New Analysis: 60 Percent of Black High School Dropouts Are Unemployed, Up From Nearly 40 Percent in 2007
EPI Points To Recession, Wage Mandates Driving Unemployment
Publication Date: May 2010
Topics: Teen Unemployment
WASHINGTON – Today, the Employment Policies Institute (EPI) released a new analysis of current Bureau of Labor Statistics data showing that job prospects are poor for young high school dropouts this summer season. Economists blame a recession of historic proportions and the unintended consequences of increases in state and federal minimum wages.
In April 2010, the unemployment rate for 16 to 24 year olds who weren’t enrolled in school and carried less than a high school diploma was 33 percent – up from nearly 20 percent in April 2007. For black young adults, the unemployment rate was a shocking 60 percent, an increase from 37.8 percent in April 2007. A graphic version of the analysis is available here.
“The weak economy combined with high mandated wage levels has created a perfect storm for less-experienced young adults” said Michael Saltsman, research fellow at the Employment Policies Institute. “It’s unfortunate that legislators continue to advocate policies that make this problem worse.”
Research from David Neumark, an economist from the University of California-Irvine, estimates that each 10 percent increase in the minimum wage reduces employment for 16 to 24 year old minority teens by almost 4 percent.
“Raising the minimum wage makes it more costly for employers to take a risk hiring untrained young adults who have dropped out of school,” Saltsman continued. “The higher the minimum wage, the fewer entry-level job opportunities are available.”
For individuals who have dropped out of school, an entry-level job can be a valuable source of education. Young adults rely on these jobs to learn the “invisible curriculum” that comes with showing up to work on time, reporting to a supervisor, and working with customers.
“Studies show that young adults who can’t find work may turn to illegal means of supporting themselves,” Saltsman concluded. “This summer, a top priority should be rolling back wage mandates that shut less-experienced individuals out of work opportunities.”