01 Oct 2001 Minimum Wage Increases: Although Not Designed to be Racist, They Simply Are

Is it better to have a raise or a job?

It’s a no-brainer. A raise is worthless without a job.

Since the passage of the Fair Labor Standards Act in 1938, some have contended that a constantly increasing minimum wage will prevent the exploitation of workers. Politicians continually trot out the issue, confident that even if its economic effects aren’t as advertised, the political benefits of appearing to care about the working poor are.

But yet another of our many dozens of upward wage adjustments will fail to create economic stability for those at the bottom end of the pay scale.

As Sharon Brooks Hodge of the African-American group Project 21 says: “Wages are a reflection of relative work skills. You can trust that no one is out there lobbying for a minimum skills floor to coincide with the demand for more money. Until that happens, this segment of the work force will remain unable to compete for higher wages on their own. What [those] clamoring for a higher minimum wage fail to acknowledge is that boosting pay for that reason alone does little more than continue the endless spiral of inflation.”

And put more money in the coffers of labor unions, as well.

Other African-Americans endorse Hodge’s view: “Forty years ago, when Jim Crow was alive and well but before substantial increases in the minimum wage, the unemployment rate for black youths was virtually identical to that of white youths. But with the rise in the minimum wage, there has been a rise in the unemployment rates of black youth,” says Peter Kirsanow, Chairman of the Center for New Black Leadership and a labor attorney.

Black youths, through no fault of their own, disproportionately attend failing inner-city schools. The government thus hits them with a double-whammy: It gives them substandard training in public schools, and then it raises the minimum wage, which reduces the number of jobs for untrained people.

Minimum wage increases, while not designed to be racist, simply are.

According to the Employment Policies Institute, an increase in the minimum wage has perverse effect of increasing both the school dropout rate and teenage unemployment. This is because higher mandatory wages entice some students into sacrificing school for work while simultaneously compelling employers to forgo hiring low-skill teenagers in favor of older employees whose experience makes them worth higher wages.

These facts are no secret: A University of New Hampshire poll of economists has shown that nearly 80 percent acknowledge that minimum wage hikes cause job losses.

Nevertheless, the crusade for a minimum wage increase continues. Advocates of increases gloss over the job loss issue. Rarely do they answer the question: If it is good to raise wages a dollar an hour, why not raise them $50 an hour? Wouldn’t that be fifty times better?

The answer is that it is much harder to pretend that raising wages by $50 per hour will not kill jobs. The pretense that raising wages by legislative fiat is a benevolent act must be maintained.

If we are going to again raise the minimum wage because politicians love nice headlines and labor unions love cash, we could at least do so honestly, and admit that doing so kills jobs. And that the people who will lose those jobs will be our most vulnerable.

(Amy Ridenour is the president of The National Center for Public Policy Research. Comments can be sent to her at [email protected].)

Note: New Visions Commentaries reflect the views of their author, and not necessarily those of Project 21.