NCPA - National Center for Policy Analysis

With Each Minimum Wage Hike, Black Youths Lose

May 27, 1999

The Republican Congress appears poised to raise the hourly minimum wage from $5.15 to $6.15. That move could destroy as many as 436,000 jobs.

Virtually every recent study has confirmed that raising the minimum has a negative impact on employment -- particularly among teenagers and minorities.

  • From 1948 until 1955, unemployment averaged 11.3 percent for black teen males and 11.6 percent for their white counterparts.
  • Following an increase in the minimum in 1956 from 75 cents to $1, unemployment rates between the two groups began to diverge -- and by 1960 the unemployment rate for black teen males was up to 22.7 percent, while the white rate stood at 14.6 percent.
  • Between 1961 and 1981 the minimum was raised almost yearly, with the result that the unemployment rate for black teen males stood at 40.7 percent by 1981.
  • That year, the federal Minimum Wage Study Commission concluded that each 10 percent rise in the minimum reduces teen employment by some 1 percent to 3 percent.

Research since then has only confirmed this estimate.

San Francisco Federal Reserve economist Kenneth Couch estimates that the proposed $1 increase in the minimum will cost between 145,000 and 436,000 teenage jobs.

In a survey of labor economists last year, the average effect of a 10 percent rise in the minimum was estimated at a 2.1 percent decline in overall youth employment.

Researchers have discovered that the vast bulk of those benefited by increases in the minimum wage are members of families with incomes substantially above the poverty line. Moreover, such increases result in employers reducing their training programs and encouraging teens to drop out of school in pursuit of wages that seem high to them at the time.

Source: Bruce Bartlett (National Center for Policy Analysis), "Minimum Wage Hikes Help Politicians, Not the Poor," Wall Street Journal, May 27, 1999.


Browse more articles on Economic Issues