Friday, November 30, 2012

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?


  1. I would certainly agree with you that although legislation designed to raise minimum wage was created with pure intentions to help the disadvantaged working low-income jobs, in many ways, this same legislation has negatively impacted the same people it was designed to empower. In general, I think this situation represents a difficulty in creating legislation to empower one certain group of people or one socioeconomic class without having at least some negative repercussions on the same group or another. Personally, I believe that if the policy makers and those whom the legislation is designed to impact were given the opportunity to collaborate and discuss the implications of their legislative design in greater detail, many adverse effects of such legislation could be avoided or caught before they spiral out of hand---like the unemployment increase spawned by minimum wage legislation. Although it may not be possible under the current system, I think that if policy makers were in closer coordination with the people whom their legislation is designed to impact, not only would they be represented "better" but problems due to legislation backfiring would probably be lessened.

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  3. Since your research states that employment for African Americans has plummeted since the increased minimum wage (I'm assuming since employers can't afford to pay as many workers such "higher" wages), I feel that more foundational measures should be taken to combat this issue. In order to more thoroughly address problems of economic inequality, there must be easier and more widespread opportunity of education. The amount of education one has, or lacks, often plays a substantial role in economic disparities between minorities and their counterparts. In Tennessee, there is a recent initiative called TNAchieves that focuses on increasing higher education opportunities for Tennessee students through last dollar scholarships and guidance from mentors. With this program, public high school students who never thought of attending college and/or whose parents can not afford it (and may otherwise have limited options such as minimum wage jobs), have the opportunity to receive an education from a specified list of two and four-year institutions. There is no GPA or ACT requirement, and what financial aid does not cover, TNAchieves will. TNAchieves found from studies that even students with just an associate’s degree make over $400,000 more in a lifetime than a high school graduate. This is an example of a program that could help improve economic inequality. Though it is geared only toward senior high school students (who ultimately develop a desire to attend college), it is a model of a form of foundational structure needed to develop economic equality.