A Living Wage

“[T]he minimum wage is a crime against black Americans” (Friedman as in Carden).

“People with the best intentions and the least economic understanding constantly try to help the people on the bottom of the economic ladder by governmental intervention” (Greaves).

      As we’ve surveyed African American efforts to combat inequality throughout history, we’ve often discussed the struggles African Americans had to overcome in order to become active participants in American society.  These efforts to achieve economic, political, and social equality were often established with the best intentions and eventually led to considerable policy reform.  Similarly, recent policy reform has indirectly addressed economic disparities among African Americans, other minorities, and whites and has attempted to tangibly reduce poverty.  In particular, this is the case in the relatively recent legislation that increased the minimum wage from $6.55 per hour to $7.25 per hour.  Unfortunately in this case, policy makers failed to consider the unintended consequences of policy intervention and created a situation worse than the original for low-skill, African American wage workers. 

      Though a higher minimum wage appears to raise employees’ net income on the surface, it actually ends up leading to, “if it doesn’t manifest itself in lost jobs” (which it more than likely will), “fewer hours, reduced benefits or both” (Carden).  With lost jobs and fewer hours worked, valuable skills cannot be acquired, reducing future earnings for low-skilled workers.  This problem is only magnified among minority groups, with African American men being the most adversely affected by minimum wage laws (as they comprise a large proportion of the low-skill labor market).  According to an Employment Situation Summary released by the Bureau of Labor Statistics, “the change in the unemployment rate for ‘Black or African American’ workers was double” the unemployment rate for all workers in 2009 after the minimum wage law was put into effect over the summer (Carden).  Though the economic downturn may be to blame for some of the rise in unemployment, it would be naïve not to consider minimum wage law as a significant, contributing factor to the disproportionate effect on African American workers.

      Because minimum wages and other regulations “lock a lot of younger black males out of the labor market,” “they do not acquire as many skills as they would if they were employed.  When they are older, therefore, they earn less” (Carden).  This creates a perpetual cycle that eliminates opportunities for African Americans and other minorities that tend to have low-skill jobs to escape poverty or to jump up into the middle class.  Under this reasoning, it is arguable that the minimum wage laws and other regulations are counterproductive to achieving the ends for which they were put into place.  Though they were intended to positively affect low-skill wage earners, they have instead adversely affected many of those whom intervention was intended to help.  It is important to consider the results of policy intervention when evaluating plans to address economic inequality among African Americans, other minorities, and whites.

      As much as policy makers nobly seek to help those that are in need or are disadvantaged (perhaps, as a product of our nation’s history), it is important to not only look at the intended consequences of intervention, but also at the unintended consequences that may harm those whom policies are intended to help. How do you think minimum wage laws affect low-skill wage earners?  Given the empirical evidence that African American men are more adversely affected by minimum wage laws, how should policy makers proceed to address issues of economic inequality?