How the Minimum Wage Hurts Black Americans

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from NCPA,

February is Black History Month, and while numerous lawmakers, pundits and voters have called for more to be done to expand economic opportunities for black Americans, too often that means increasing the size and scope of government programs. Unfortunately, government programs — even the most well-intentioned — routinely fail, create disincentives to growth and hurt the people they’re supposed to help.

In a new report, the NCPA has compiled a list of government policies — from housing law to education, welfare programs, tax policy and employment-related laws — that are hurting black Americans. Consider minimum wage policy — advocates of higher minimum wages say they will help the working poor, yet they often price the lowest-skilled workers out of the market so they are essentially earning nothing. Black teenagers bear most of the burden, as the NCPA has noted in a previous publication:

– From 1948 to 1955, the unemployment rate of black and white teenage males was essentially the same — 11.3 percent and 11.6 percent, respectively. But after the minimum wage was raised from 75 cents to $1 in 1956, unemployment rose significantly for both black and white teenage males, with blacks bearing more of the burden. By 1969, the unemployment rate was 22.7 percent for black teenage males and 14.6 percent for white teenage males.
– Economists Donald Deere, Kevin Murphy and Finis Welch found that minimum wage increases in 1990 and 1991 reduced employment for all teenagers by 7.3 percent and for black teenagers by 10 percent.
– Historically, minimum wage and prevailing wage laws were supported by almost exclusively white unions in order to remove the competitive advantage of blacks who were willing to work for less.

Like many government policies, minimum wages are touted as helping low-income workers — unfortunately, they often end up hurting them. For more on how government action is hurting black Americans, check out the NCPA’s new publication, “Reflections During Black History Month: What Public Policies Are Hurting African-Americans?”

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