Lawmakers Tackle Our State’s High Teen Unemployment Rate

February 1, 2013

It’s been a busy week for the Small Business Center.   Between holding a press conference to present lawmakers with the results of WPC’s Small Business Survey and testifying on bills that will reform workers’ compensation, repeal the unfunded Paid Family Leave Act and rein in government regulations, I was invited to present my research findings on teen unemployment in Washington to the Senate Commerce & Labor Committee. 

The study, “Did Your Teen Find a Summer Job?,” notes that Washington State currently has the nation’s 6th highest teen unemployment rate (28.6%), as well as the nation’s highest minimum wage ($9.19).  Numerous studies conclude the two are inextricably linked.

Still, there are those who insist that a high minimum actually creates jobs. 

The multitude of studies notwithstanding, the most strongly worded quote I’ve found supporting the common-sense conclusion that a high minimum wage reduces the number of low wage jobs is from John Buchanan, Nobel laureate in economics: “Just as no physicist would claim that ‘water runs uphill,’ no self-respecting economist would claim that increases in the minimum wage increase employment.”

The most thought provoking quote comes from another Nobel laureate in economics, Milton Friedman: “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.”

Friedman makes a valid point—the unemployment rate for black teens is dramatically higher than for white teens. 

The Senate Commerce & Labor Committee was looking for input on teen unemployment as they prepared to hear testimony on HB 5275, a bill that will allow a temporary training wage for workers just entering the workforce.

I testified that a temporary training wage would provide employers with the economic incentive they need to take a risk in hiring a young, unskilled teenager just entering the work force over an older applicant with more job skills and a work history.  Precisely because our state’s high minimum wage decreases job opportunities for young, unskilled workers, the law currently allows a training wage for 14 and 15 year olds that is 85% of the minimum wage.

Given Washington’s history of ranking in the nation’s top ten highest teen unemployment rates almost every year since 2002 (the one exception was 2007, when we ranked 12th), it is clear a much larger segment of workers would benefit from expanding the training wage beyond 14 and 15 year olds.

WPC has long recommended lawmakers allow employers to pay a temporary training wage to unskilled workers.  A time-limited training wage would expand youth employment by making it economical for employers to hire low-skill workers just entering the work force. 

WPC's recommendation may finally be gaining traction.  At WPC's press conference, Rep. Condotta, sponsor of the House companion bill (HB 1150), said some Democrats have been receptive to the idea of a training wage to combat our state's high teen unemployment.  When a reporter expressed surprised Condotta quipped, “Democrats have kids too.”