OPINION:
Former gang members in Los Angeles can get paid to remove tattoos, work at cafes, and do other odd jobs at a nonprofit company called Homeboy Industries, which tries to transition ex-cons back into the workforce. In Europe, similar transitional work charities exist for a less marginalized group — the long-term unemployed.
The only difference? These European jobs are unpaid and the work is fake.
The New York Times reports that thousands of these “Potemkin companies” are selling fake products to fake customers as “part of an elaborate training network that effectively operates as a parallel economic universe” for the millions of victims of Europe’s anemic labor market.
This depressing European tale may be a harbinger for Los Angeles and America’s entry-level workforce as a whole.
Homeboy Industries as well as other similar Los Angeles charities like Chrysalis and L.A. Conservation Corps, which provide paid work opportunities for the homeless and wayward youth, respectively, have said that they will be severely impacted by the city’s recently passed $15 minimum wage.
Homeboy has said that the costs associated with the hike will force it to eliminate 60 trainee positions. L.A. Conservation Corps said that the wage could force it to cut 200 job participants. Chrysalis says that the wage hike would add $2 million in costs by 2018.
Participants of these work training programs are largely unemployable without them. It’s not a stretch to say that if the opportunities are eliminated, participants could turn back to crime or the streets.
The value of these work training opportunities is also true of traditional work.
Real entry-level jobs provide training and skills for those on the bottom of the career ladder, helping integrate people into the workforce and transition them to better jobs. These first jobs teach an “invisible curriculum” of soft skills, including time management, customer service and a sense of urgency, which are needed to succeed at all jobs.
Many of these soft skills are intuitive to most people reading these words. But it is surprising how many job applicants need an education and orientation regarding workplace culture. And it pays off. A study by economists at University of Virginia and Middle Tennessee State University finds that those who get this early career experience earn about 10 percent more after leaving high school than their jobless counterparts.
Many of the companies providing entry-level jobs operate in the low-margin service sector, where the costs associated with currently proposed minimum wage increases of 40, 60 or even 100 percent will force a reduction of these learning opportunities. A recent survey of Los Angeles restaurants found that 42 percent were “very likely” to reduce staffing levels in response to the dramatic minimum wage hike. Technology investments and self-service are becoming the accepted alternatives to hiring employees.
In the eurozone last year, 52.6 percent of the unemployed had been out of work for a year or more. The lack of available entry-level jobs means that if Europeans lose their job, there’s the very real possibility that they may never work again. And for American at-risk youth, if you can’t get hired at 19, you’ll probably still be unemployed at 20 and 21.
Despite these irrefutable facts, activists are still calling for the same workplace regulations — “living” wages, and mandatory paid sick and vacation leave — that increase hiring costs and incentivize European companies not to offer traditional employment. More than half of new jobs created in the European Union today are temporary contracts. What these liberals don’t understand is that when you mandate businesses to provide jobs and workplace welfare, you often end up getting neither. There is only so much that a customer will pay for service and the activists have no clue as to where that cost begins to have unintended consequences.
In the United States, the long-term unemployment rate may be lower, but it still hasn’t returned to its pre-recession level — one of many labor indicators not to do so. And for young minorities the job market is a desert. To improve the labor market — on both sides of the Atlantic — service jobs that have long been the true transitory training programs should be embraced. Instead we are regulating them out of existence.
• Rick Berman is president of Berman and Co., a Washington public affairs firm.
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