THE LOST WAGES OF YOUTH

March 8, 2010

Rarely has a law hurt more vulnerable people more quickly than when Congress raised the minimum wage in three stages to $7.25 an hour from $5.15 an hour, beginning in May 2007, says the Wall Street Journal. 

A comparison of the three-stage increase in the minimum wage with the jobless rate for teens age 16 to 19 since 2007 reveals the following: 

  • The first increase, to $5.85 from $5.15, came after a decade of no increases, and when the overall jobless rate was below 5 percent and the teen rate was 14.9 percent.
  • The demand for labor was sufficiently strong in many areas that most employers were probably willing to absorb the higher wage.
  • But as the minimum wage increased even as the overall job market began to worsen, the damage to teen job seekers became more severe.
  • By the time the third increase to $7.25 from $6.55 took effect in July 2009, the teen jobless rate was 24.3 percent, and by October it peaked at 27.6 percent before dropping to 26.4 percent in January 2010.  

The story is even worse for black teens, who often have lower than average education levels or live in areas with fewer job prospects: 

  • Their jobless rate climbed from 38.5 percent before the third wage hike to 49.8 percent in November 2009, before falling back to 43.8 percent in January.
  • For black male teens, the rate climbed to 52.2 percent in December 2009 from 39.2 percent in July.
  • The difference between the jobless rates for black teens and the entire population widened by 6 percentage points from June 2007 to January 2010.  

A Congress that has spent $862 billion to create jobs thus managed with its wage increase to harm tens of thousands of entry-level job seekers.  And it did so in the name of "compassion" and a "living wage."  In many cases that wage has since become zero, says the Journal. 

Source: Editorial, "The Lost Wages of Youth," Wall Street Journal, March 5, 2010. 

For text:

http://online.wsj.com/article/SB10001424052748704761004575096150953378366.html 

 

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