When minimum wage goes up, teen jobs go down
A summer job has become a rite of passage for American teenagers. From scooping ice cream to lifeguarding at the community pool, summer jobs have allowed teens to earn some extra cash before heading back to school in the fall. But over the past few decades, the rate of teenagers looking for summer jobs has fallen significantly. One contributing factor to the decline: Rising state and local minimum wages.
Over the past several years, many states and locales have embraced higher wage mandates, some as high as $15 and $16 per hour. Connecticut is now debating legislation that would phase-in a $15 state minimum wage. It is currently $10.10.
Now, Congress is considering the “Raise the Wage Act” that would implement a federal $15 minimum wage and is estimated to potentially eliminate 15,531 jobs in Connecticut.
These higher wage mandates are leaving teens struggling to get these once available entry-level summer jobs, which could negatively impact them not only for the summer they're unemployed, but potentially for the entirety of their career.
Consider historical averages of the labor force participation rate among teenagers. Nearly two decades ago in 2000, 52 percent of American teenagers were looking for or had a summer job. Last summer, that number was roughly 35 percent.
There are several possible explanations for this decline, including more students opting to take unpaid internships or enrolling in summer school. But one undeniable cause is higher minimum wages.
A recent Mercatus Center study by economists David Neumark of UC Irvine and Cortnie Shupe of German Institute for Economic Research found that higher minimum wages were the “predominant factor” in the decline of teen labor force participation rates. The researchers examined the recent sharp drop in teen employment and determined that “a rising minimum wage (on the state and federal level) could have priced some teenagers out of the labor market.”
Today, more skilled job seekers are being hired to fill positions once taken by teenagers. A report from Drexel University found a five-percentage-point decline in the number of teenagers working in the restaurant industry over the past two decades. As hikes in the minimum wage occur, employers tend to look for applicants who have more experience rather than a 16-year-old who is hoping to land his or her first job.
Increasing labor costs have also led to business closures. The owner of a popular children's toy store, Creative Kidstuff in Minnesota, cited higher minimum wage mandates as a reason to close all six locations, wiping out dozens of summer jobs for teens. Creative Kidstuff isn’t alone. My organization has compiled stories from over 150 businesses across the country that have been affected by minimum wage hikes. They can be viewed at FacesOf15.com.
If they don't have a Plan B, teenagers who can't find a summer job might just find themselves in trouble instead. A recent study from economists at the University of New Hampshire and San Diego State University, sponsored by my organization, found that minimum wage increases observed between 1998 and 2016 led to an increase in property crime arrests among those aged 16 to 24.
More than simply staying out of trouble and earning a paycheck, summer jobs allow young adults to learn valuable job skills that can be useful later in their careers. A study released by my organization from economists Dr. Christopher Ruhm and Dr. Charles Baum from the University of Virginia and Middle Tennessee State University found those who had part-time jobs as teenagers had annual earnings that were roughly seven times higher compared to their classmates who did not have jobs.
The decline in teen employment should serve as a red flag for both parents and policymakers. Lawmakers and advocates for big increases in minimum wages should consider the young adults who could do better without their help.
Samantha Summers is the communications director for the Employment Policies Institute, a fiscally conservative non-profit think tank that conducts research and opines on employment issues, particularly opposition to minimum wage increases. It is based in Washington, D.C.