OPINION:
Students looking to pick up some extra cash with a holiday job over school break may have to settle for a lump of coal in their stocking instead. Jobs for this demographic are hard to come by across much of the country at the moment.
Despite improvements in the broader labor market in recent years, the youth unemployment rate is still 17 percent and 29 percent for African American youth. That masks even higher figures in parts of the country like Washington D.C., where the rate is 30 percent and 41 percent, respectively. Nationwide, there are still about 25 percent fewer young employees working than there were before the Great Recession.
Young employees are often the last demographic to recover from a recession because they have the fewest skills and are therefore the least attractive to employers.
But there is one thing policymakers could do to ease this problem: not raise the minimum wage. Currently labor union-backed activists are calling for a more than doubling of the federal minimum wage floor to $15 an hour. Democratic presidential candidate front-runner Hillary Clinton supports a $12 wage.
It’s pretty well established that substantial wage mandates create an unnecessary burden to employment for young employees who are already facing long odds of landing a job.
Economic research continually confirms this outcome. President Carter had a major Minimum Wage Study Commission. It found what more current research evidences: a one or two percent reduction in youth employment for every 10 percent increase in the minimum wage. Replicating Congressional Budget Office methodology, economists from Trinity University and Miami University recently found that 770,000 jobs would be lost nationwide if the minimum wage were increased to $12. These job loss figures would only be substantially worsened if it was illegal to pay an unskilled teen less than $15 an hour.
And for those who claim these wage hikes are without downsides, a new survey of U.S.-based economists, the majority of whom self-identify as Democrats, conducted by the University of New Hampshire Survey Center finds that three-quarters of respondents agree that a $15 minimum wage will cause youth job losses.
But don’t take economists’ word for it. The negative consequences of dramatic minimum wage increases are being seen firsthand in West Coast cities that have already taken this step. Numerous popular restaurants and retailers have gone out of business in Seattle, San Francisco, Oakland, and Los Angeles with owners citing the municipal minimum wage increases as the driving reason. (Specific stories can be found at Facesof15.com.)
Such establishments are the places that have traditionally provided the job opportunities which allowed young employees to stand on the first rung of the employment ladder. They train the nation’s workforce with an invisible curriculum of soft skills including time management, customer service, and teamwork that are used by employees throughout their careers. It’s not a surprise that research finds these jobs are usually quickly parlayed into positions that pay much more than the minimum wage.
Unfortunately, wage hikes that consumers won’t pay for result in substituting young employees with older, self-service, or automated alternatives.
Though it may be particularly aggravating at Christmastime, the reduction of employees on the retail floor and the addition of touchscreen checkouts and ordering systems have been occurring for several years. Bureau of Labor Statistics data confirms that over the last decade there’s been a nearly 28 percent increase in the number of department stores in the U.S., while the number of department store employees has dropped by 15 percent.
“If you look at history, every time there has been a wage or cost increase, business owners have found a way of adapting,” says Jerry Newman, a compensation expert at the University of Buffalo. “The standard ways they do that are to raise prices, reduce workers’ hours and introduce technology to replace employees.”
In this sense, the minimum wage is truly the Christmas Grinch who stole one of the merriest parts of the holidays: jobs for students. Policymakers shouldn’t exacerbate its detrimental effect by raising it further.
• Richard Berman is president of Berman and Co., a Washington public affairs firm.
Please read our comment policy before commenting.