Young, Poor And Needing A Job, Not A Raise
Now Los Angeles is following the well-worn trail of increasing the minimum wage and decreasing opportunities for the intended beneficiaries.
When the Brookings Institution published a study last year on the job prospects of teens and young adults in the nation's largest metro areas, Los Angeles placed an abysmal 98th out of 100. Last week, the city responded by voting to increase its hourly minimum wage to $15 from $9 by 2020. This will decrease employment opportunities for younger and less-skilled workers by making them more expensive to hire.
Los Angeles is the latest large city in recent years to lift its local wage floor well above the federal minimum of $7.25. Seattle and San Francisco are already implementing $15 minimums, which likewise have been proposed in New York City and Washington, D.C. Last year, Chicago passed legislation that will boost the minimum in stages to $13 an hour in 2019, a 58% increase over five years.
The biggest backers of these measures tend to be unions, who want to reduce the supply of labor by increasing its cost. Unions call for higher minimums in the name of helping the working poor, reducing inequality, increasing purchasing power and so forth. But a union's primary objective is to protect its members, and Big Labor's minimum-wage advocacy primarily is in the service of pricing nonunion workers out of the labor force. The average union worker in Los Angeles earns more than $27 an hour, a wage that is easier to command when people who will work for less are too expensive to employ thanks to a mandated minimum wage.
Economists are largely in agreement that minimum-wage laws reduce employment. The only real debate is over the size of the reduction. Economists also agree that wage hikes affect different segments of the working-age population in different ways and that younger, less-skilled workers experience the most harm.
In a 2011 paper, labor economists William Even of Miami University in Ohio and David Macpherson of Trinity University in Texas disaggregated employment data by not only age but also race and ethnicity. Congress raised the federal minimum wage by 41% to $7.25 in several stages between 2007 and 2009. The study found that for each 10% increase in a federal or state minimum wage, employment among males ages 16 to 24 decreased by 1.2% among Hispanics, by 2.5% among whites, and by 6.5% among blacks. The effect on black workers was so pronounced, wrote the authors, that “employment losses for 16-to-24-year-old black males between 2007 and 2010 could have been nearly 50% lower had the federal and state minimum wages remained at the January 2007 level.”
The raw numbers are even more troubling. States were impacted differently by the federal wage hike because some of them already had a higher state minimum in place. But in the 21 states that were fully affected, Messrs. Evans and Macpherson estimated that 13,200 young blacks were put out of work as a direct result of the recession, versus 18,500 who lost their jobs as a result of the minimum-wage mandates. “In other words,” they wrote, “the consequences of the minimum wage for this subgroup were more harmful than the consequence of the recession.”
This would be the same subgroup—young black men—who were rioting in Baltimore last month and Ferguson, Mo., last year due to a dearth of job opportunities, according to left-wing commentators bent on rationalizing delinquency. If liberals believe that high unemployment among young men can foster social unrest—and there is plenty of evidence that it can—it would help if they stopped advocating polices that reduce employment prospects.
Politicians like President Obama and civil-rights groups like the NAACP insist that the minimum wage is an effective antipoverty tool. But most minimum-wage earners do not hail from poor households, let alone head them. Rather, they tend to be teenagers or young adults working part time. The majority of poor families in the U.S. have no workers. What they need most is a job, not a raise.
Minimum-wage laws that idle otherwise employable youths are imposing costs on those youths in the form of forgone work experiences. “Finding and keeping a job is a key step in a young person's transition to adulthood and economic self-sufficiency,” wrote the authors of the Brookings Institution study. “Employment obviously allows young people to cover expenses for themselves and their families, but it also provides valuable opportunities for teens and young adults to apply academic skills and learn occupation-specific and broader employment skills such as teamwork, time management, and problem-solving.”
Minimum-wage laws are hardly the only cause of high unemployment among young blacks. Even in poor communities where jobs are available, some residents won't fill them. After the riots in Baltimore, a black construction worker at a job site that had been looted told a Washington Post reporter that the neighborhood kids seemed to have little interest in work. “I see about 30 people walking by here every day, and only about two of them will bother to ask whether we're hiring,” he said. “You have some brilliant kids, extraordinary talent, but they don't see opportunity.”
This piece originally appeared in Wall Street Journal
This piece originally appeared in The Wall Street Journal