OPINION: This Tuesday, Protect Jobs for South Dakota’s Teens
Author: Michael Saltsman
Publication Date: November 2016
Newspaper: The Daily Republic
On Tuesday, South Dakota voters will decide whether the state’s young adults deserve the same shot at a first job as prior generations.
South Dakota approved an increase in the state’s starter wage in 2014, raising it from the federal level of $7.25 up to $8.50 an hour. It was a relatively narrow win, however—45 percent of voters opposed the measure, suggesting that they were sensitive to concerns raised by small business owners about the potential negative impact on job opportunities.
Voters were right to be concerned: A 2014 study by the nonpartisan Congressional Budget Office reviewed 60 past studies on the subject and confirmed that when the minimum wage rises, youth employment falls. It’s not because employers are hard-hearted: Rather, if customers aren’t willing to pay for the mandated raise through higher prices, employees “pay” for it through few hours or jobs.
Sensitive to these concerns, State Senator David Novstrup proposed a compromise in the following year’s legislative session. The state’s hourly minimum wage would rise to $8.50 as slim majority of voters intended, but young adults under the age of 18—those at greatest risk of being displaced from a wage hike—could be paid a starting wage of $7.50.
The bill (SB177) was signed into law in March of 2015, but was subsequently challenged by advocates for whom any compromise—no matter how well-crafted—was unacceptable. That’s why voters will consider Referred Law 20 on this year’s ballot. A vote of “yes” will uphold the original Senate bill.
Sen. Novstrup’s bill makes intuitive sense— If the state’s small businesses can pay a training wage to young adults who don’t have extensive workplace experience, they’re less likely to “downsize” that job. The economic literature backs him up: A study published in a Cornell University academic journal found that the creation of a training wage for young adults can help alleviate the negative effects of a minimum wage increase on these inexperienced employees.
A training wage allow young people to continue to reap the benefits associated with a first job, including higher pay and greater job security in the future. Economists from the University of Virginia and Middle Tennessee State University, in a 2014 study published by my organization, found that part-time work per week during the senior year of high school results in annual earnings that are 20 percent higher after graduation, when compared to young adults who don’t work.
Not only are teens with work experience expected to make more than their non-working peers, they will also have a more stable employment: Millennial high school seniors who held a part-time job were employed an average 42 weeks per year after graduation, as compared to 37 weeks of employment per year for those who didn’t hold a job. Another study shows that young adults who are unemployed today are missing out on more than a paycheck—they’re also at a greater risk of future unemployment.
Referred Law 20 is a sensible compromise that respects the will of 55 percent of South Dakota voters, while addressing the concerns of the 45 percent. A youth training wage provision will ensure that, even as the minimum wage in South Dakota rises, this first rung on the career ladder will still exist.