Minimum wage laws are discriminatory.

With Colorado poised to lower it's minimum wage for the first time in 70 years, this seems like a good time to discuss minimum wage in greater detail.  Before understanding the implication of minimum wage laws and their tendency to discriminate, let us briefly delve and solidify the economic consequences of such laws.

Firstly, let us all agree that minimum wage laws are feel-good laws because they instinctively make sense.  A question asking whether or not the working poor should have higher wages technically should illicit a resounding yes!  Not only because the working poor are struggling as it is, but because it prevents exploitation of these working poor by corporations and greedy businessmen seeking a profit.  Unfortunately when it comes to economics fairness is a very poor indication of what works and does not work. 

Price Controls

Feel free to skip this section if you understand how minimum wage laws create shortages.

Minimum wage laws are a form of price controls and price controls yields shortages.  In this particular case the shortages do not reflect a tangible product, but instead an opportunity, an opportunity for employment.  A hypothetical example for clarity.

Suppose you are the employer of Widget Company and need to fill five jobs requiring very little skill.  You believe that a high school education is more than sufficient for this job and are prepared to pay $2 an hour for this job.  You put an ad out and are disappointed to learn that no one wishes to take this job.  You are getting information from the market indicating that your "price" is not attractive.  After several attempts you determine that $4 an hour is attractive, but can only now offer four jobs. However you plan to expand the job opening upon collecting profits.  Everyone seems happy, no one is coerced and there is a mutual contract between you and your employees.  Good.  Now imagine that I came along and using the power of the federal government threatened you if you do not comply with federal minimum wage laws, which happen to be $7 an hour.  You are disappointed in this, but are forced to comply.  You do so by terminating two positions.  You are not better off even if the remaining two employees now get more money, of course there are two other employees completely out of work and are relying on government for assistance.  I have marginally improved the life of two people while destroying your productivity and leaving two people jobless.  These are the effects of price control.   Instead of letting the job market establish a fair price through competition and people's choice the power of the federal mandate has artificially manipulated the market and hurt the very low income people in dire need of work.  The consequence of undermining the company's productivity and hindering it's ability to create more jobs should be of equal consideration. 

Discrimination

So why are these laws so discriminatory?  In America, certain minorities for various reasons are at the lower end of the economic spectrum.  Blacks, Hispanics and other minority groups on average suffer from poor education, violent neighborhoods and environment not conducive to upward mobility.  Opportunities may be there, but the path to achieving these opportunities is a long and arduous one.  Therefore it should be of no surprise that these minorities represent a larger part of the working poor.  According the Bureau of Labor Statistics, consider the following:

The unemployment rate for blacks and Hispanics aged 25-34 were 11.1% and 5.8% in 2005. Unemployment for whites and Asians in this age group were 4.4% and 3.5%. In the 35-44 age group the unemployment rates for these four ethnicities were 7.2%., 5.1%, 4.4%, and 2.7%.

Younger age groups have an even more profound difference placing many black and Hispanic on the street instead of a job where they can at least make some money and begin moving up in the corporate world.  As you can see creating shortages areas of low skilled labor hurts minorities significantly more so than it does whites.  Historically, liberal price controls of wages has already been implemented and not coincidentally during one of the most aggressive federal expansion moments in American history - New Deal - with equally damaging results. 

National Recovery Administration

While FDR is still celebrated and taught as the savior of America from the Great Depression, information is emerging suggesting that the New Deal was a catastrophic failure and hurt millions of people while prolonging the very depression it set out to "fix".  Notice a pattern? 

The NRA immediately ushered in minimum wage laws under the assumption that if people are suffering from lack of funds then the government can simply infuse their wallets with extra cash.  In fantasy land where money grows on trees this happens to be a wonderful solution, but in real life shortages begin to mount and fast.  No group of people suffered more under the NRA's laws and promotion of labor unions than the black community.  In fact, the NRA was dubbed at the time as "Negroes Robbed Again" by the black community as they witnessed the devastation unleashed by a planned economy.  Many blacks lost their jobs and were forced to be physically displaced out of regions where their industries participated in the NRA.  As a testament to this migration another popular moniker brandished the NRA as the  "Negro Removal Act".
NRA was struck down in 1935 by the Supreme Court (before FDR's court packing scheme turned the justices into whimpering cowards) but the damage on blacks and industry remained and unions via the Wagner Act continued to discriminate against blacks via artificial wage laws. 

Yet to this day, ask most people about the New Deal and FDR and you will get only glowing endorsements about the man who saved America.