Paul Ryan’s Right (Again): A Lot of Minimum-Wage Earners Are Young and Trying to Get a Start

ThinkProgress seems to think they’ve caught Paul Ryan in a fib: “The majority of these workers [earning the minimum wage] are younger people just getting into the workforce,” Ryan told an audience in Wisconsin while back for Congress’s St. Patrick’s Day recess. (I’m still trying to figure out whether we can thank Tip O’Neil and Ted Kennedy for that.)

A-ha, says Podesta’s house of pain: “The majority of low-wage workers who would benefit from raising the minimum wage from $7.25 to $10.10 per hour are not in fact teenagers getting a foothold in the workforce, but rather grown-ups with rent, medical bills, and often children.”

Except Ryan didn’t claim the majority of minimum-wage earners are teenagers or deny that they have medical bills (which they wouldn’t in many cases, unless Medicaid serves them poorly, which would never happen, right?). 

He said the “majority” are “younger people just getting into the workforce.” And lo, that is entirely correct, as the Bureau of Labor Statistics informs us:

To fact-check Ryan’s factually correct statement, ThinkProgress cites a report from the liberal Economic Policy Institute, which considers what kind of workers would be affected by raising the minimum wage from $7.25 to $10.10 an hour (not what Ryan was referring to, exactly). They point out that 88 percent of those workers are over 20, and 55 percent work full-time. That’s true, which means that the median worker making less than $10.10 an hour is a full-time worker — but 45 percent of them are not.

And if we’re looking just at people making the minimum wage or below, which is what Ryan was describing, the difference is more striking: Just about a third of those people work full-time; almost two-thirds work part-time. It’s absolutely correct to claim that minimum-wage workers are hugely disproportionately young: Workers under 24 make up just about 20 percent of the hourly-wage workforce, but 50 percent of the workforce earning minimum wage or below; those 16 to 19 make up just 5.4 percent of the workforce but a quarter of the minimum-wage-or-below workforce.

Thus, a lot of conservatives argue, this is a poorly targeted poverty-reduction program. Only a small slice of minimum-wage earners or beneficiaries of a hike, for instance, are breadwinners (and if they are, the Earned Income Tax Credit pushes them out of poverty). Most of them live in families earning more than or a lot more than the poverty line.

It’s not correct to claim that the median worker who would see higher wages with a minimum-wage hike is a teenage or in a genuinely middle-class family – lots of poor and middle-aged people would be. But huge numbers of them — way disproportionately large numbers – don’t have kids, are second earners, live above the poverty line, or only work part-time. Which is why we see the benefits of a minimum-wage hike, as the CBO modeled them, distributed across most of the entire economic spectrum:

Now, if you don’t think raising the minimum wage will cost anyone jobs, this shouldn’t matter a whole lot: It’s an economic distortion, but some of the money goes to truly poor people and it would reduce inequality. But if you buy the professional economic consensus on this issue, that it comes with employment costs and therefore requires a cost-benefit analysis, this is a problem: We’re raising wages for a lot of people, but mostly for people who don’t need it most.

And who’s paying the costs? This is one of the problems with the minimum wage, as Ross Douthat explains: Conservatives who acknowledge the moral merits of some degree of a welfare state and redistribution don’t like when the costs aren’t clearly manifest.

The CBO projects that half a million jobs will be lost if the minimum wage is raised to $10.10 an hour, as President Obama and some liberal senators have proposed (Ryan’s claim here was actually more incorrect than anything else he said — he claims they projected between 500,000 and a million jobs lost, when that’s their mid-range and high-range estimates. It’s either half a million or between 0 and 1 million lost). Moreover, a range of surveys and some academic evidence indicates that future hiring would be where the damage really shows up: Employers say they’d especially just avoid hiring additional workers down the road if wages rise.

Who’s going to be excluded from the workforce? Those who can perhaps depend on others and whose labor is worth the least — i.e., teenagers and low-marginal-product workers. (Who will survive? Those with relatively high productivity, which are likely to be those in relatively higher income brackets. Seeing the problems with this as a redistribution/safety net strategy?) Younger workers who, like Ryan describes, are trying to get a toehold in the workforce, develop responsible habits, and perhaps learn some skills don’t have very valuable labor. And since their cost of living isn’t that high, moreover, expanding their earning power by fiat isn’t be a top priority.

Is it worth excluding younger workers from the market by making jobs scarcer, in order to wages for those who are further along in life or need to support dependents? Not really: The government can’t just mandate that someone’s labor is worth more — it’s also older low-marginal-product workers who are already struggling who will lose out in a truncated labor market.

But back to young people: Those of them who want and need jobs certainly can’t afford fewer of them. Unemployment among workers 16 to 24 is at historically high levels:

And labor-force participation looks even worse: Extremely historically low levels of those aged 16–24 are working. (I cut out mid 70s and earlier years because participation rates for women prior to that were much lower.)

It’s quite true that conservatives shouldn’t overstate the case that minimum-wage earners, as the CBO suggests was once the case, are “primarily . . . teenagers from nonpoor families who are working part time.” But those characteristics are quite abundant among minimum-wage earners nonetheless. Raising the price floor for labor to exclude them from the market is, as Ryan argued, unwise.