Higher Minimum Wage Would Mean Fewer Teens with a Job
Raising the minimum wage is a hot topic in the news right now. Voters in the City of SeaTac will decide in November whether to increase wages for workers in that city’s hospitality and transportation industries to a minimum of $15 per hour, fast food workers are striking for higher pay, and Seattle Mayor Mike McGinn is demanding Whole Foods pay workers in that city more than the company’s current average wage of $16.15 per hour.
What hasn’t been in the news is the fact that teens around the country are having more trouble than ever finding a job, with Washington leading the pack. Our state has the nation’s third highest teen (16-19 year olds) unemployment rate, at just under 30% as of June 2013.
Not coincidentally, our state has the highest minimum wage in the nation at $9.19 per hour. Calls for an even higher minimum wage will make young people much more expensive to hire, and consequently fewer of them will be able to find a job.
Numerous studies agree that artificially increasing the cost of creating jobs (via a high mandated minimum wage) reduces the number of jobs created. The result is decreased job opportunities for young and unskilled workers.
According to the U.S. Department of Labor, minimum wage workers “tend to be young.” Only 3% of workers over the age of 25 earn the minimum wage (and of those adult minimum wage earners the vast majority are supplementing the income of a higher earning spouse). So teens and young workers, not adults, by far comprise the biggest sector of minimum wage earners.
The impact is much greater than a teen without spending money for the summer. Numerous studies show a long lasting “wage scar” that is created by youth unemployment. This wage scar leaves a lasting impact on a worker’s employment prospects and earning trajectory. The longer a young worker remains unemployed, the bigger the scarring effect.
Increasing the minimum wage would exacerbate the problem. As Nobel laureate economist Milton Friedman said:
“The high rate of unemployment among teenagers, and especially black teenagers, is both a scandal and a serious source of social unrest. Yet it is largely a result of minimum wage laws.”