Increasing the minimum wage is all the rage. An April 2016 poll showed 74% of Americans would like a higher minimum wage, and 15% support an hourly wage of $15 or higher. But most Americans are unaware of the history of such legislation, let alone the deleterious effects that these laws can have on the very same minorities they aim to protect (at least superficially) at every turn.
Minimum wage laws first gained traction in the early 20th century, and one of the impetuses for such regulations was to keep immigrants out of work. The original targets were Asian immigrants, specifically the Japanese. Angered at Japanese immigrants’ lower pay requirements, British Columbia, Canada, passed a minimum wage law in 1925 to prevent employers from favoring the lesser-demanding Japanese workers.
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In the midst of the Great Depression, the United States’ first federal minimum wage legislation, the Davis-Bacon Act of 1931, gained support from workers due to its ability to “keep contractors from using ‘cheap colored labor’” rather than employ the more expensive whites. Workers unions, which excluded minorities, lobbied for more privileges and laws benefiting union workers. As a result, unemployment for minorities during the Depression was double that of the average unemployment rate at the time.
During South Africa’s period of apartheid, union workers rallied for a minimum wage, and the results have been disastrous. The unemployment rate for blacks ages 15-34 was triple that of whites, and facilities not cooperating with the nation’s minimum wage laws were shut down, resulting in thousands of jobless citizens.
Also, minimum wage hikes favor the big businesses leftists claim to hate, all the while punishing small businesses who are less likely to handle increased labor costs. Black women are the fastest growing group of business owners (an increase of over 300% over the last 20 years), and the rising cost of labor will no doubt shutter multiple doors of these businesses.
Today, while politicians do not publicly espouse their hope for the lowered employment of minorities, the consequences remain. Minimum wage laws result in job loss, and a more selective choosing of employees. Higher pay necessitates a higher skill level and more educational achievement, and blacks and Hispanics, on average, have less formal education than whites. During the Great Recession, minimum wage hikes resulted in more job loss for blacks than the recession itself.
The free market is the best approach to raising wages and employment. And until Americans latch onto the idea tenaciously, we are doomed to see little to no improvement in the economy and standard of living.
