$15 Minimum Wage Won't Help Seattle’s High Teen Unemployment Rate

June 26, 2014

Seattle Mayor Ed Murray has unveiled a series of proposals to reduce crime in the city.  Calling it a “crisis of confidence” in public safety, Murray identified the city’s high youth unemployment rate as a contributing factor to crime.

Numerous studies link a high teen unemployment to an increase in youth crime rates.  And while teen unemployment rates are high in most every state, Washington State, and the City of Seattle, have some of the nation’s highest. 

According to a recent study of teen (16-19 year olds) employment between 2000-2012 by the Brookings Institute, the employment rate for teens in the Seattle-Tacoma-Bellevue area fell from 45.8% in 2000 to just 25% in 2012.  The study shows the Greater Seattle region’s 20.8 percentage-point decline is the 14th biggest drop nationwide and puts the region in the bottom third of metro areas for teen employment.

In comparison, the U.S. employment rate for teens declined by 14.2 points over the 12-year period to 27.5%.

Washington State has long had one of the nation’s highest teen unemployment rates, and it is not getting better.  The state’s teen unemployment rate in 2013 was 30.6%, up from 28.6% the year before.  Meanwhile, the state’s overall unemployment rate declined to 6.4%.  The Great Recession can’t be blamed for the state’s worsening teen employment rate.  Since 2002, in all but one year Washington ranked among the top ten states with the highest teen unemployment.  The single exception was 2007, when Washington briefly broke out of the top ten to rank 12th.

The 12-year span studied by the Brookings study corresponds with Washington’s enactment of the nation’s highest minimum wage.  Voters approved a ballot measure in 1998 to begin incrementally increasing the state’s minimum wage, and by 2000 the new wage with annual inflation increases was fully in place.  The state’s minimum wage is now $9.32, the highest of any state.   Not coincidentally, the state’s teen unemployment rate is now the 6th highest in the nation.

The cause-and-effect relationship between Washington having the nation’s highest minimum wage and one of the nation’s consistently highest teen unemployment rates is well documented. 

Over 85% of the most credible studies examining the minimum wage conclude that a high minimum wage hurts the very people it is supposed to help—those with low-skills, such as young workers just entering the workforce.   The general consensus of decades of minimum wage studies is that a 10% increase in the minimum wage reduces teen employment by 1 to 3% because the higher wage incentivizes employers to hire older applicants with more job skills and a work history over young workers with no skills or work history.

So the fact Seattle has now passed a law mandating a $15 minimum wage does not bode well for the city’s teens.   The city’s new minimum wage law includes a provision and a process that could allow a training wage that mirrors the state’s training wage, but no such training wage rule has been officially adopted by the city.   And if the city were to implement a training wage rule, it could not go beyond what the state law allows, which is currently 85% of the minimum wage for 14-15 year olds.

Given Seattle’s already high unemployment rate for 16-19 year olds with a $9.32 minimum wage, the teen employment crisis will likely only worsen once the phase in of the $15 wage begins. 

One Seattle business owner explained why a $15 minimum wage will squeeze more teen workers out of the job market:

“As an owner and manager, if you’re going to pay $15 an hour, you’re going to get your $15-an-hour’s worth.  You could probably get a 22-year-old to do the job of two 16-year-olds.”

This business owner says he will rely on fewer, more experienced workers.  That will mean even more unemployed teens in Seattle.

To combat the city’s increasing youth crime rate, Mayor Murray’s plan is to increase city-sponsored youth jobs by 50%, which amounts to about 1,000 new jobs for teens.  But with the $15 minimum wage mandate set to begin phasing in next year, the city’s teen employment crisis has only just begun.