Minimum Wage Increase in Two Weeks Will Likely Send Teenage Jobless Rate to a Record High
The current (June) unemployment rate for teenagers of 24% (data here, paid subscription required for full access) is within 1/10 of a percent of the all-time high of the 24.1% teenage jobless rate set back in November and December of 1982 (see chart above). The teenage jobless rate of 24% is more than double the national average of 9.5% for June, and for African-American teens the unemployment rate was almost 38%. When July employment data become available in early August, watch for the teenage unemployment rate to jump to a new record high. Reason?
NEW YORK (CNNMoney.com) -- The federal minimum wage is set to increase later this month as the job market shows signs of further decay. The federal minimum wage will go to $7.25 an hour on July 24 from its current level of $6.55, according to the U.S. Department of Labor. The impact will be felt in 29 states, and many of them plan to match the federal minimum when it goes through.
Seven states already have laws mandating $7.25 minimum pay, while 14 states and Washington, D.C., exceed the new minimum. Employers are required to pay whichever is the highest: Federal or state.
10 Comments:
" . . watch for the teenage unemployment rate to jump to a new record high. Reason? . . . The federal minimum wage is set to increase later this month . . "
so the current recession has nothing to do with increasing teen unemployment?
it appears to me that teen unemployment tracks total unemployment, NOT minimum wage. [from Spencer at Angry Bear]
why? too few teens employed at minimum wage for it to have much effect. see BLS stats here.
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Professor Mark did something similer back on June 12 and I'm guessing that those who couldn't/wouldn't come to grips with reality then will have just as hard a time doing it now...
Are Summer Jobs ‘Going Out of Business?’
Fewer Teens Gain Valuable Employment Skills this Summer
From the Econ International Blog: Impact of Minimum Wage Indexing on Employment and Wages: Evidence from Oregon and Washington
Robert, I agree your analysis is correct as it is simply a matter of basic economics that raising minimum wage will increase unemployment if everything else stays the same.
However bobble's point is still valid in that other changes in the economy seem to dwarf the effects of min. wage changes, so one can't blame any new record highs on teen employment on the min wage increase.
RM:"Price floors are ineffective when they are below equilibrium wage."
i make that point in the last sentence of my post. in fact, that's my whole point. i agree that min wage a *could* increase teen unemployment. just not so much right now due to the current level of teen wages; an important variable that prof perry appears to be ignoring.
"just not so much right now due to the current level of teen wages; an important variable that prof perry appears to be ignoring"...
ROFLMAO!
Obama economists’ jobless predictions off by 2.9 million
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I can tell you that tomorrow I'll start sending out e-mails to several former student employees telling them that I will not be able to hire them back this next semester due to stagnant budget + higher minimum wage. These are the same students I had last year at 6.55 per hour. And ones I'd like to have back.
European manufacturers also bought up a lot of cotton. Someone should talk to them about this...
21 states already pay above the Federal minimum wage, and guess what? The 6 states with the highest minimum wage are also 6 of the brokest states.
Read about it, and stick around for more good content.
http://libertarianhumor.com/2009/07/10/coincidence-i-think-not/
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