NCPA - National Center for Policy Analysis

What Is the Youth Minimum Wage?

January 6, 2015

As of 2015, 29 states have minimum wages above the federal floor, but Preston Cooper of Economics21 says the laws are nothing to cheer about -- minimum wages limit the ability of inexperienced young people to get entry-level jobs as employers, forced to deal with new labor costs, higher fewer workers.

What evidence is there that minimum wages hurt teenage employment? Just recently, a 2013 study from Texas A&M researchers found that young workers faced the worst negative job impacts from minimum wages, while workers above the age of 35 were not impacted. And a University of California-San Diego study from December 2014 found that minimum wages limit low-wage workers' ability to advance economically, as would-be workers are denied valuable work experience.

According to the Bureau of Labor Statistics, the labor force participation rate for Americans age 16 to 24 was 55 percent (as of November 2014, the national labor force participation rate was 62.8 percent). By 2022, the BLS expects that figure to drop below 50 percent in 2022.

How to improve youth employment? There is actually already a federal solution to the problem, says Cooper: a youth minimum wage. Federal law allows employers to offer wages below the federal minimum to workers under the age of 20 for up to three months. The federal wage is $7.25 per hour, while the youth minimum wage is $4.25. Allowing employers to offer lower wages could open doors to young people seeking entry-level employment, training and experience.

However, the policy means little when states do not include a similar exemption for youth wages -- just 19 states, says Cooper, have youth minimum wages at the federal level, while 23 set youth wages at or above the federal minimum wage. He encourages state lawmakers to pass exemptions allowing employers to offer young people lower introductory wages and expand their employment opportunities.

Source: Preston Cooper, "Exemption from Minimum Wages Would Help Younger Workers," Economics21, January 6, 2015. 

 

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