Please Stop Helping Us: How Liberals Make It Harder for Blacks to Succeed

by Jason L. Riley

The preponderance of evidence continues to show, as it has for decades, that minimum-wage laws tend to lead to overall job loss, which is bad enough. But the most insidious aspect of these policies is that the job loss is concentrated among the least-educated and least-skilled workers—the same group that minimum-wage advocates are trying to help. And blacks, it so happens, are over-represented in this segment of the population. According to 2011 Census Bureau data, the median age for blacks in the United States is 31, versus 37.3 for all Americans. The black population is growing faster than the total population—it grew by 15 percent between 2000 and 2010, compared with growth of 9.7 percent among all groups over the same period—and the young black population is growing especially fast. The Census Bureau projects that the number of black persons under age 18 will grow by 5 percent between 2015 and 2025, “while white, non-Hispanic juveniles will decrease by 4%.”9 Blacks are also more likely than the general public to be living in poverty—28.1 percent versus 15.9 percent—and their median household income of $33,460 significantly trails the national median of $50,502.10 When it com...

Minimum-wage mandates don’t impact all workers equally, but they are especially harmful to those who are young and those who are living on the margins, where many blacks for various reasons find themselves. What such individuals want and need are job opportunities, which minimum-wage laws reduce by pricing people out of the labor market. These laws keep the large number of blacks who lack the right education and skills from being able to compete for jobs by offering to work for less money, get on-the-job experience, and ultimately increase their skills and pay. Alan Greenspan, the former chairman of the Federal Reserve, told a congressional hearing in 2001 that he would abolish the minimum wage if he could. “I’m not in favor of cutting anybod...

The well-meaning liberals who defend these laws today ignore their racial impact, but it is undeniable that race was on the minds of those who initially championed a federal wage floor. States took the lead in establishing a minimum wage, with Massachusetts going first in 1912. Within a decade, fifteen states and the District of Columbia had minimum-wage laws on their books. This was the Progressive Era, and proponents said that workers were being exploited and needed more bargaining power. Employers disagreed, and challenged the laws in court on the grounds that they “violated employers’ constitutional rights to enter freely into contracts and deprived them of their private property (i.e., their profits) without due process,” wrote economists Neumark and Wascher.13 The Supreme Court agreed in a 1923 ruling against the District of Columbia’s minimum-wage law. And by the end of the decade similar laws in most other places had been declared unconstitutional, repealed, or otherwise neutered to avoid a legal challenge. They would reappear in 1933, when President Franklin D. Roosevelt signed the National Industrial Recovery Act, which called for workweeks of thirty-five to forty hour...

Black leaders today continue to cite racism as a major cause of black unemployment (and every other socioeconomic problem that blacks face). Yet in 1930, when racial discrimination was infinitely more open and rampant, the black unemployment rate was lower than that of whites. And until around 1950 the unemployment rate for young black men was much lower than today, and similar to whites in the same age group. “Black 16-year-olds and 17-year-olds had a slightly lower unemployment rate than white youngsters of the same age in 1948 and only slightly higher unemployment rates than their white peers in 1949,” wrote Stanford economist Thomas Sowell. How come? Sowell offered one plausible explanation: This was just before the minimum wage law was amended in 1950 to catch up with the inflation of the 1940s which had, for all practical purposes, repealed the minimum wage law, since inflated wages for even unskilled labor were usually well above the minimum wage level specified when the Fair Labor Standards Act was passed in 1938. The key role of the federal minimum wage laws can be seen in the fact that black teenage unemployment, even in the recession year of 1949, was a fraction of what it would become in even prosperous later years, after the series of minimum wage escalations that began in 1950.21

So while racism may not drive today’s proponents of minimum-wage laws, the effects of these laws continue to disproportionately harm the job opportunities of blacks in general, and young blacks in particular. Nevertheless black politicians, civil rights groups, and their liberal allies continue to ignore the empirical data and back these disastrous policies. In May of 2011 the Chicago Urban League, a civil rights group that supports minimum-wage laws, released a study of youth employment prepared by Northeastern University’s Center for Labor Market Studies. The study found that despite overall job growth in the previous year, “the nation’s teenagers did not manage to capture any of the increase in employment.” Indeed, 2010 was “the fifth consecutive year in which a new historical low for teen employment was reached,” and the center predicted that “only one of every four teens (16–19 years old) would be employed during the summer months of June, July, and August,” which would represent the “lowest ever or second lowest ever summer employment rate for teens in post-WWII history.” When the study was released, the national unemployment rate was 9.1 percent, but it was 24.2 percent for teens, and 40.7 percent for black teens. In Chicago the situation was much worse, said the Urban League, noting that “90 percent [of black teens] are jobless, including 93 of every 100 teens from families with incomes under $40,000; upper-middle-income whites were nearly four times as likely to h...

The irony is that the same liberals who complain about the dearth of employment opportunities in the ghetto—from President Obama to the Congressional Black Caucus to black mayors and MSNBC talking heads—are among the loudest defenders of the minimum wage. In his first State of the Union address after being reelected, Obama called for increasing the federal minimum by 24 percent, from $7.25 to $9 an hour, and indexing it to inflation. At the time of the speech in February 2013, unemployment was 7.9 percent overall, but 13.8 percent among blacks (versus 7 percent among whites), 14.5 percent among black men (versus 7.2 percent among white men), and 37.8 percent among black teens (versus 20.8 percent among white teens). In separate interviews, Professors Macpherson and Even told me that several factors contribute to the racial disparities resulting from minimum-wage hikes. “One problem is that I think blacks tend to have, on average, inferior schooling,” Macpherson said. “Also, the effects of the minimum wage differ by industry, and blacks tend to be heavily concentrated in, for example, eating and drinking establishments, where it’s easier to substitute capital for labor.” Geograph...

The reality is that as the minimum wage has risen, the gap between the overall jobless rate and the jobless rate of young people has widened. This holds true at the federal and state level. “At least 10 states have raised their minimum wages above the federal level in the last decade, largely in response to union lobbying,” reported the Wall Street Journal in 2009. “Four states with among the highest wage rates are California, Massachusetts, Michigan and New York. Studies have shown in each case that their wage policies killed jobs for teens.” This phenomenon extends beyond U.S. borders, by the way. A study of seventeen other countries found a “highly negative association between higher m...

Minimum-wage defenders don’t have much in the way of hard data to refute the disemployment effects of these policies. Instead, they argue that minimum-wage laws alleviate poverty, which is the greater good, in their view. Here’s how Obama put it in his 2013 State of the Union address: We know our economy is stronger when we reward an honest day’s work with honest wages. But today, a full-time worker making the minimum wage earns $14,500 a year. Even with the tax relief we put in place, a family with two kids that earns the minimum wage still lives below the poverty line. That’s wrong. That’s why, since the last time this Congress raised the minimum wage, nineteen states have chosen to bump theirs even higher. Tonight, let’s declare that in the wealthiest nation on Earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9.00 an hour. . . . This single step would raise the incomes of millions of working families. It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets. The belie...