Friday's employment report showed that teen unemployment is 16 percent, more than three times the overall rate. Teenage labor force participation, a measure of how many teens are working or actively looking for work, has declined from 52 percent to 35 percent over the last twenty years. As the economy weakened and policymakers responded with minimum wage increases, young people were left behind.
“A business owner probably would not take a chance on a young, untested job applicant if he had to pay $10 per hour, but $5 per hour might be a different story.”
Many teenagers do not have the skills and experience necessary to command high wages. When the minimum wage rises above what employers are willing to pay for unproven workers, the result — millions of young people out of work — should not be surprising.
One solution is to allow young people to work for a lower wage than older Americans. A business owner probably would not take a chance on a young, untested job applicant if he had to pay $10 per hour, but $5 per hour might be a different story. After working in an entry-level position at a so-called "youth minimum wage," a teenager will have the experience and references at his disposal to obtain a higher-paying job. But you cannot get your second job without your first.
The good news is that the United States already has a policy along these lines. The federal youth minimum wage allows people under the age of 20 to work for a wage of $4.25 per hour for a period of up to 90 days.
The bad news is that many states that have raised their minimum wages forgot to include a similar exemption in their own laws. When federal and state minimum wage laws conflict, the more restrictive law always applies. For example, in Kentucky no youth exemption to the minimum wage law exists, and all young people must earn the state minimum wage of $7.25 or above. But in neighboring Tennessee, which has no state minimum wage law, young people are free to work for the federal youth minimum wage of $4.25 (albeit only for 90 days or less).
Fifteen states adopt the federal youth minimum wage of $4.25, while seventeen other states and the District of Columbia have a more limited youth exemption. Eighteen states have no exemption at all. The policy machinery to improve young peoples' job prospects exists, but many states are not taking advantage of it.
In a new report for the Manhattan Institute, I estimate that creating a universal youth minimum wage of $4.25 per hour could create up to half a million jobs for young people. While no single policy change can solve the youth employment crisis overnight, a universal youth minimum wage could put a serious dent in it.
In November, several states will vote on ballot initiatives to raise the minimum wage. Many of these initiatives, even in those in red states, will probably succeed. To reduce the burden on teenage jobseekers, the architects of these initiatives should consider including youth minimum wage provisions. The economic recovery has been biased against the young — it is time for policymakers to reverse that trend.
This piece originally appeared on the Washington Examiner, based on a new report
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Preston Cooper is a policy analyst at the Manhattan Institute's Economics21. Follow him on Twitter here.
This piece originally appeared in Washington Examiner