If you’re a teenager unable to find a job this summer — or a parent with a teenager hanging around the house — you’re not alone. The latest data from the U.S. Bureau of Labor Statistics show that the teenage unemployment rate was at a stubbornly high 24.5 percent in June, and because the unemployment rate only includes people actively seeking work, the true number of teens who cannot find jobs is likely higher. For most of the past two years, the rate has been above 25 percent.
While the overall weak economy is certainly at fault, another major factor was the decision by Congress and President Bush to raise the minimum wage over 40 percent in the face of a weak economy, without exempting teenagers — thus pricing teens out of the labor market and denying them crucial work experience.
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Economists have tried to measure the effects of a minimum wage. Hundreds of studies have been completed, focused primarily on low-skilled and teenage employment. The consensus result has been that for every 10 percent increase in the minimum wage, a 1 to 3 percent decrease in employment is observed, disproportionately affecting low-skilled, mostly young workers.
The last minimum-wage increase was in July of 2009, when the final dollar increase of the legislation passed back in 2007 took effect. Adjusted for inflation, the minimum wage is currently 36 percent higher than the minimum wage of 2006. A study released in June by University of Chicago economist Casey Mulligan estimates that the most recent minimum-wage increase (after adjusting for the effects of the recession) resulted in the loss of 800,000 jobs, mostly by low-skilled and young workers.
The political argument for a minimum wage is that compensation below a certain level is exploitative and inadequate to support a family. We don’t agree that a minimum wage is the right solution to this problem, but regardless, that rationale is simply not relevant for teenagers trying to enter the first rung on the employment ladder, get out of the house, and earn some spending money.
Thom Hartmann, a leading progressive radio and television host with whom we almost never agree, recently said: “I don’t have a problem with saying a minimum wage doesn’t apply to people under 18 or somebody who hasn’t graduated from high school.” So this is not a left-right issue.
The Organization for Economic Cooperation and Development (OECD), a group of 34 of the world’s most advanced economies, suggested in an April 2010 report that teen unemployment could be reduced by exempting teens from the minimum wage and instead instituting a “sub-minimum training wage.” In fact, only half of the OECD countries even have a minimum wage, and 9 of those 17 — including many in Europe — have a training wage for teenagers. Larry Summers, the former director of Obama’s National Economic Council, has reportedly advocated that the United States create such a wage. We agree.
The existing Youth Minimum Wage provisions of the Fair Labor Standards Act are inadequate because of their limited scope and 90-day cap. As the Wall Street Journalhas correctly observed, the 90-day cap makes employers unlikely to hire at all.
It would be great if teens could all find summer work at $7.25 an hour or more. But many teenagers with no job experience can’t, and so they end up not working, earning nothing, and missing out on valuable work experience. So here is our modest proposal, which we think should gain bipartisan support in Congress: Exempt teenagers from the 2007 legislation increasing the minimum wage. Let them work for $5.15 an hour — if they want to and that’s what an employer wants to pay. Let them gain work experience and move up the wage ladder from there.
The minimum wages is one of the reasons black unemployment is as high as it is. Its net effect is to prevent entry of blacks and very unsilled labor into the labor force. Also, isn't better to make something than nothing? Alas, many do not realize that the minimum wage is a form of price control, except instead of being a ceiling it is a floor; and many do not realize when the price of something is held artifically high (as in the case of the minimum wage) the demand for the something (in this case, low skilled labor) will be choked off. As the red-queen said: Off with its head.
I believe that was one of the orginal intentions of the early progressive movement; to keep the unwanteds out of the job market. Social eugenics, one of the many ugly faces of the progressives.
The myth here is that inexperienced teenagers are less competent than their savvy elders and thus deserve only half as much. This completely inverts the truth, especially among the pool of those available to work at minimum wage. When you visit McDonald's, you may well find your burgers being flipped and your money being taken by a future valedectorian, a future doctor, even a future Nobel Laureate. But only if (s)he is young person. A teenager working a humble job may simply be serving in a humble position due to youth. A 40 year-old in such a job has proven they're not fit for much better. The vast majority of minimum wage jobs don't require anything special in the way of experience. But someone with an IQ of 110 is almost immediately going to be a lot better than someone with an IQ of 85 at anything that has even a tiny mental component.
If you put a smart teen cashier to train next to a dull middle-aged cashier, by the end of the shift the teen will already be more productive. 20 or more years of experience mean nothing. This isn't brain surgery or fine craftsmanship we're talking about or they wouldn't be minimum wage jobs to begin with.
I agree that minimum wage laws are problematic, but as long as we have them, they must be applied equally.
Patrick J - There are lots of not-so-obvious skills that go along with a job, such as showing up on time and staying the whole day. Such skills come with time, which is why entry jobs are low-paying. It the teen-agers (or others) are as good as you say, they will rise quickly in the ranks. But a minimum wage acts as bar to new entrants. Let the market determine what the wage will be, not some arbitrary government regulation.
Well said, sir. Other skills such as customer service and dealing with the public are learned by experience and no IQ, however high, can substitute for that experience.
Well clearly here someone who's never had to work for minimum wage for more than a year or two and is now making roughly $20/hour would be my guess.
I personaly work 2 different jobs, both in the same field, I have 27 years exsperience doing the type of work I do and at my 40hour/week job I recive $15.00/hour and on my 16 hours/ weekend job I recive $7.25/hour, I do the same type job at both places, I am a custodian at the better paying job and the cleaning man at the minimum wage job.
Jusr because you are 40 and flip buggers for minimum wage does not make you less fit for a better paying job, it could and in this ecomony mean its the only job you can get that was hireing and you need the income to feed your faimly and pay the monthly rent/morgage bill.
Here's a better idea. Eliminate the minimum wage. There are many things wrong with it. The law is basically telling employers that the federal govt. knows best what a job is worth. It also implies that the money is the fed's to control. The cost of living varies too much across the 50-States for the Federal government to determine the wage. If a minimum is needed (which I disagree with), then let the individual states decide.
Also, I didn't think we have had any inflation. Why then should min. wages go up over 36%?
Why do unions endorse an increase? How many union members are working at minimum wage? Could it be that there are union compensation contracts that are tied to the minimum wage (they get a certian multiple over minimum wage)?
Bottom line, on principle, what is the difference between the Federal Government deciding the minimum you can earn and the Federal Government deciding the maximum you can earn?
While I do feel for the kids who don't have jobs, creating a separate class who get paid less for doing the same job doesn't seem like a good or workable solution. As Patrick pointed out, the teen worker is as productive or more at these low-level jobs, and it's not going to take them long to notice and resent it. Fair is fair. If burger-flipping earns X per hour, then it should earn X per hour regardless of age, sex, color, or creed. The value of X could arguably be left to the market, but to make it different for different classes of people (other than "productive" vs "non-productive") is crazy.
If you want to start with categories who don't "need" minimum wage, how about married folk who have a second, main income in the house? Seniors whose mortgages and student loans have already been paid off? People with good investment portfolios who only work so they have something to do? Maybe each employee should have a financial screen at hiring so that the employer knows how much that person "needs," and we could create a government bureaucracy to make up minimum wage tiers based on a complex formula of how deserving each potential employee is! Why, that could employ hundreds of people!
I actually started working at an amusement park below the minimum wage. It was seasonal so they could do that. It was actually a raise from delivering newspapers. I eventually became a manager and made more than most of my peers in college. I just wanted a chance to prove myself and would have even taken less than what they paid me.
"The political argument for a minimum wage is that compensation below a certain level is exploitative and inadequate to support a family."
Well that's a stupid argument. Who ever thought that is is smart to try and support a family on min. wage? Also the wage is exploitative only if the person is forced to accept the wage, but people make choices as to whether they want to be employed or not. Oh, I forgot that falls outside the paternalistic, victim narrative our pols are transfixed by.
Fundamentally, the only reason the government establishes a minimum wage is because the marketplace is unwilling to pay more for something than it is worth.
The minimum wage is no different than a farm or other subsidy. It is a deliberate distortion of the market and serves only to transfer from those who are being paid what they worth to those who will be paid more than they are worth.
Patrick and several others MISS the point -- some people, especially those who are new to working or new to a specific job, do NOT BRING the skillset to a job that makes them WORTH the higher wages.
I think it should be extended even further than just exempting teens. If we can't get rid of this stupid law (which is artificially keeping some people's wages lower because their employers must pay their less-skilled co-worker more than they probably should), create a sub-category for new employees, say for 6 months or something. This would allow them to be paid something while they are learning the ropes and proving if they are worth having on the team or not.
Of course, better yet, drop the minimum wage down ridiculously low, like it was when I began working, to aroun $3.25/hour. That would just eliminate it as a real factor, the equivalent of repealing it!
I would also like to add that the minimum wage is a direct assault on one's freedom of action.
If I have an opportunity to start in a job and gain experience and potential advancement by what right is it the government's business to interfere with my electing to work the job for a specific wage? If I do not like the offer of the job at that wage I can elect to not accept it.
The individual should have the right to work for whatever he and his prospective employer mutually agree is an appropriate wage.
If I have my choice I can elect to be unemployed or employed at low wage and get my career started at the bottom.
The government, by pricing me out of the market, has demanded I be unemployed.
