09 Apr 2024 Craig DeLuz: Black and Hispanic Youths Pay the Biggest Price for Minimum Wage Hikes

While many well-meaning souls naïvely cheer over a new California law that raises the hourly wage of fast-food workers to $20/hour, Project 21 Ambassador Craig DeLuz cites a sobering statistic: “for every 10 percent increase in the minimum wage, employment for 16-19 year old black and Hispanic teens falls 6.6 percent.”

In a commentary published by California publications such as the Orange County Register, Los Angeles Daily News and San Gabriel Valley Tribune, Craig adds:

In the end, it is not the politicians who bear the consequences of their actions, but rather hard-working individuals who will lose their jobs, see their hours reduced and their cost of living rise as a result of these misguided feel-good policies. And no group has felt the negative impact of such policies more than young black workers.

Read Craig’s entire commentary below.

It is not uncommon for politicians to make promises that they cannot fulfill, especially when it comes to issues such as minimum wage laws. The recent developments in California’s restaurant industry serve as a prime example of this trend.

Craig DeLuz

California has passed a law that will increase the hourly wage of fast-food workers to a staggering $20. This decision was met with support and cheers from those who believe in a “living wage” for all workers. However, the reality is not as rosy as some may believe.

In the months leading up to the implementation of this law, California restaurants have been making preparations for the financial burden it will impose on their businesses. As revealed by state records obtained by The Wall Street Journal, popular pizza chains such as Pizza Hut and Round Table Pizza have already announced plans to lay off nearly 1,300 delivery drivers and reduce the hours of other team members.

These actions are a direct result of the looming minimum wage hike, which will significantly increase labor costs for these companies. It is important to note that these businesses are not motivated by greed or a desire to exploit their employees. Rather, they are responding to the economic reality that is a direct consequence of government action.

As expected, the job cuts and reduced hours will have a ripple effect on the entire restaurant industry. In response to the cost-saving measures being implemented by their counterparts, other businesses have also announced plans to raise menu prices and cut back on hiring.

The situation in California serves as a perfect case study for the misguided and often detrimental effects of minimum wage laws. These laws are touted as a solution to income inequality and poverty. However, they fail to recognize the basic principles of supply and demand, which dictate that artificially increasing wages will ultimately lead to job losses and higher prices for consumers. And for young black workers in particular, these laws do far more harm than good.

The reality is that these laws create barriers to employment, making it harder for these individuals to enter the workforce and gain valuable skills and experience. As a result, many young black workers are left without job opportunities, forcing them into a cycle of poverty and dependence on government assistance.

According to economist David Neumark of the University of California at Irvine, for every 10 percent increase in the minimum wage, employment for 16-19 year old black and Hispanic teens falls 6.6 percent. So, minimum wage increases not only stifles their economic growth and potential, but also perpetuates the stereotype of the “unemployable black man.” Rather than being lifted up by minimum wage laws, these young workers are being held back and robbed of opportunities to better themselves and their communities.

In the end, it is not the politicians who bear the consequences of their actions, but rather hard-working individuals who will lose their jobs, see their hours reduced and their cost of living rise as a result of these misguided feel-good policies. And no group has felt the negative impact of such policies more than young black workers.

Rather than providing them with opportunities to gain valuable skills and experience, minimum wage laws push them to the outskirts of the job market. By artificially inflating the cost of labor, these laws make it difficult for employers to justify hiring inexperienced workers, leaving young black men with fewer options for economic advancement.

Moreover, as businesses adjust to the increased cost of labor, prices for goods and services rise, making it harder for these men to make ends meet. Instead of empowering them, minimum wage laws only serve to hold back and harm the very community they claim to help. It is time to examine the facts and acknowledge the unintended and detrimental consequences of such well-intentioned but ill-informed policies. Young black workers deserve real solutions, not feel-good rhetoric.

As economist Thomas Sowell has famously stated, “There are no solutions, only trade-offs.” In the case of California’s minimum wage laws, the trade-off is clear – some individuals may receive higher wages, but at the expense of others losing their jobs, businesses struggling to survive and consumers facing higher prices. The true cost of these policies can only be measured in the lives that are affected and the opportunities that are lost.

Craig J. DeLuz, an ambassador with the Project 21 black leadership network, has almost 30 years in public policy and advocacy.  He currently hosts a daily news and commentary show called The RUNDOWN. You can follow him on X at @CraigDeLuz.