New EPI Analysis Shows Teen Unemployment Rate Averages 34.3 Percent in California
At Fourth Highest in the Country, EPI Points to Consequences of the Recession and Minimum Wage Hikes
Publication Date: August 2010
Topics: Minimum Wage
WASHINGTON, DC – A new EPI analysis of Bureau of Labor Statistics (BLS) data estimates that the average unemployment rate for 16 to 19 year olds in California was 34.3 percent as of June 2010. Economists point to the consequences of the recession and recent increases in state and federal minimum wages.
“This summer, more than one in four California teens is looking for work without success,” said Michael Saltsman, research fellow at the Employment Policies Institute. “The tough job search isn’t just a product of the recession; minimum wage mandates are keeping teens out of work.”
Economists confirm the harm caused by minimum wage hikes. Most recently, a study from Miami University’s William Even and Trinity University’s David Macpherson attributed over 114,000 fewer employed teens to the 40 percent increase in the federal minimum wage between July 2007 and July 2009. In states like California where the minimum wage is even higher than the federal level at sixth highest in the country, teens are really hurting.
“Higher minimum wages increase the price of low-skilled labor, forcing employers to raise prices or cut costs,” Saltsman continued. “When employers can’t pass on higher prices to their customers, they’re left with no choice but to increase the use of self-service and automation, leaving fewer opportunities for entry-level employees like teens.”
There is a broad consensus among economists that a higher minimum wage translates to fewer jobs for teens. A recent survey by the University of New Hampshire found nearly three-quarters of labor economists in agreement that higher mandated wages reduce employment opportunities for entry-level workers.
“Without action from California state and federal legislators to create a lower starting wage for teens, we’re going to continue seeing this generation of teens miss out on the important skills learned in a first job, like customer service, time management, and dealing with co-workers. And research shows that those teens without job opportunities are at a higher risk of dropping out of high school or ending up in the criminal justice system.”