandably a relatively inexperienced group of labor market participants. Since minimum wage laws discriminate against the employment of the least-skilled worker, it shouldn’t be surprising to find 16-to-24-year-old male high school dropouts its primary victims.

Among the white males, the authors find that “each 10 percent increase in a state or federal minimum wage has decreased employment by 2.5 percent; for Hispanic males, the figure is 1.2 percent.

“But among black males in this group, each 10 percent increase in the minimum wage decreased employment by 6.5 percent.”

The authors go on to say, “The effect is similar for hours worked: each 10 percent increase reduces hours worked by 3 percent among white males, 1.7 percent for Hispanic males, and 6.6 percent for black males.”

Even and Macpherson compare the job loss caused by higher minimum wages with that caused by the recession and find between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage across the 50 states and at the federal level.

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  • Fred Dawes

    Yes and no but its up to black kids to make a cultural MIND SET into a good thing of power and enlightment and remove the gang ideals. and that will never happen.

    The blacks want to subjugate others and will never be a people that can live with others and when the hispanic NATIVE INIDANS take over the blacks will just disappear like the whites will disappear into nothing but space. The chinese will rule the hispanics within 30 years and the USA Will just become one more despot nation state, See kids you must see to understand that all people want to be subugated by others and the others are alway more murderous them the former. Its all about power and the cultural message inside all people Blacks have that message of right or wrong and we will see a descent into the hell of the third worlds message of evil.

    • coyote3

      I don' t know what to say. I cannot understand what you are saying. So, I don' t know if I agree or disagree. Now you say the blacks will do what? Then the hispanic NATIVE INDIANS will do what? I have news for you, I am of Mexican descent. On some Indian reservations, you don't want to say that out loud. A lot of Indians still hate Mexicans, more than they ever hated the Anglos, and if you read anything about it, you would know that it is not without some good reason. Anyway, then the chinese will do what?

  • jasonz

    of course they create it. if they didnt and instead helped the 'community' work and take responsibility for thir lives the lib dems could never have the class/race warfare needed to keep their power. thats why all the biggest dem/black communities are devestated and poor as hell. the govt gives just enough handouts to keep them needed, and create an enviroment of entitlement and dispair needed to ensure that the black people will never leave them. any black person who dares try and break the mold of entitlement and relience is quickly and brutally silenced and branded a traitor or uncle tom

  • brimp

    The unemployment rate does not necessarily go up if there is a decrease in employment. I know this is absurd. If a young person has never had a job, they are not considered, by the U.S. Government, as being unemployed because they have never joined the work force. The same is true if someone has been out of work for more than a year. Realtors who have not sold a house in a year are also not considered unemployed even though they are earning no money. If unemployment is calculated as it was before LBJ, it would be more than 22% instead of 9%. The percentages listed in the article needs to be accurately defined. (see ShadowStats.com)

    NAFTA and GATT have also reduced employment in America. The physical workers of America have been competing with the slaves in Asia for more than two decades. Now the knowledge workers are facing similar competition.

    The solutions are 1) Nationalize the private Federal Reserve. 2) Eliminate the IRS. 3) Withdraw from NAFTA and GATT and institute tariffs on foreign goods. 4) Eliminate the welfare state. 5) Dramatically reduce the overseas commitments of the armed forces of the United States. 6) Eliminate the minimum wage. 7) Privatize the so called health care system in America by busting the medical unions (AMA, FDA, and ABA).
    To cut the minimum wage without taking these other steps will not solve the problem.

  • lkensinger

    I teach biology in a failing urban high school. I have long advocated for a two-tier minimum wage: a lower minimum for minors without a high school diploma and a higher one for anyone who has earned a high school diploma (or anyone over 21). I don't know all the ramifications, but I think it would place a greater value on the diploma. Right now, I see kids who get their first fast-food paycheck and they think they're rich. They don't realize it's not enough to support a family on.

    • OLJingoist

      That would just create more government regulations to guide our lives.
      Maybe if the rest of the educators at your failing school actually taught children lifes skills. Instead of helping them fail. All this readjustment of regulations would not be necessary.
      Question: Do they even teach CIVICS any longer.

      • lkensinger

        My school isn't failing because of the teachers. It's failing because of all the social ills that afflict our neighborhood: prostitution, drug abuse, illegitimacy, crime, etc. etc. Our top kids can rival the top students at any school, but we are not judged by the top kids. We are judged by the students at the bottom. Those are the ones who need to realize the value of their education.

  • FBastiat

    One very simple question: How could any think that raising the minimum wage would be a good idea? I mean, exactly whom would it benefit:
    http://www.abcdunlimited.com/ideas/wages.html

  • Steve Chavez

    The minimum wage issue was a national campaign advanced by the Communist Party USA who then ordered its state chapters to advance the issue in City Councils. Here in Albuquerque, the wage issue was announced by Martin Heinrich, president of the City Council, and Gerry Bradley, who in the 80's was the head of the NM Marxist Educators for Socialist Action and the NM Peace Council which was the state chapter of the U.S. Peace Council run by the CPUSA! The World Peace Council was a front of the Soviet KGB! Bradley then was appointed to the NM Department of Labor in 2002 by Governor Bill Richardson who in the 80's was a Congressman and supporter of all Peace Council programs concerning the Sandinistas and funding of the Marxist FMLN rebels in El Salvador.

    The wage issue went to vote and was defeated but then Heinrich took it up in his Politburo and it passed. Bradley was also instrumental in getting it approved in the Santa Fe City Council with the wage at $10.25 one of the nation's highest! The main speaker and supporter in front on the councils was Emil Shaw, the head of the NM Communist Party but he introduced himself as the head of a retired teachers association like he did at any public event! Heinrich is now in his second term as Congressman and is now running for the Senate in 2012. Bradley is extremely interested involved in Heinrich for Congress and now will be more interested in his Senate run! I wonder why? Maybe to get some National Security secrets?

  • FdUp2Here

    What would be the alternative to no minimum wage? As I see it, employers would of course have all the power, as most do today, to pay as little as 1 cent per hour, day, week, month or even year. With no law in place to ensure that American workers earn at least what has come to be known as a "living wage", the U.S. would be taking a huge leap backward. While there would be hordes of people living in parks, on the streets, in foreclosed homes and apartments, you name it, as least the U.S. would finally be in a position to compete equally with those countries to which we have lost jobs.

    As a former small business owner and as a former employee working both hourly and salaried positions, my experience has shown me that even with wage laws, employers go out of their way to hire the most highly skilled and educated employee for the least amount of earnings and benefits. Had I been able to pay my former employees as little as possible, I would still be in business today.

  • FdUp2Here

    (continued from above)
    It doesn't matter what race you are; I'm convinced that our government does nothing for us. I constantly hear that politicians support small business, but while operating my former business, there was no assistance from the government.

    Politicians regularly insist that obtaining a higher education is the means to an improvement in our economic future and quality of life, but I found this to be entirely false. After applying for hundreds of jobs in 1989 prior to graduating with my first B.A., I settled for a starting wage of $7.15 an hour and relocating to a city in which I could not afford to live. When my employer went out of business, I moved back to the city I left and again applied for hundreds of jobs. I finally landed one at a starting wage of $6 an hour. This was about 1992-‘93. I tried temp agencies in order to earn a higher hourly wage, but was advised by each to "ask for less per hour" in order to obtain a position. I was seeking $10 an hour.

  • FdUp2Here

    (continued from above)
    In short, I continued a cycle of going back to school — while working — so that I could obtain additional education and skills. This is what the "experts" and politicians advised then. But I consistently found myself being offered jobs that paid minimum wage, with no guarantee that I could ever advance, I presume because I left the company at which no employee in a comparable position could ever earn no more than $9 an hour. I didn't get a well-paying job until 2003 when I was selected from a pool of 56 only because I agreed to the lowest salary offered.

    After being fired a few years ago while hospitalized, I am now disabled. How do you explain the discrimination against me, a white woman, and against quite a few of the white men I went to college with? My experiences have shown me that race plays no part in how successful one is or isn't.

  • ben

    Cite your sources, bitch.

    http://mises.org/daily/3261