Tuesday, July 03, 2007

Minimum Wage, Jobless Teenagers

From today's WSJ: Congress recently raised the federal minimum wage to $7.25 an hour by 2009, in the name of helping low-income families escape poverty. But a sobering new report from the New York City-based Center for an Urban Future shows how minimum-wage laws are already hurting the unskilled and inexperienced.

The "Summer Help" study assesses New York City's publicly funded Summer Youth Employment Program, which each year matches tens of thousands of young people between the ages of 14 and 21 with employers ranging from the local library to investment banks.

Today, however, the New York program serves 20% fewer young adults than it did in 1999, and last year it turned away 30,000 mostly black and Latino applicants. The report cites minimum wage-increases in the Empire State -- one of 30 states that mandates a minimum higher than the federal floor -- as a factor in the program's decline.

The harm from minimum-wage laws is well-documented, and even government job programs aren't immune. As an antipoverty measure, these laws are inefficient because most people who are poor already earn more than the minimum, and most who do earn the minimum aren't living in poverty. They are retirees, homemakers, part-time workers, and teenagers in the Big Apple -- fewer of whom will have summer jobs in the future thanks to the higher minimum wage.

From the BLS May employment reports
here and here, and this minimum wage summary

Number of teenagers unemployed: 1,054,000

Overall teenage unemployment rate for May: 15.7%

Teenage unemployment rate for blacks: 30.4% (247,000)

Teenage unemployment rate for whites: 13.9% (807,000)

Number of states with minimum wages above the federal (currently $5.15, will increase to $5.85 on July 24): 29

Minimum wage in NY, PA, Alaska, and Michigan: $7.15

From the politicians (aren't they supposed to try to create more jobs, not eliminate them?):

Michigan Governor Jennifer Granholm: "Increasing the minimum wage is one part of her plan to diversify and expand Michigan's economy."

Senator John Edwards: Edwards today will call for the minimum wage to be raised to $9.50 an hour by 2012.


At 7/03/2007 9:20 AM, Blogger Bruce Charlton said...

The agitation to raise minimum wage is a very clear example of politics as moralizing - an expression of 'caring' as contrasted with actually helping.

In a very stark fashion, it shows that - for most 'progressives', 'the poor' exist primarily to be objects of 'concern'.

Admittedly, any effective policy is likely to create short term problems before generating long term benefits - that is the nature of things.

But until this kind of moral showboating can be put into a back seat, I don't see any prospect of effective policies that might actually help the poor in rich societies. The same applies to poor nations, such as Africa.

At 7/03/2007 1:28 PM, Blogger juandos said...

Well apparently that old saw about those who don't learn from history are doomed to repeat it fit socialists like Granholme and Edwards and those who support these two clowns...

Back in '95 Dr. Walter Williams penned the following: Minimum Wage Maximum Folly

Back in '99 Bruce Bartlett penned the following: Minimum Wage Teen-age Job Killer

At 2/11/2011 10:47 PM, Blogger Unknown said...

Why stop with teenagers? I am sure the minimum wage put poor geriatric workers out of work too.


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