Issue Name

Employment Policies Institute Study: Unskilled Workers Hurt

In his State of the Union speech, President Clinton urged another increase in the minimum wage. But a new study from the Employment Policies Institute presents further proof that each mandated hike in the minimum wage hurts unskilled workers -- particularly black teenage boys.

The last minimum wage increase took effect in two steps -- rising to $4.75 in October 1996, then to $5.15 in September of last year.

  • For the 11 months before the first installment in the hike to 11 months after, the employment rate for teenage boys dropped 0.6 percentage points -- even as the employment rate for all workers was rising 0.7 percentage points due to the strong economy.

  • For black teenage boys, the employment rate dropped a full percentage point.

  • If the teen employment rate had followed the overall trend, 107,000 teen jobs would have been created -- but the reality was a loss of 21,000 teen jobs.

  • So a total of 128,000 jobs for teenagers disappeared -- corresponding to a loss of 20,000 jobs for black males in their teens.

Because one-third of minimum-wage workers are teenagers, the hike may have killed as many as 380,000 jobs for teens.

Moreover, the working poor did not get the benefits of the October 1996 increase. Less than 18 percent of the gains went to families and individuals living below the poverty level. More than half of the gains went to households earning about $30,000 or more.

Source: Perspective, "A New Minimum-Wage Hike?" Investor's Business Daily, January 30, 1998.

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