In 1966 Milton Friedman wrote an op-ed in Newsweek in which he argued that the “shockingly high” unemployment rate among African American teenagers was largely the result of the country’s current minimum wage laws.
The Nobel Prize winning economist then predicted that the 28% increase in the minimum wage that Congress had just enacted — from $1.25 to $1.60 an hour — would only exacerbate the problem.
Women, teen-agers, Negroes and particularly Negro teen-agers, will be especially hard hit. I am convinced that the minimum-wage law is the most anti-Negro law on our statute books—in its effect not its intent. It is a tragic but undoubted legacy of the past—and one we must try to correct—that on the average Negroes have lower skills than whites. Similarly, teen-agers are less skilled than older workers. Both Negroes and teen-agers are only made worse off by discouraging employers from hiring them. On the-job training—the main route whereby the unskilled have become skilled—is thus denied them.
As the saying goes: the more things change, the more they stay the same.
[T]he federal minimum-wage hikes reduced teen employment by 2.5% translating to approximately 114,400 fewer employed teens.
Additionally, BET points out that the report:
[F]ound that for each 10 percent increase in the federal or state minimum wage employment for young Black males decreased 6.5 percent. By contrast, after the same wage boost, employment for white and Hispanic males fell respectively just 2.5 percent and 1.2 percent.
The findings reveal that while 13,200 Black young adults lost their jobs as a direct result of the recession nearly 40 percent more, a total of 18,500, were fired because of the rise in the federal minimum wage.
The irony here, of course, is that many minimum wage proponents are so because of their supposed “compassion” for the very young, unskilled worker that minimum wage laws hurt.
Even more bizarrely, some acknowledge that minimum wage laws don’t make sense economically, which Governor Brown does here even while signing a law that increases California’s minimum wage to $15 an hour:
Those best poised to determine how high a minimum wage should be are local businesses. These businesses can discover the ideal minimum wage with very simple trial and error experiments. If a business advertises a position that pays $8 an hour and no qualified applicants appear, then clearly $8 an hour will not be enough to fill that position.
For example, in North Dakota during the 2014 fracking boom, the actual minimum wage — the least amount businesses could pay to attract applicants for even entry-level retail or fast food positions — was often many times that of the federal minimum wage.
The minimum wage that a business must pay should be a reflection of that business’ local economy, not a mandate from politicians in a distant state house or, worse, the federal government.