by Jon Sanders
Research Editor and Senior Fellow, Regulatory Studies, John Locke Foundation
There is new research out of the Mercatus Center at George Mason University that investigates the effects of higher minimum wages on teen employment since the 2000s. Suffice to say it doesn’t overturn mainstream economics.
It’s already been shown that higher minimum wages are associated with fewer teens holding jobs. The new study, by David Neumark and Cortnie Shupe, found that higher minimum wages led to fewer teens aged 16–17 combining school and work. A higher share of teens merely went to school.
This meant that a higher share of teens acquired fewer job skills, reduced their future employment opportunities, and lowered their lifetime earning. What Neumark and Shupe describe is a snowball effect: less work, fewer skills acquired, less overall employability, fewer later job opportunities, lower overall lifetime earnings.
I would point out again that these negative effects are not randomly distributed across all teenagers, as if it were an evil “Sorry! YOU Get Lower Lifetime Earnings!” lottery. As is always the case with the minimum wage, those who are most harmed by its negative effects are the ones who most need to be helped:
A lower income trajectory is the result of the higher minimum wage keeping low-skilled workers from accumulating experience as well as income, artificially limiting their upward income mobility, even to rise just to the lower middle class.
Looking at 2009 data for teenagers, Algernon Austin, director of the race, ethnicity and the economy program at the Economic Policy Institute, found that
In 2009, teens from poor families were less likely to find work than their middle-class peers. Poor African American teens, however, were the worst off: Only 20% were able to find work, compared with 31% of poor Hispanic teens and 36% of poor white teens.
In North Carolina, that increase caused a 3.6 percent employment decline among teenagers — but for teens without 12 years of education, the decline was much higher: 7.2 percent.
In five years, employment of teenagers nationally had fallen by 10 percentage points. A Today/Reuters analysis in 2012 found that the teens hardest hit were also “those who may need the money most: teens from poor families in which a parent is out of work.” Least affected: teens from wealthier families with working parents.
As Austin said to Today/Reuters, “In terms of need, it is backwards.”