Has The Minimum Wage Increase Decreased Teenage Employment?

I recently wrote about a Star Tribune article that documented the disappearance of jobs for teenagers with nary a mention of the increase in the minimum wage.  Ironman at Political Calculations has dug up some data to see if my claim - that the increase in the minimum wage is at least a factor - holds water.  His conclusion:

This chart confirms that for teenagers, those between the ages of 16 and 19 years old, all of the jobs that disappeared in 2007 were minimum wage jobs. In essence, a total of 94,000 hourly jobs disappeared for this age group overall. This figure is the net change of this age group losing some 118,000 minimum wage earning jobs and gaining some 24,000 jobs paying above this level.

This represents what we believe to be the effect of the higher minimum wage level increasing the barriers to entry for young people into the U.S. workforce. Since the minimum wage jobs that once were held by individuals in each age group have disappeared, total employment levels have declined as those who held them have been forced to pursue other activities.

Now consider this: The minimum wage was just reset on 24 July 2008 to $6.55 per hour, a 27.2% increase from where it was in early July 2007. Our best guess is that a lot of additional teenagers will be pursuing those other activities. 

Meanwhile, the lack of employment opportunities for the least educated, least skilled and least experienced segment of the U.S. workforce will likely have costs far beyond the benefits gained by those who earn the higher minimum wage. The government might be able to make the minimum wage earning teenage worker disappear, but they didn't do anything to make the teenagers themselves disappear.

Someday the average politician will believe that they cannot repeal the laws of supply and demand.  But I won't hold my breath.

Comments

[spencer]

Over the last 8 years teenage employment only rose in two of those years. It fell in six of those years while only in the last two of those years was there a change in the minimum wage. Of course the minimum wage has a negative impact. But the impact of the minimum wage sure seem to be a lot smaller than other factors.

For example, over the last year real sales at limited sales restaurants -- fast food places -- that are a major employer of teenagers and other minimum wage workers are actually down. A major way people adjust to high gas prices is by eating out less.

Now, which of these played a larger role in the drop in teen employment?

It is funny, minimum wage increases accompanied by a business cycle downturn seem to impact teen employment but minimum wage hikes in a business expansion do not seem to impact teen employment.

[Houston Labor Attorney]

It seems like it would increase if anything. I remember when minimum wage was so low I didn't even want a job. Now it seems like it would be worth it.

[Phil Miller]

HLA: the minimum wage encourages people to seek minimum wage work, but it discourages businesses from hiring them.