Though minimum wage is often thought of as a triumph of the labor movement, it actually has a sordid history deeply entwined with racism. It was created, in part, to protect the white labor establishment from competition with black labor.
The end of free European immigration in 1921 combined with increasing economic opportunities in the North led to the Great Migration of Southern African Americans, living under Jim Crow, moving north. Similar to the Hispanic migration of recent decades, this led to a clash with establishment labor that worried about losing their jobs to those who would work for less. Samuel Gompers, the longtime leader of the American Federation of Labor, had let it been known that white labor would not take such threats lying down: “The Caucasians … are not going to let their standard of living be destroyed by Negroes, Chinamen, Japs or any others.”
White labor appealed to the legislature and Congress. On the House floor, Congressman William Upshaw spoke for many in the labor movement when he said, “You will not think that a southern man is more than human if he smiles over the fact of your reaction to that real problem you are confronted with in any community with a superabundance or large aggregation of negro labor.” Representative John J. Cochran relayed that he had “received numerous complaints in recent months about southern contractors employing low-paid colored mechanics getting work and bringing the employees from the South.” And, Representative Clayton Allgood complained about the “cheap colored labor” that “is in competition with white labor throughout the country.”
David Bernstein of the Cato Institute has argued that in addition to these instances of explicit racism, lawmakers made many more circumspect references to black labor: “They rallied against ‘cheap labor,’ ‘cheap imported labor,’ men ‘hired from distant places to work on this new hospital,’ ‘transient labor,’ and ‘unattached migratory workmen.’ While the congressmen were not referring exclusively to black labor,” Bernstein contends, “it is quite clear that despite their thinly veiled references, they had black workers primarily in mind.”
To remedy this issue of cheap black labor underbidding white union labor, legislators emulated the effective models passed just a few years earlier in British Columbia, Canada and South Africa. In the early 1920s, white British Columbian lumberjacks found that they were being underbid by Asians. The remedy was found in 1925, with the novel concept of a minimum wage – set at 40 cents per hour for anyone in the lumbering industry. White lumberjacks believed that if the Asian’s comparative advantage -– the willingness to work for less – could be eliminated, their jobs could be protected.
A 1927 B.C. Department of Labor report explicitly articulated the intentions to price Asians out of the job market through the introduction of a minimum wage: “The Board of Adjustment has always taken the view that, if employers were obliged to conform to a higher standard of wages in the employment of Oriental labour, such labour would tend to become less desirable from an employer’s point of view, and to a certain extent would be substituted by the employment of white help.” The report goes on to approvingly cite figures that show the effectiveness of this strategy: “In 1925 there were 55.20 per cent of white employees and 44.80 per cent of Orientals…. In October, 1927 there were 68.86 per cent of white employees and 31.14 per cent of Orientals.”