How Minimum Wage Hikes Hurt Latino Workers

How Minimum Wage Hikes Hurt Latino Workers

Countering calls from leading Latino organizations to raise state and federal minimum wages, the LIBRE Institute, a free market Latino advocacy group, has published a new study that finds minimum wage hikes would adversely impact Latino workers.

Relying on previous scholarly evidence and using the latest job numbers from the Bureau of Labor Statistics (BLS), a non-partisan governmental agency, the LIBRE Institute concludes that employment opportunities for Latino workers are significantly diminished following minimum wage hikes. This is especially the case for Latino workers without a high school diploma.

The findings arrive as the Latino unemployment rate remains higher than the national average. For Latino Americans who are employed, wages have remained stagnant. And although the Latino unemployment rate has gone down in recent years, evidence shows that the official numbers mask a higher unemployment picture because they fail to consider the number of workers that have given up looking for work.

Still, for groups such as the National Council of La Raza, raising the minimum wage is particularly urgent given the 2008 economic downturn that continues to leave many behind amid a sluggish recovery. In a fact-sheet supporting federal legislation to boost the federal minimum wage to $12 an hour by 2020, La Raza says such a move would benefit over 8 million Latinos — many employed in low-wage and tipped-wage industries.

But according to the LIBRE Institute study, such a raise would have the opposite effect for the Latino community.

“It is likely that a deep concern for their welfare motivates those who call for a raise in the minimum wage…but mandated minimum wage controls do not accomplish that goal,” argue Payton Alexander and Carli Dimino. “Wages are not levers that set value, but metrics that reflect value. When we understand this central fact, we begin to realize the ways in which the minimum wage has the potential to hurt exactly those whom it is intended to help.”

As a number of cities and localities have raised their minimum wage laws, there is evidence that these hikes may have contributed to a decline in jobs, or a reduction in hours for some employees. Among the cities that recently raised their minimum wage include Seattle, which raised the hourly rate to $11. But according to a team of economists commissioned by the city to study the wage hike’s impact, there was scant evidence that the measure helped in any significant way.

Meanwhile the American Enterprise Institute found that there was actually a steep decline in employment participation in the city of Seattle shortly after the new wage law took effect. 

Despite this, it’s likely that calls to raise the minimum wage will continue unabated as the National Council of La Raza joins with labor unions and other progressive organizations to pressure the new administration and the new Congress to enact new wage laws.

The LIBRE Institute hardly seems likely to join in these calls. In fact, for Daniel Garza, the organization’s president and board chairman, it’s not a lack of regulations holding back the Latino community — but the opposite.

“Policymakers must remember that a long-term problem in the economy has been a lack of entry-level opportunities, as government regulations and mandates make it costlier and more difficult for small businesses to hire new staff,” Garza said in a recent release “These opportunities are often critical for Latinos.”