Reagan Economist: Minimum Wage Is the ‘Black Teenage Unemployment Act’

Stephen A. Crockett Jr.
Arthur Laffer

An economist influential in the Reagan administration called the $7.25-an-hour federal minimum wage the "black teenage unemployment act" and claimed it "makes absolutely no sense whatever," the Seattle Post-Intelligencer reports.

Arthur Laffer, who is known as the father of "trickle down economics"—the theory that tax breaks for big businesses stimulate the poorer economy—denounced the current minimum-wage rate on Fox News’ Happening Now. Fellow economist Michael Strain took it a step further, claiming that for some workers, the minimum wage should be lowered to $4 an hour.


"The minimum wage makes absolutely no sense whatever to me," said Laffer. "I mean, honestly, it’s just the teenage—black teenage—unemployment act, and this is the very group that we need to have jobs (and) not be put out of work because of the minimum wage.

"So I’m very much in favor of at least for teenagers getting rid of the minimum wage so that we can bring them back to the labor force, get them the skills they need to continue being productive members of our society for years and years."

Following Laffer's lead, Strain said that an employer who is contemplating hiring a person who has been unemployed for seven months might not want "to take a $7.25 an hour risk on that worker."

"So if we lower that down to, say, $4 an hour, then the risk is much less to the firm," he added. "Firms are going to be more likely to hire these workers."


The idea of reducing or removing minimum-wage protections comes as the president prepares to call on Congress to raise the federal minimum wage to $10.10 an hour.

Currently, Washington, D.C., and two Maryland suburbs have just adopted an $11.50-an-hour minimum wage. In Seattle, a move is underway—either by City Council action or an initiative—for a $15-an-hour wage.


What Fox News didn't report is that according to the Federal Bureau of Labor Statistics, 1.6 million hourly workers (out of 75.3 million nationally) earn the $7.25-an-hour wage, and just 24 percent of those workers are teenagers and nearly 80 percent of them are white, the Post-Intelligencer reports.

"It is a common myth that very low-wage workers—workers who would see a raise if the minimum wage were increased—are mostly teenagers. The reality is that raising the federal minimum wage to $10.10 an hour would primarily benefit older workers," David Cooper and Dan Essrow of the Economic Policy Institute wrote recently and the Post-Intelligencer reports.


Read more at Seattle Post-Intelligencer and the Federal Bureau of Labor Statistics.

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