MINIMUM WAGE HIKES HARM TEENAGERS
February 4, 2005
Advocates of a minimum wage hike ignore the evidence that it increases unemployment among the least productive workers: unskilled teenagers whose employment opportunities are limited. This is unfortunate, because low wage jobs are the first rung on the economic ladder of success for workers entering the labor force, says Bruce Bartlett, a senior fellow with the National Center for Policy Analysis.
How Do Minimum Wage Increases Affect Minority Groups?
- From 1948 to 1955, unemployment of black and white teenage males was essentially the same, 11.3 percent and 11.6 percent, respectively.
- However, after the minimum wage was raised from 75 cents to $1 in 1956, unemployment rose significantly for both black and white teenage males, with blacks bearing more of the burden.
- By 1969, the unemployment rate was 22.7 percent for black teenage males and 14.6 percent for white teenage males.
- Economists Donald Deere, Kevin Murphy and Finis Welch found that minimum wage increases totaling 27 percent in 1990 and 1991 reduced employment for all teenagers by 7.3 percent and for black teenagers by 10 percent.
- A study of the 1996 and 1997 increases by economists Richard Burkhauser, Kenneth Couch and David Wittenburg also found a 2 to 6 percent decline in employment for each 10 percent increase in the minimum wage.
In a study published by the Federal Reserve Bank of San Francisco, Couch translated these conclusions into raw numbers:
- At the low end, he estimated at least 90,000 teenage jobs were lost in 1996 and another 63,000 in 1997.
- At the high end, job losses may have equaled 268,000 in 1996 and 189,000 in 1997.
Source: Bruce Bartlett, "The Minimum Wage Is Bad Policy," Brief Analysis No. 499, National Center for Policy Analysis, February 4, 2005; Donald Deere, Kevin Murphy and Finis Welch, "Employment and the 1990-1991 Minimum Wage Hike," American Economic Review, May 1995; Richard V. Burkhauser, Kenneth A. Couch and David Wittenburg, "Putting the Minimum Wage Debate in a Historical Context: Card and Krueger Meet George Stigler," Center for Policy Research, June 1995; and Kenneth A. Couch in Federal Reserve Bank of San Francisco, Economic Letter 99-06; February 19, 1999.
For NCPA text:
For Deere, Murphy and Welch study (subscription required):
For Crouch study:
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