Teen Labor Market Participation Rate Falling in the Midst of the Summer Job Season, According to New Federal Data
Federal- and State-Level Minimum Wage Hikes Hurting Teen Job Market
Publication Date: August 2007
Topics: Minimum Wage
WASHINGTON — In July, the teen labor market participation rate — which measures the number of teens with a job or actively looking for a job — fell to 41.2%, according to the Labor Department’s July jobs report. This decline indicates that many teens are leaving the job market during the height of the summer job season. The likely causes are state and federal minimum wage hikes, which destroy entry-level job opportunities.
The July jobs report also shows that the unemployment rate for high school dropouts rose to more than one and a half times the national level. At 7.1% it is as high as it has been at any point over the last year, except for April when it stood at 7.2%.
Decades of economic research show that minimum wage hikes eliminate entry-level jobs, putting particular pressure on minorities and the low-skilled. A Cornell University study found that black young adults typically bear almost four times the employment loss of their non-black counterparts after a minimum wage increase. Specifically, the study found that a 10% increase in the minimum wage will result in an 8.5% decrease in employment for black young adults and teenagers.
“This month’s numbers show that jobs for teens are evaporating. The federal government is making matters worse by raising the minimum wage,” said Dr. Jill Jenkins, chief economist for the Employment Policies Institute. “Legislators should keep in mind that giving up on finding a job is not the same as getting a job.”