Association for Public Policy Analysis & Management

The economic landscape of the United States has been deeply marred by inequality between its black and white citizens since before its conception. While civil rights activists have made great and heroic strides toward equality, there is still a long way to go. The scars of inequality are still visible as evidenced by. The recent study showing that the median income for black men would rank below the 30th percentile of the income distribution for white men, after having increased only 4 percentage point in over 70 years (Beyer & Charles, 2018). One solution that has been proposed to mitigate this income discrepancy is to raise the federal minimum wage rate.

I present evidence that higher minimum wage levels have been related to lower racial wage gaps. I utilized annual earned income for black and white individuals from eight states during the years 2000 to 2006, which I culled from the IPUMS Community Population Survey. I grouped individuals by state and year into income brackets at $10k intervals. I hypothesized seeing a stronger relationship between smaller racial wage gaps and higher minimum wage levels at the lower end of the income distribution. While the hypothesis holds generally, it is inconclusive by income bracket. Even though this is a preliminary analysis and continued research is needed, the policy implications are that raising the federal minimum wage could indeed be one tool available to addressing economic inequality in the United States.