There has been substantial research on the employment effects of minimum wages. Much of this research shows that minimum wages reduce employment, with the largest effects observed in the lowest-skilled groups, usually defined in terms of age or education. This is likely because a larger share of lower-skilled workers earn the minimum wage; when the minimum wage increases, these workers are more likely to experience reduced hiring, fewer hours, and job losses. However, there has been little research on how minimum wages affect employment and other labor market outcomes for lower-skilled racial minority workers, even though these groups tend to earn lower wages and hence are more likely to be affected by the minimum wage.

Advocates for higher minimum wages claim they are necessary to close the earnings gap between black and white workers. However, because black workers disproportionately earn a minimum wage, standard economic theory predicts they will experience the most adverse employment effects of the policy. Moreover, even when skills and wages are similar between black and white workers, employers may discriminate by choosing to reduce employment among black workers more than among white workers. Existing research suggests that employers are most likely to do this by hiring fewer black workers when minimum wages increase.

Those who advocate for higher minimum wages to close racial gaps tend to focus on wages while ignoring the potential job losses that could result, which would be worse for black workers. The evidence for this argument comes from research on minimum wage increases in the 1960s, which found that wages for black workers rose relative to those of white workers, without an accompanying decline in employment among black workers. However, other researchers studying the same minimum wage increases found that disproportionate job losses for black men partly offset the wage increases for this group. Regardless, the minimum wage effects examined in both studies occurred decades ago.

Our research uses data from the American Community Survey between 2005 and 2019 to examine the effects of minimum wage increases on black workers and their relative impact compared with that of white workers. We studied not only teenagers—the focus of much existing research—but also other lower-skilled groups, including workers under the age of 30 and those without a high school degree.

Our findings indicate that job losses from minimum wage increases were much more prevalent for black workers, especially black men, and were minimal for white workers. For example, among black male workers under the age of 30 without a high school degree, a 10 percent increase in the minimum wage reduced employment by 4.1 percent on average. In contrast, our research finds no evidence of reduced employment for white workers with the same characteristics, even though the wages of both black and white workers increased by a similar degree.

Considering the wage and employment effects together, we found that higher minimum wages have decreased earnings for lower-skilled black workers. For example, within the same group of black male workers, a 10 percent increase in the minimum wage led to a 4.8 percent average reduction in earnings. In contrast, we found no evidence of reduced earnings for white workers with the same characteristics. In fact, for several of the lower-skilled groups we studied, minimum wage increases tended to increase earnings for white workers.

Because there is substantial residential segregation by race in the United States, the concentration of the minimum wages’ adverse effects on black workers implies that their adverse effects are also concentrated in heavily black neighborhoods. Indeed, our research finds that the adverse effects of minimum wage increases fell disproportionately on people of all races living in areas with a high black population share, worsening the adverse effects of minimum wages on black workers living in these areas relative to workers living elsewhere. In some cases, the accumulation of adverse effects for black workers and black neighborhoods implies that large differences in minimum wages could account for roughly 40 percent of the gap in employment rates for lower-skilled workers between areas with high and low black population shares.

We do not believe that policymakers increase minimum wages to harm black workers or with the knowledge that the benefits may accrue mainly to white workers. But our research indicates that black workers tend to bear the costs of reduced employment and earnings, while white workers bear fewer costs and are more likely to benefit. This evidence calls into question the claim that minimum wage increases narrow the gaps in employment outcomes between black and white workers. Instead, our findings suggest that minimum wage increases widen racial disparities. Therefore, those seeking to reduce racial disparities should perhaps rethink their support for higher minimum wages and focus instead on other policies to improve economic opportunities for racial minorities.

NOTE
This research brief is based on David Neumark and Jyotsana Kala, “Minimum Wages and Race Disparities,” National Bureau of Economic Research Working Paper no. 33167, December 2025.