How the Minimum Wage Grinch Stole Christmas Jobs
Author: Michael Saltsman
Publication Date: December 2010
Newspaper: Treasure Coast News-Press Tribune
Topics: Minimum Wage
You might have the best kids in the world — the kind that get straight A’s and do their chores. But they’re more likely to get a lump of coal than find a job this holiday season.
Winter break has always been a great opportunity for teens to make a few extra bucks during their time off from school. But job-searching teens that had a blue Christmas in 2008 and 2009 have little reason for cheer in 2010; one recent survey found that half of all hiring managers planned no new hires this holiday season, lacking either the budget or the business to support them.
The sluggish economy certainly hasn’t helped; teen employment across the board has been trending downward since the beginning of 2007, a consequence of traditional teen employers (like restaurants, retailers, and grocery stores) reacting to the recession.
But a bad situation was made worse by Congress’ 40 percent increase in the federal minimum wage between July 2007 and July 2009. A recent study by economists David Macpherson and William Even found that the “raise” priced more than 114,000 teens out of a job.
What’s happening here? Employers who utilize minimum wage labor tend to have razor-thin profit margins. Macy’s, for instance — a giant in the world of holiday shopping — sees less than 3 cents in net profit for every dollar of revenue.
Raising labor costs forces these businesses to either raise prices or cut costs. Holiday bargain-shoppers aren’t willing to shoulder the former, so employers are forced to cut back on customer service and the number of people they employ.
When you go Christmas shopping this year, notice how much you do yourself. You’ll use an electronic price-checker instead of asking an employee to do it for you and you’ll probably find fewer sales staff on the floor. You might even use the self-checkout lane to pay.
Those missing entry-level jobs are crucial both for teens and society as a whole. There are certain skills in life that are best learned in an entry-level job. Teens learn the importance of showing up on time, taking responsibility for different tasks, and helping customers. These are lessons that require real-world experience and can’t be taught in a classroom.
The cost of denying teens a holiday job could be much greater than missing out on the new golf putter you wanted as a gift. Research from Northeastern University shows that unemployed teens — especially those from economically disadvantaged backgrounds — are more likely to drop out of school or get caught up in the criminal justice system.
None of this has stopped well-intentioned lawmakers at the state and federal level from playing Grinch with teen job prospects. As kids come home for the holidays, remember that they need a shot at entry-level employment to grow into responsible adults — and that a future hike in the minimum wage could keep them from that chance.
Saltsman is the research fellow at the Employment Policies Institute, a Washington think tank that focuses on employment.