Teen employment and the minimum wage

This new research from the Employment Policies Institute may surprise some people, even though it shouldn't:

Three years after the passage of federal wage legislation, teen employment prospects are suffering tremendously. The unemployment rate for 16 to 19-year-olds remains above 25 percent; for those ages 16 to 17, the unemployment rate is close to 30 percent. While the recession has been a significant cause of teens’ employment woes, some advocacy groups have claimed that it’s the only cause – downplaying any employment loss caused by the more than 40 percent increase in the federal minimum wage that occurred over the same time period.

In this study, labor economists William Even (Miami University) and David Macpherson (Trinity University) quantify how much teen employment declined due to increases in the federal minimum wage. The authors use Census Bureau employment data collected between January 2005 and April 2010, and follow a well-established empirical technique first initiated by labor economists Richard Burkhauser (Cornell University), Kenneth Couch (University of Connecticut), and David Wittenburg (Urban Institute).

Using state-specific variations in minimum wage growth, and carefully controlling for the effects of the recession and other state economic differences, Even and Macpherson are able to isolate only the decline in teen employment that was caused by the federal wage hike.

For the 19 states affected by all three stages of the federal wage hike, there was a 6.9 percent decline in employment for teens aged 16 to 19. This translates to approximately 98,000 fewer employed teens. Broadening the analysis to include all 32 states impacted by any stage of the federal wage increase, the authors find approximately 114,400 fewer employed teens.

When Even and Macpherson look specifically at 16 to 19-year-olds with less than 12 years of education, the proportional employment loss grows larger. In states impacted by all three wage hikes, there was a 12.4 percent decrease in teen employment.

Turns out that when politicians violate the laws of supply and demand, bad things happen! And yet, in the popular narrative, legislators who vote for minimum wage increases are portrayed as compassionate while those who argue against are mean-spirited and in the clutches of evil corporations.