Minimum wage is back in the news in large part because President Obama called
for it to be increased once again. I will get to his proposal in just a minute after a brief
discussion of the history of the minimum wage.

Economics professor Walter Williams in his book, Race and Economics, explains
that minimum wage laws were passed in the 1930s, and they had negative consequences
for black employment. Economist Milton Friedman has argued that the minimum wage
laws were actually used to prevent blacks from displacing whites in the labor force by
working for less money. He therefore regarded the minimum wage as “one of the most, if
not the most, anti-black laws on the statute books.”

Whatever the past motivation, one has to wonder how raising the minimum wage
would help those out of work. Unemployment stands at just below eight percent, but is
nearly twice as high for African-Americans. Unemployment among black teens is nearly
38 percent. A higher minimum wage might raise earnings for existing workers, but it
most certainly would reduce the job opportunities of the millions looking for work.

Let’s get back to the president’s justification for raising the minimum wage. His
argument is that a full-time worker making minimum wage still falls below the poverty
line. He implied that raising the minimum wage to $9 per hour would put that worker and
his or her family above the poverty line. The news director for one of the radio stations
that carries my radio program pulled data on poverty thresholds for families of different
sizes to demonstrate that raising the minimum wage won’t lift those families out of
poverty.

It’s a compelling justification. Raise the minimum wage so that no one who
works will be below the poverty line. Why not raise the minimum wage to $20 per hour?
Callers to my program quickly rejected that idea saying it would increase unemployment.
More companies would lay off workers. And that’s the point. When we raise the
minimum wage, some benefit. Others lose their jobs. And the unemployed have a
tougher time finding a job.