Why do young black males suffer unequal harm from minimum wage increases? Even and Macpherson say that they’re more likely to be employed in low-skilled jobs in eating and drinking establishments.
These are businesses with narrow profit margins and are more adversely affected by increases in minimum wage increases. For 16-to-24-year-old men without a high school diploma, 25 percent of whites and 31 percent of blacks work at an eating and drinking establishment. Compounding the discriminatory burden of minimum wages, not discussed by the authors, are the significant educational achievement differences between blacks and whites.
The best way to sabotage chances for upward mobility of a youngster from a single-parent household, who resides in a violent slum and has attended poor-quality schools is to make it unprofitable for any employer to hire him. The way to accomplish that is to mandate an employer to pay such a person a wage that exceeds his skill level.
Imagine that a worker’s skill level is such that he can only contribute $5 worth of value per hour to the employer’s output, but the employer must pay him a minimum wage of $7.25 per hour, plus mandated fringes such as Social Security, unemployment compensation and health insurance. To hire such a worker would be a losing economic proposition. If the employer could pay that low-skilled worker the value of his skills, he would at least have a job and a chance to upgrade his skill and earn more in the future.
Minimum wage laws have massive political support, including that of black politicians. That means that many young black males will remain a part of America’s permanent underclass with crime, drugs and prison as their future.
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