According to George Mason University economist Alex Tabarrok, there is “an evolving new consensus on the minimum wage.” The first part of this consensus is that the minimum wage does not affect all groups of workers in the same way. Tabarrok cites two new National Bureau of Economic Research working papers: a study by Jeffrey Clemens, Melissa D. Gentry and Jonathan Meer concluding “that large minimum wage increases significantly reduce employment and labour force participation for individuals of all working ages with severe disabilities,” and a study by David Neumark and Jyotsana Kala concluding “that job loss effects from higher minimum wages are much more evident for Blacks, and in contrast not very detectable for whites.”

It’s not surprising that the most disadvantaged and lowest-earning members of the labour force would be most affected by minimum wage laws, but most research has focused on teenagers and youth. As the Clemens, Gentry and Meer study confirmed, however, people with severe disabilities are “indeed on the margins of employment” and there is evidence of “substantially more negative employment effects” for them following a large minimum wage hike. The decline in employment, they find, is “accompanied by a decline in labor force participation and a downward shift in their position in the wage distribution.”

Their study used American data, but the minimum wage’s negative effects on disabled workers are not bounded by geography. In 2018, Ontario’s Liberal government hiked the minimum wage to $14 per hour and terminated the exemption for organizations hiring disabled workers. The result was that most such organizations stopped hiring people with cognitive disabilities while some let go already employed disabled workers — whose families responded by protesting the new minimum wage policy and pleading with the provincial government to reinstate the exemption.

As for the Neumark and Kala study, it found not only that the minimum wage had “substantial disemployment effects for low-skilled Black workers” as compared to little to no detectable effect on white workers, but that “the adverse employment effects of minimum wages on Blacks are sufficiently large, relative to the positive wage effects, that minimum wages seem quite likely to reduce earnings of Black workers.”

That the minimum wage is particularly harmful to Black workers is not a new idea. As highlighted twice in the Neumark and Kala study, and again in a presentation by Neumark at a policy seminar at Stanford University’s Hoover Institution, Milton Friedman wrote in his Newsweek column in 1966 that the minimum wage is the most anti-Black law on the statute books. He repeated the claim in his famous 1980 book, Free to Choose, co-authored with his wife, economist Rose Friedman. Other prominent economists, such as Martin Feldstein, Robert Barro and Thomas Sowell have also long pointed out that Black or minority youth are hardest hit by the minimum wage’s negative effects on employment.

According to Tabarrok, the second part of the evolving economic consensus on the minimum wage, in addition to its different impact on different groups, is that it causes harm on more margins than employment. If as a condition of employment the government insists the wage rate be higher, other forms of compensation, such as work conditions, fringe benefits and training may have to be lower if employment is to continue to be viable for employers. Tabarrok points to a November 2024 study in the Journal of Public Economics that found that in the U.S., “large minimum wage increases adversely impact workplace safety.” According to other studies, the minimum wage also causes price inflation, including in grocery stores and fast-food restaurants.

Again, the Canadian experience is the same. While not focused exactly on racial impacts, a 2017 study in the journal Contemporary Economic Policy concluded, based on three decades’ worth of data on provincial minimum wage hikes, that raising the minimum wage reduces employment among immigrants. Ontario’s 2018 minimum wage hike, which produced clearly visible effects because of how big it was, induced sticker shock in many families when daycare prices spiked as soon as the $14 minimum wage took effect. There were also reports of workers across Ontario losing their benefits as employers reacted to government forcing up their wage costs.

Politicians still seem to love the minimum wage. Nova Scotia’s government boasts in a recent announcement that it is about to implement the province’s “largest minimum wage increase ever.” But in the economics profession, as Tabarrok writes, the idea that a minimum wage law “raises wages without trade-offs is gone.”

Matthew Lau is a Toronto writer.