(CNN) The schoolchildren who faced water hoses and police dogs in Birmingham gave the civil rights movement one of its most iconic victories. But a new generation of activists has arisen in the city with another message:

The "for colored only" signs may be gone, but the "Jim Crow economy" remains.

That is the thrust of a lawsuit linking a three-year battle to raise the city's minimum wage with Alabama's ugly racist heritage. Oral arguments were heard in federal court on Friday after a coalition of civil rights groups sued to preserve an attempt by Birmingham's majority black government to raise the city's minimum wage.

They treated Birmingham like it had whistled at a white woman. It was like an insult: How dare you raise your own minimum wage without our say-so.

The suit is the latest skirmish in a national battle over the minimum wage. At least 21 states and DC have raised their minimum wages above the federal level of $7.25 an hour in the last four years, and at least 41 localities have adopted wages above their state minimums. Many have done so because of protests by Fight for $15, a workers' movement that seeks to raise the minimum to $15 an hour.

Legislatures in at least 24 states, including Alabama, have responded by passing "pre-emption bills" that either abolish or roll back those increases. What's different in Birmingham is the racial dimension of its minimum wage battle -- and the massive implications of a workers' movement gaining a victory in a Southern city.

Birmingham became the first city in the South to try to raise the minimum wage for anyone employed within its city limits. The primary beneficiaries of the raise would have been fast-food and retail workers.

Alabama lawmakers responded by passing a law that abolished the wage increase. Every Alabama lawmaker who voted against the raise was white, according to the lawsuit.

A coalition of groups that included Fight for $15 activists sued the state in 2016, saying passage of the law was tainted by "racial animus" and relied on a state constitution that still has explicit language geared toward putting blacks in their place.

"They treated Birmingham like it had whistled at a white woman," says Scott Douglas, executive director of Greater Birmingham Ministries, one of the plaintiffs in the suit. "It was like an insult: 'How dare you raise your own minimum wage without our say-so.''

Dunetra Merritt protests for higher wages in Memphis, Tennessee. Some Fight for $15 activists say their struggle is linked to the civil rights movement.

CNN tried to reach at least four Alabama lawmakers who voted to overturn Birmingham's wage increase, including some of the most outspoken opponents. None responded. Alabama's attorney general's office, though, made the state's position clear in a brief filed with the 11th US Circuit Court of Appeals. The court is hearing an appeal by the plaintiffs after a federal judge dismissed their lawsuit. A decision is not expected for months.

The brief said Alabama lawmakers were motivated in part by studies that suggest minimum wage increases cause more unemployment and don't reduce poverty. It said the state was well within its rights to oversee the economic regulations of its cities, and pointed out that numerous states had already passed similar laws preventing localities from enacting their own minimum wage laws.

"To get around this, the appellants asserted a dizzying array of legal theories casting Alabama's minimum-wage law as state-sponsored racial discrimination," the brief said.

Living on two ham sandwiches a day

Linking a minimum wage battle in Birmingham to water hoses and attack dogs may seem far-fetched, almost obscene. But the famed 1963 civil rights campaign was spawned by economic concerns in the city's black community as well. The initial goal of the campaign was to desegregate downtown stores for black shoppers and persuade merchants to hire black sales clerks.

The Rev. Martin Luther King Jr. often noted that racism and economic exploitation are intertwined.

"What does it profit a man to be able to eat at an integrated lunch counter if he doesn't have money to buy a hamburger?" King said.

Blacks in Birmingham still have trouble buying a hamburger, the plaintiffs argue. According to their suit, the city is about 74% black; 32% of its black residents earn below the federal poverty line; and the average black resident earns about $16,000 a year.

A statue honoring the four girls killed in the 1963 bombing of Birmingham's 16th Street Baptist Church graces the corner of Kelly Ingram Park.

Poverty in the city's black community has spilled into the closest thing to sacred ground in Birmingham -- a park dedicated to the 1963 campaign.

Kelly Ingram Park was the four-acre epicenter of the 1963 protests. It's where black school children were lashed with water hoses. It's now a civil rights monument, ringed with sculptures of King, statues of demonstrators facing off against lunging attack dogs, and benches adorned with photos of civil rights martyrs.

Homeless black men also populate the park. They shuffle through the manicured grounds with soiled clothing and matted hair like zombies. Some mutter to themselves, heads cast down. Others sleep on park benches. One panhandler with a ZZ Top silver beard and a toothless smile approached strangers on a recent day asking, "Gotta dollar?"

Across the street, Antoin Adams, a young man with gold teeth, leaned his lanky frame against a civil rights museum facing the park. He's not there to reflect on the past; he's trying to make some new history.

Adams, 24, is one of the plaintiffs in the lawsuit. At the time he joined the suit, he was making $7.25 an hour at Hardee's and lived in Section 8 housing. His job came without health benefits, but he was making too much for Medicaid. Alabama refused to expand Medicaid under Obamacare, leaving him to call 911 for free breathing treatments for his chronic asthma.

Adams said he couldn't afford the cost of an inhaler.

"I know I need it for my asthma, but the bills need to be paid. It makes you kind of think of giving up, but you can't. Life goes on."

Adams is joined by Michelle Jones, a Fight for $15 activist. Bubbly with a big smile, the 28-year-old said she could barely afford to eat after paying her bills and bus fare on her $7.25 an hour wage at McDonald's.

"Two ham sandwiches a day -- one in the morning and one at night," she said when asked to describe her diet. "Sometimes it's just crackers and noodles."

Jones and Adams swapped stories about the grim choices needed to make a living on minimum wage: Do you pay the water bill or gas bill? When you're in pain, how long do you wait before paying for a doctor's visit? How do you get to work on time when the buses you rely on often break down?

Before their conversation ended, they mentioned a startling detail. They said they'd sought out black veterans of the 1963 campaign to get advice and inspiration. Instead they got shrugs.

"They'll be like, 'It ain't going to happen. You're fighting for nothing,''' Adams said. "I thought older people would motivate us. I never thought it would be like that."

Why some say Alabama is 'the baddest of the bad'

Their pessimism may be understandable because of a geographic reality: It's difficult to organize any workers' movement in the South.

The region is the most hostile in the nation to workers' rights. Every Southern state has "right-to-work" laws that make it easy for companies to fire employees -- and difficult for unions to organize. Only five states have no state minimum wage. All five are in the South -- including Alabama.

Birmingham's black residents won a stirring victory in 1963, but many still struggle to make ends meet.

This Southern hostility to workers isn't a coincidence. It's tradition. Since the late 19th century, many Southern states have embraced a similar economic approach, some historians say: slash taxes to attract corporations, pass laws that weaken unions and pull back on investing in public services like infrastructure and public schools.

Some groups are starting to rebel against this economic approach. Public school teachers in red states like West Virginia and Oklahoma have staged walkouts and protests over low pay and funding cuts, placing many state lawmakers on the defensive.

Southern political leaders, though, traditionally have been hostile to any measures -- guaranteed health care, unemployment benefits, minimum wage laws -- that would make workers less dependent on employers, these historians say.

Some call this economic approach "Southernomics." After the Birmingham lawsuit was filed, one woman described it as a fight against the "Jim Crow economy."

"The days of a Jim Crow economy should be long gone," said Christine Owens, executive director of the National Employment Law Project, a nonprofit group that promotes policies to protect low-wage workers and the unemployed.

"But sadly, the refusal of Alabama's legislature to allow Birmingham to meet local needs through appropriate local measures signals the past persists."

Antonio Cathey leads a crowd of fast food workers in a Fight for $15 protest in Memphis. The campaign has raised wages for low income workers but inspired a fierce counterattack by some lawmakers.

Adams, one of the lawsuit's plaintiffs, eventually moved to Atlanta for better job prospects because the economic climate in Alabama was so difficult. He is still a plaintiff in the lawsuit.

Jim Crow remains in other ways, too, the plaintiffs say in their suit.

They pointed to Alabama's Constitution, which they say state lawmakers relied on to abolish Birmingham's wage increase. The Constitution is explicitly racist. It calls for "separate schools for white and colored children," and it still has references to "poll taxes," which were used to prevent blacks from voting in the Jim Crow era. A referendum was held in 2012 to remove the language, but voters rejected it.

The suit also says the Constitution was designed to concentrate power at the state level and prevent black people in cities from exercising control over their communities.

The notion of ordinary workers of color organizing for better pay is offensive to some white leaders in Alabama, says Douglas of Greater Birmingham Ministries.

"There's a culture of deifying corporate leaders, making them almost like gods," Douglas says. "It's a kind of deference where the model is the plantation owner."

There are still many people in Alabama who reflect the sentiments of the state lawmakers who once wrote about educating "white and colored children" in separate schools. Alabama was the last US state to overturn a ban on interracial marriage. Voters did it in 2000 -- but at least 40% of the state's residents voted to keep it.

"No place in the US has had white supremacy embedded so deeply in its everyday social culture as Alabama," says James Blaksher, a native of the state and one of the lawyers for the plaintiffs.

"Even among the Southern states, when it comes to race, Alabama is the baddest of the bad."

A Fight for $15 victory in Birmingham could show that workers can win a victory anywhere, even in Alabama, says Richard Rouco, another of the plaintiffs' attorneys.

"If this case succeeds, it will put limits on the power of the state to enact legislation that would deprive people of the ability to address what they think are racial inequalities in their community," he says. "The deepest racial inequalities that exist in this country are economic."

Antoin Adams may have already won a personal victory -- to preserve some of his own self-worth.

He talks with pride about the time he was asked to deliver a speech before a huge Fight for $15 rally in Richmond, Virginia. He quoted King and broke into rap, an homage to Fight for $15 he composed.

Black protesters came under attack by dogs and water cannons in 1963. Activists say there's a link between those protests and Birmingham's efforts to raise the minimum wage.

As he sings his anthem for me, his gold teeth flash and he dips his shoulder to do a little dance. And once again, a young black activist is singing freedom songs in Kelly Ingram Park:

Well, first of all to tell the truth,

7.25 is not going to do

That ain't right so let's stand up for what's right

We've been in the dark so long, it's time we've seen some light.

But this isn't 1963. Adams isn't flanked by a group of fellow civil rights demonstrators. There is no King writing a letter from a Birmingham jail. And there are no racist Southern sheriffs for him to confront as the cameras roll. His main audience, at least for today, is a group of indifferent homeless men.

And yet he continues to sing.

"They say it can't happen," he says of his battle for a higher wage. "But it can happen. The only way it won't happen if we don't try.''