If you think that minimum wage laws benefit minorities, let me explain to you why such a belief is wrong. If you do truly care about the well-being of people who are part of a minority group, including black people, then you really need to pay close attention to how minimum wage laws truly affect them.
South African Apartheid and Minimum Wage
Let me start out with an example from South Africa during apartheid. At the time, black construction workers were willing to work for about $1.50 less per hour than white construction workers. The unions, representing the white construction workers, pushed for minimum wage laws that effectively took away the black construction workers’ competitive advantage that they had with their lower hourly wage that they charged, and were willing to work for. Because their price advantage was taken away with minimum wage laws, they were not hired as much, and the unemployment rate for blacks in that industry in South Africa was higher than for the whites in that industry.
Well, the same thing happens here in the United States when we use minimum wage laws to take away the competitive advantage of often lower-priced ethnic and racial minorities. For starters, it results in higher unemployment rates for those minorities. They are less likely to find that beginning job that provides them valuable training, skills, interaction with other people, and work ethic, all which help a person on the path to upward economic mobility.
The Black Teenager
Now let’s look at the black teenager. You’ll find that all teenagers, no matter what their race or ethnicity, tend to suffer from a higher unemployment rate than adults. But since minimum wage laws started to come out in the 1930’s, there have been times when the black teenage unemployment rate was 2 1/2 times higher than the white teenage unemployment rate. In October 2018, the overall teenage unemployment rate was 12.8 percent, but it was 19.3 percent for black teenagers. A lot of people on the political left just chock this disparity up to “systemic racism,” but that’s just an excuse to ignore the real reasons behind such a disparity.
Teenagers tend to be untrained and unskilled, which means they would have to be trained on the job. If there were no minimum wage laws, businesses would take advantage of these unskilled workers’ competitive advantage, which would be their low price, and train them on the job – that training would allow them to eventually find a higher-paying job, and help them with their upward economic mobility. Minimum wage laws end up making training more unaffordable for the business owners, which means businesses have to choose teenagers that already have more background abilities in order to cut down on the costs to train those teenagers.
If you’re a white teenager, and you’ve gone to a suburban school where you’ve been adequately trained to know how to read, write, do basic math, and communicate properly, you are more likely to be hired than if you’re a black teenager who’s gone to a defunct inner-city school that fails to train you in even those simple, basic things, like reading and writing. All of this translates into lower job skills for the potential employer, and less black teenagers hired because of it. And this disparity between black and white workers can negatively affect the black employment rate in total.
Lesson Learned: Raising the minimum wage potentially hurts blacks and other minorities the most by taking away their possible competitive advantage of lower price.
