Teen Unemployment Skyrocketing in Weak Economy

Mandated Minimum Wage Hikes Have Exacerbated the Problem
  • Publication Date: March 2009

  • Topics: Minimum Wage

WASHINGTON D.C. – The new Bureau of Labor Statistics employment data shows a continuing upward trend in unemployment for American teenagers, now higher than it has been in 17 Years. The teen unemployment rate hit 21.6 percent in February, 5.5 percentage points higher than at this time last year and 6.5 percentage points higher than it was prior to the 2007 increase in the minimum wage. That growth is nearly twice as much as the national unemployment rate as a whole.

In addition, the unemployment rate for Americans without a high school diploma rose yet again, now to 12.6 percent, with 130,000 fewer employed than in January.

“The weak economy is combining with high mandated wage levels to create the perfect storm of unemployment for less experienced and less educated groups like teenagers and adults without a high school degree,” said Kristen Lopez Eastlick, Senior Research Analyst for the Employment Policies Institute.

Overwhelming amounts of economic research predicted that there would be an increase in job losses following minimum wage hikes, particularly among vulnerable groups like minority teens and adults without a high school diploma.

When looking at job loss during a good economy, research from the University of California-Irvine found that negative effects of wage hikes are overwhelmingly concentrated on the most vulnerable employees, particularly young minorities and high school dropouts. Research from the University of Georgia found that every 10 percent increase in the minimum wage was associated with a 4.6 to 9.0 percent decline in teenage employment in small businesses. In a weakening economy, these vulnerable employees won’t have many options available.

“The unintended consequence of the federal minimum wage hike is pricing some employees out of the workforce, and based on the recent unemployment data, it’s teens – minority teens especially – who are getting hit the hardest,” Eastlick continued. “A job for a young employee is a chance to gain important skills and learn the invisible curriculum that comes from being employed. Unfortunately many won’t have that opportunity thanks to legislators who elected to embrace populist sound bites instead of sound economics.”

The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment. For additional information or to schedule an interview with a spokesperson call Tim Miller at 202.463.7650.