How to Keep a Teen Out of Work

Original Article:

  • Author: Michael Saltsman

  • Publication Date: March 2013

  • Newspaper: Las Vegas Review-Journal

  • Topics: Minimum Wage

It’s tough being a Nevada teenager in search of a job. The Bureau of Labor Statistics reports that Silver State teens faced a 25.6 percent unemployment rate in 2012, one of the highest in the nation.

Unfortunately, President Barack Obama’s State of the Union proposal to raise the federal minimum wage by 24 percent stands to make the situation even worse.

The president denies this, of course, citing a single University of California, Berkeley study to argue that jobs won’t disappear after a minimum wage increase. But fully eighty-five percent of credible economic studies on the minimum wage point in the opposite direction — that is, they confirm that wage hikes hurt the employment prospects of the least-skilled.

The White House and its supporters look a bit foolish standing on the opposite side of this consensus, especially with the recent evidence from the 2007-2009 federal wage increase. The minimum wage spiked 40 percent from $5.15 to $7.25, and economists at Miami and Trinity University estimate that some 114,000 young adults were priced out of job opportunities as a result.

You don’t need to have a doctorate in economics to understand why teens would feel the pinch from a wage mandate. The businesses at which they are most likely to work — picture a restaurant or grocery store — face thin profit margins of roughly 2 or 3 cents from every sales dollar.

Mandated increases in labor costs can’t just be absorbed with margins like these. Businesses instead have to offset the cost through raising prices (thus reducing sales), or — more likely — by providing the same product with less service. That means more customer self-service, and fewer opportunities for the people who used to fill those jobs.

Losing these jobs means losing the bottom rung on the career ladder. The skills that teens pick up in these first years in the workforce are invaluable, as studies have shown. From teamwork to timeliness, the foundations of a successful professional life are often learned flipping burgers or waiting tables.

Furthermore, recent economic research suggests that teens who have this early workforce experience will earn more later in life, compared with their peers who didn’t work.

So here’s a tip for Representatives from Nevada and elsewhere who are considering the wisdom of the President’s plan: Don’t price your kids (or your constituents’ kids) out of the jobs they need.

Michael Saltsman, a former field economist for the Bureau of Labor Statistics, is the research director at the Employment Policies Institute, a nonprofit research organization based in Washington, D.C.