The Looming Teen Unemployment Crisis
We’ve seen the number 9.1 a lot recently. It’s a gruesome figure -- one that marks the prolonged and deep economic tragedy gripping our nation. However, not much attention is given to the near 25 percent rate of teenage unemployment (around 40 percent among African-Americans).
Our national conscience is not as readily concerned by this figure. They aren’t breadwinners. They aren’t on their own. They aren’t adults adding to America’s welfare rolls. However, the problem of teenage unemployment, if not addressed, will produce disastrous long-term consequences for the productivity of our economy. Moreover, the problem is particularly glaring due to the availability of its remedy -- a permanent reduction in the minimum wage for teenagers.
Of the 1.1 percent of Americans on the minimum wage, teenagers are five times more likely to earn the minimum wage and they comprise over fifty percent of total recipients. They are inexperienced workers taking first-time or part-time entry-level jobs.
Many argue that a minimum wage overprices the labor of these teenagers: a young, inexperienced worker who can add only $3 or $4 of value per hour can’t be paid a minimum wage of double that.
However, many supporters of minimum wage laws claim this is just a problem in economic textbooks and not actually in the real world.
Nevertheless, the statistics seem to support that the latter claim also happens in practice. Countless studies (such as recently Even & Macpherson or Neumark & Wascher) have shown that an increase in the minimum wage leads to increases in low-skill level unemployment. These studies found “overwhelming” evidence of the negative connection, particularly regarding minorities.
The problem of increased teenage unemployment extends beyond the monetary value of a paycheck. Teenage years contain vital opportunities to harness skills that will later translate in the full-time work force: meeting deadlines, working with co-workers, dealing with a boss, etc.
The cultivation of these traits has tangible impacts. For example, researches at Stanford concluded that those who do not work as teenagers have lower long-term wages and chances of employment even after ten years. What seems like an inconsequential lost summer for a sixteen year old translates to protracted difficulty and a greater later dependency on the same minimum wage that created the cyclical process.
The federal government, with the interests of future generations in mind, should permanently lower the minimum wage for those 16 to 19. Their current exemption on the books provides that for only 90 calendar days (or until a 20th birthday) teenagers can be paid $4.25 – but this is often overpriced, difficult to apply for, and many times irrelevant because states don’t also include the provision.
Before concerns arise that this change in policy will harm not only adults, but also younger Americans 20-24, it’s important to underscore the nature of teenage employment. These are temporary, part-time, basic jobs – not in the same pool as full-time, career-oriented adults. This is reflected in the vastly higher propensity for teenagers to be on the minimum wage.
Moreover, this law will have little impact on twenty-somethings trying to enter the labor market full-time at ground level. According to the Labor Department, two-thirds of all minimum wage workers get a raise within a year. The reason for the latter fact is that businesses want to cultivate and keep talent, even with first-time jobs. Teenagers, constrained by high school and truancy laws, can’t immediately compete with committed, older workers.
The prospect of working, even at a lower wage, is vastly more desirable to teenagers currently being priced out of the chance to do so. To address this deficit of opportunity, a teenager’s labor value must reflect its true market value to a greater degree.
Teenage unemployment is the worst kind of crisis -- hidden yet immediate. If we hope to keep the well being of the next generation in mind, minimum-wage reform, even if only in the limited range of teenagers, must happen.