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News Link • Economy - Economics USA

A BASIC PRINCIPLE ABOUT THE MINIMUM WAGE

• https://www.fff.org, by Jacob G. Hornberger

In fact, the minimum wage is why there is a chronic unemployment rate among African American teenagers of around 30-40 percent. If the minimum wage is repealed, that unemployment rate drops close to 0 percent.

Employers aim to make a profit. When they hire workers, they subjectively place a value on their labor. If they believe that the labor from the worker is more valuable than the money they are paying him, they'll hire him. If they don't, they won't.

Let's assume that an African American teenager asks for a job from an employer. The employer immediately places a subjective value on the teenager's labor. He thinks: This person has no work skills (no work history), a bad education (public schooling), and he doesn't dress well (extreme poverty).

Let's say that a middle-class white teenager asks for a job from this same employer at the very same time. Good work skills, good education, and well-dressed.

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