The Minimum Wage and Systemic Racism

Systemic racism exists, we're told, wherever the structures of society work to the disadvantage of black people regardless of the intent of those who work within those structures.

I was for a long time skeptical that in 2021 such structures actually existed outside the imaginations of Ibram X. Kendi and Ta-Nehisi Coates, but thanks to Wall Street Journal columnist Jason Riley, I've found one - the minimum wage.

Despite the good intentions of those who want to raise the minimum wage, doing so, Riley argues, would have a disproportionate and negative impact on black workers and is therefore a good example of systemic or structural racism.

Riley points out the following facts:

• The Biden administration wants to raise the federal minimum wage to $15 an hour, but according to a new Congressional Budget Office report doing so would cause approximately 1.4 million jobs to 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.
• 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.”
  
  In other words, those who would be helped by a higher minimum wage are not those who most need it, poor minorities.
• 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.
• Low-income minorities stand to lose the most from lifting the wage floor because they are overrepresented among less-skilled and less-experienced workers, i.e. the workers most likely to get laid off or not hired at all if businesses have to pay their employees twice what they have to pay them now. 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.

In fact, the minimum wage was instituted in order to prevent black workers from competing with white workers during the Great Depression, Riley tells us. By requiring employers to pay their workings a minimum starting wage employers lost the incentive to hire cheaper labor, usually blacks. This served to protect whites from being undercut by black workers who were willing to work for lower wages.

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.

Riley writes that,

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?”

He concludes that the minimum wage hurt blacks at its inception and hurts them still today by making it harder for employers operating on slim margins to keep them on the payroll: "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" (the very definition of systemic racism).

Here's just one example, among hundreds, of the baleful effects that mandating an increase in employee wages has. The grocery chain Krogers has closed two stores in Seattle and two in Long Beach, California after these municipalities passed an ordinance requiring that employees be given a $4.00 per hour raise as "hazard pay."

Whether Krogers could've afforded the increase is irrelevant, they decided it wasn't worth the cost of keeping the stores open.

Not only does this mean that hundreds of workers will be out of a job it also means that food markets in urban areas will become even more scarce than they already are.

When government decides to mandate what businesses will pay their employees the very people that were supposed to be helped are often harmed and usually those harmed are disproportionately minorities, so why are we not hearing cries of outrage from our progressive friends about the systemic racism inherent in the minimum wage?