The Minimum Wage’s Racially Discriminatory Roots

If the filibuster is a ‘Jim Crow relic,’ so is a policy designed to curtail the abundance of black labor.

By Jason L. Riley.

"Speaker Nancy Pelosi said last week that the House version of the next coronavirus aid package will include a $15 federal minimum wage, adding that “27 million people will get a raise, 70% of them women.”

In truth, Mrs. Pelosi has no idea how many people would see a raise because she doesn’t know how many people would keep their jobs. Employers may decide that they can’t afford to pay someone a $15 hourly wage, so workers could be let go or offered fewer hours as a result. A new Congressional Budget Office report estimates that 1.4 million jobs would vanish, and no one knows how many people would never be hired in the first place because they’ve been priced out of the labor force. Politicians gloss over these trade-offs, but they are basic economic facts of life.

Mrs. Pelosi’s reference to female workers is also misleading. Democrats have long held up single working moms as the typical minimum-wage earner, but that’s a myth. A 2014 analysis by economists Joseph Sabia and Richard Burkhauser found that the vast majority of workers who would benefit from a minimum-wage increase live in nonpoor households. According to Mr. Sabia, “only 13 percent of workers who would be affected live in poor households, while nearly two-thirds live in households with incomes over twice the poverty line, and over 40 percent live in households with incomes over three times the poverty line.”

Such findings would seem to underscore the limits of using minimum-wage laws to address poverty. Most workers who earn minimum wages are not a family’s sole breadwinner. They tend to be teenagers living at home or senior citizens working part-time to stay busy in retirement. According to Mr. Sabia, single mothers made up less than 5% of those who potentially would benefit from a minimum-wage hike.

What Democrats play down is that most minimum-wage earners aren’t impoverished, and most people who qualify as poor already earn more than the minimum. Poor families need jobs more than they need raises. And what teens and young adults most need are opportunities to accumulate job experience that can lead to higher pay and upward social mobility down the road. By reducing employment opportunities, minimum-wage laws can make inequality worse.

Low-income minorities stand to lose the most from lifting the wage floor because they are overrepresented among less-skilled and less-experienced workers. Labor economists William Even and David Macpherson’s study of the impact of state minimum-wage mandates in 2007-09 found that they cost younger blacks more jobs than the Great Recession did.

This is exactly what the early 20th century minimum-wage proponents were hoping these laws would do: keep black workers from competing for jobs. We hear a lot today from Democrats who want to ditch the Senate filibuster, which enables the minority party to block legislation that doesn’t have a 60-vote majority, ostensibly on the grounds that it has been wielded in the past to thwart black progress. Last summer, President Obama referred to the filibuster as a “Jim Crow relic” that was used to block civil-rights bills. We’ll know that Democrats are arguing in good faith when they hold minimum-wage laws and the labor unions that back them to the same standard.

The federal government got involved in setting wage levels in the 1930s and did so at the urging of unions that excluded blacks as members. During debates in Congress, lawmakers complained openly about the “superabundance” and “large aggregation of Negro labor” and cited complaints by whites of black Southerners moving north to take jobs.

As Congress increased the minimum wage periodically over the decades, these same arguments were put forward as a justification. When he was a U.S. senator from Massachusetts, John F. Kennedy backed minimum-wage hikes as a way of protecting New England industry. “Having on the market a rather large source of cheap labor depresses wages outside of that group, too—the wages of the white worker who has to compete,” he lectured an NAACP official at a hearing in 1957. “And when an employer can substitute a colored worker at a lower wage—and there are, as you pointed out, these hundreds of thousands looking for decent work—it affects the whole wage structure of an area, doesn’t it?”

It’s no accident that these wage mandates disproportionately harm black job prospects. That was the intent all along. Even if it’s no longer the intent, it’s still happening. What’s disconcerting is the support that these laws have among today’s black politicians and activists, who choose to ignore the facts and evidence. Alas, they have essentially been bought off by Big Labor, which makes them worse than useless."