David Neumark: Delay the Minimum Wage Hike

"A recession is the worst time to raise the cost of low-skilled unemployment."  Is there a good time?

Comments

[spencer]

If you look at the post WW II US record the rule for the impact of higher minimum wages on teenage employment is complex.

One, if the wage hike occurs during an economic expansion it has no impact on teenage unemployment. About half of minimum wage hikes have been during expansion and in each of those instances teen unemployment fell significantly. Just the opposite of what is taught in introductory economics.

Two, if the wage hike occurs during a recession teenage unemployment rises. But that appears to be largely because of the recession, not the minimum wage hike.

The dominant determinant of the teenage unemployment rate appears to be the adult unemployment rate while changes in the minimum wages appear to have a minimal impact.

http://angrybear.blogspot.com/2008/06/minimum-wage-teenage-unemployment.html

[Ihsuan]

What are the studies for this particular finding that you cite? Card and Krueger 1995, 2000?

[Phil]

He cites a blog post at Angry Bear that he wrote that provides some graphs to show that teenage employment follows the business cycle. No doubt that is a major explanation of teenage employment trends, but it's hardly sufficient evidence that the minimum wage does not matter.