In 1966, Milton Friedman wrote an op-ed for Newsweek entitled “Minimum Wage Rates.” In it, he argued “that the minimum-wage law is the most anti-Negro law on our statute books.” He was, of course, referring to the then-present era, after the far more explicitly racist laws from the slavery and segregation eras of United States history had already been done away with. But his observation about the racist effects of minimum wage laws can be traced back to the nineteenth century, and they continue to have a disproportionately deleterious effect on African-Americans into the present day.
By: Chris Calton
This article first appeared at Mises.org
The earliest of such laws were regulations passed in regards to the railroad industry. At the end of the nineteenth century, as Dr. Walter Williams points out, “On some railroads — most notably in the South — blacks were 85–90 percent of the firemen, 27 percent of the brakemen, and 12 percent of the switchmen.”1
The Brotherhood of Locomotive Firemen, unable to block railroad companies from hiring the non-unionized black workers, called for regulations preventing the employment of blacks. In 1909, a compromise was offered: a minimum wage, which was to be imposed equally on all races.
To the pro-minimum wage advocate, this may superficially seem like an anti-racist policy. During this time, with racism still rampant throughout the United States, blacks were only able to enjoy such high levels of employment by accepting lower wages than their white counterparts. These wage-gaps at the time genuinely were the product of racist sentiment.
But this new wage rule, of course, did not eliminate the racism of nineteenth-century employers. Instead, it displaced their racism at the expense of black workers. One white union member at the time celebrated the new rule for removing “the incentive for employing the Negro.”2 This early minimum wage rule was explicitly put in place to prevent African-Americans from finding employment, and it was successful in this goal.
In the 1930s, racial views had hardly improved, if at all. Despite this, the unemployment rate among blacks was actually marginally lower than that of whites.3 Like the railroad workers, this was due to their willingness to accept lower wages than whites. But as infuriating as the employer racism at the time might be, the 1930s wage laws should incite even more anger.
In 1931, Congress passed the Davis-Bacon Act, requiring uniform wages for any workers employed in federally funded public works projects. In 1933, the National Industrial Recovery Act was signed into law, mandating industry-specific wages throughout the economy. In 1938, the Fair Labor Standards Act — the only one of the three to remain permanently on the books — took effect, initially imposing a federal minimum wage for any worker engaged in interstate commerce.
All of these laws served to price African-Americans out of the job market. Rather than forcing employers to pay non-racist wages, it simply forced blacks to shift from suffering race-motivated wages to suffering race-motivated unemployment.
The industries that were not governed by minimum wage laws demonstrate the market’s propensity to raise the relative income of discriminated people. In the 1920s, for example, popular black performers were starring in Broadway plays alongside whites. In the 1940s, Jackie Robinson broke the color barrier in Major League Baseball, despite the racism in professional sports. Meanwhile, blacks in civilian and government jobs were being pushed out of their industries by wage floors.
By the 1960s, many African-Americans were employed as farmers — at least partly due to this being one of the few remaining fields of work that was not yet subject to wage regulations. This changed in 1967, when the government extended the minimum wage laws to American farmers as part of the “War on Poverty.” Black farmers who were accustomed to making a modest $3.50 per day were now legally required to be paid $1.00 per hour — a tremendous increase in wages.
The effect of this law was immediate and undeniable. An estimated 25,000 farm workers were put out of work in the Mississippi Delta region alone.4 Black farmers were not oblivious to the cause-and-effect at play. “That dollar an hour ain’t worth nothing,” said the wife of one day-laborer. “It would have been better if it had been 50 cents a day if you work every day.”5 Fifty cents per day, of course, was a lower wage than what her husband would have been earning prior to the law. Her point was clear: the federal minimum wage destroyed their ability to earn a living.
Instead of raising the wages of the predominantly-black farmers, the new law sped-up the move toward mechanization and ushered in the use of chemical weed killers instead of the previously more economical human weed pullers. Meanwhile, black migration out of these farmlands occurred by the thousands; the New York Times in 1968 called it the “Negro Exodus.”
Whatever your feelings on the status of racism in America today, it is difficult to argue that the United States is actually more racist than it was during the Jim Crow era. In that time span, the country has gone from making African-Americans drink from different water fountains to electing the first black president. Yet, despite this distinct improvement, the unemployment rate of black teens is roughly double that of whites. In 1948, by contrast, the unemployment rate among teenagers was the same between the races.6 Despite the widespread racism remaining in the country following the emancipation of slaves, the rise of a black middle-class started to emerge quickly and continued for decades. But thanks to meddlesome laws passed by presumably well-intentioned bureaucrats, the government has only served to stifle this upward trajectory.
- 1.Walter E. Williams, South Africa’s War Against Capitalism (New York: Praeger, 1989), p. 74.
- 2.Sterling D. Spero and Abram Harris, The Black Worker (New York: Kennikat Press, 1931), p. 291.
- 3.Thomas Sowell, Basic Economics: A Common Sense Guide to the Economy, 3rd ed. (New York: Basic Books, 2007), p. 250.
- 4.James C. Cobb, “Somebody Done Nailed Us on the Cross: Federal Farm and Welfare Policy and the Civil Rights Movement in the Mississippi Delta,” The Journal of American History (December 1990): 912–36.
- 5.Des Moines Register, February 27, 1968, p. 2.
- 6.Sowell, Basic Economics, p. 251.
This article first appeared at Mises.org