Teen-Age Job Killer
May 21, 1999
Congress appears likely to raise the minimum wage again, probably from $5.15 per hour to $6.15 over three years. Unlike the previous debate, when supporters argued that the minimum wage had fallen sharply in real (inflation-adjusted) terms, inflation has been virtually nonexistent in the 19 months since the minimum wage was last raised. But supporters feel (correctly) that they have the votes and do not need to justify their action.
The federal minimum wage was first enacted in 1938, but the vast majority of workers were exempt. Until the minimum wage was significantly expanded in 1956, teen-age unemployment was quite low by today's standards and actually lower for blacks than for whites.
- As late as 1954, the unemployment rate for black teen-age males ages 16 and 17 was still below that of their white counterparts: 13.4 percent vs. 14 percent.
- Over the 1948-55 period, unemployment averaged 11.3 percent for black teen-age males and 11.6 percent for whites.
- After a 1956 increase from 75 cents to $1, unemployment rates were significantly higher for both black and white teen-age males, but more so for blacks.
- By 1960, the unemployment rate for black teen-age males was up to 22.7 percent, while the white rate stood at 14.6 percent.
By 1981, the unemployment rate for black teen-age males averaged 40.7 percent -- four times its early 1950s level. That year, the federally mandated Minimum Wage Study Commission concluded that each 10 percent rise in the minimum wage reduces teen-age employment by 1 percent to 3 percent.
Raising the minimum wage may be good politics, but it is still bad policy.
Source: Bruce Bartlett (NCPA Senior Fellow), "The Minimum Wage: Teen-Age Job Killer," Brief Analysis No. 292, May 21, 1999, National Center for Policy Analysis, 12700 Coit Rd., Suite 800, Dallas, Texas 75251, (972) 386-6272.
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