Federal Reserve Bank of Dallas The Minimum Wage and Latino Workers*

Abstract: Because Latinos comprise a large and growing share of the low-skilled labor force in the U.S., Latinos may be disproportionately affected by minimum wage laws. We compare the effects of minimum wage laws on employment and earnings among Hispanic immigrants and natives compared with non-Hispanic whites and blacks. We focus on adults who have not finished high school and on teenagers, groups likely to earn low wages. Conventional economic theory predicts that higher minimum wages lead to higher hourly earnings among people who are employed but lower employment rates. Data from the Current Population Survey during the period 1994-2005 indicate that there is a significant disemployment effect of higher minimum wages on Latino teenagers, although it is smaller for foreign- than native-born Latinos. Adult Latino immigrants are less affected by minimum wage laws than other low-education natives. We investigate whether skill levels and undocumented status help explain these findings