NCPA - National Center for Policy Analysis

Minimum Wage Harms Entry-Level Workers

April 23, 1998

A number of economists are coming to the conclusion that minimum wage hikes disadvantage minority teens and those with low skill levels trying to get a foothold in the U.S. labor market.

Nobel Prize-winning economist Milton Friedman says the minimum wage is one of the "most anti-black laws on the statute books."

Economist Walter Williams, who is black, warns that the wage floor "is one of the most effective tools in the arsenals of racists everywhere."

  • Government data show that black and white teenage unemployment rates in 1948 were about the same -- 9.4 percent black and 10.2 percent white.
  • But as the minimum wage rose in the 1960s and 1970s, the unemployment rate for blacks roughly doubled compared with whites -- to 37.7 percent for black teens by 1980, compared to 18.5 percent for white teens.
  • According to the Employment Policies Institute, 215,000 additional jobs for teens should have been created in 1995, but the minimum wage hike that year killed them -- a 3.5 percent drop in job opportunities.
  • This job cancellation hit black and Hispanic teens hardest -- opportunities fell by 9 percent and 3.8 percent for these groups, respectively.

According to U.S. Chamber of Commerce statistics, when Congress raised the minimum wage in 1989, the proportion of black teens who had jobs fell by 12 percent. While blacks comprised only 15.3 percent of all youngsters age 16 to 19, they suffered 30 percent of the job losses.

Source: Editorial, "Minimum Opportunity," Investor's Business Daily, April 23, 1998.

 

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