School’s out, and I’m terrified my two teenage boys won’t get a job this summer and will sit around watching TV, playing computer games or just eating me out of house and home. Idle hands really are the devil’s workshop, and at this stage, I’d pay an employer to get the kids out of the house and teach them some practical lifetime skills.
My first job was working at a warehouse for $2.35 an hour in suburban Chicago. The first job for me – and many others – was one of the most important.
But in many areas this summer, kids won’t have an easy time finding work. The teen unemployment rate is already above 20 percent in many areas. Meanwhile, Seattle just became the latest city to raise its minimum wage – to double the minimum and all the way to $15 an hour. If you aren’t worth $15 an hour, it is now illegal for you to hold a job in Seattle. The White House wants to raise the federal minimum from $7.25 to $10.10 over the next several years.
Many California cities and at least a dozen states are talking about creating a similar “super” minimum wage above the federal minimum. The idea is to reduce income inequality and raise wages for workers at the bottom of the scale.
The debate rages about whether this will actually raise wages or simply make it nearly impossible for the young to find paid work. Some liberals argue that raising the minimum wage will increase employment. In other words, making workers more expensive will evidently make employers hire more of them.
But we don’t have to debate what the effect of a higher minimum wage will have on young people. We already know from recent history. In 2007 and 2008 the minimum wage was raised three times. This wage hike requirement came at the worst possible time – just as the U.S. economy was entering recession. The effects on teen employment were immediate and devastating. The national teen unemployment rate nearly doubled. At one point during the recession in 2009, the black teen unemployment rate was nearly 50 percent, which is the rate in many third-world nations.
Also, teenage work participation plummeted to below 40 percent. In other words, as jobs became scarcer, teens either couldn’t get a job or just gave up even trying to find one. The lasting impact of this high teenage unemployment and low entry into the workforce is sharply negative. Wages later in life are higher when the young work earlier.
Skeptics say the teen unemployment rate soared only because the economy was in recession and jobs were hard to come by for every age group. True, but the teen rate rose fastest. They were the first tossed out of jobs. And as labor economist Richard Vedder of Ohio University has shown, when jobs are scarce, the solution to reducing unemployment is to allow employers to offer lower wages temporarily, not to raise the wage requirement, which only exacerbates the jobless problem.
We know about half the workers earning the minimum wage are below the age of 25. Very few minimum wage workers are the head of a household or the primary earner. Most minimum wage workers receive a pay raise within six months on the job. This is a training wage. Only about one in 20 workers is paid the minimum wage and the median wage is three times the minimum, or $24 an hour.
I love my sons (sometimes I don’t like them, though), but few employers would pay them $10 or $12 or $15 an hour. They just don’t have the skills to merit that kind of wage. Wouldn’t it be better for kids to have a job that pays $5 or $6 an hour than no job at all?
The victims of a higher minimum wage are the young and the unskilled. They are left on the jobs sideline when the wage requirement rises. This is why my own work finds that states with high minimum wages actually have MORE income inequality than those with lower minimum wages.
With about 17 million Americans out of work, not looking for work or just unable to find a full-time job, now is the worst time to raise the minimum wage. But if we do, at least let us have a federal teen minimum wage of $5 an hour. Call it a Training Wage. Let kids learn how to become productive and learn vital job skills at a young age.
This on-the-job training will pay off double or triple in the future as these teens turn into adults. It will also keep kids out of trouble this summer. There is something much worse than a minimum wage job and that is laziness, which doesn’t pay a penny.
- Stephen Moore is chief economist at the Heritage Foundation.
Originally appeared in the Orange County Register