Unemployed teens and the minimum wage

In 2007, liberals and Republicans argued over raising the minimum wage.  The mantra, at the time, was that unskilled laborers needed a living wage to support a decent, American lifestyle.  Liberals also said that fat cats, like those in the Grand Old Party, would love it if the minimum wage would just go away, so employers could get away with paying their workers $1 to $2 dollars an hour for their work.  Conservatives argued that raising the minimum would affect unskilled and teen workers in a negative manner, and that raising the minimum would have long-term consequences to unemployment figures and the value of the dollar.

The silly argument that employers would love to get away with paying their workers nothing falls flat when one considers the competitive market established for good workers.  Very few, if any, workers will be able to work at an establishment that pays them $1 to $2 dollars an hour.  So if the fat cat employers had their way, and offered to pay their workers peanuts, they would have no workers for their establishment.  “That’s right,” says the cynical liberal, “I’m sure they would love that.”

Raising the minimum wage seemed like such a grand idea at the time.  The idea that it would give unskilled workers a livable wage was a mantra that Democrats, and their followers on CNN and MSNBC, told the nation.  It appeared to be a noble gesture put forth by Democrats to help Americans down on their luck, but some conservatives argued that the true goal of Democrats was to appeal to one of their chief allies: unions.  Unions, said these conservatives, bring the minimum wage to the negotiating table and argue that union workers should receive a raise that is commiserate with the raise in the minimum wage.  Democrats, CNN, and MSNBC dismiss such arguments and focus on the emotional aspect of the argument: “What kind of heartless, hateful person could be against giving hard working, minimum wage workers a livable wage?”

Conservatives warned that two things would happen as a result of this raise: The prices of all products delivered, say at a Burger King, would go up in direct proportion to the minimum wage.  So, it would give the unskilled worker more dollars in their pocket, but when the price of the products go up by the same degree and the value of the dollar is devalued in direct proportion, unskilled workers would end up with the same quantity and quality of products in their possession when the long-term consequences of the raise are factored in.  The value of the dollar would be a primary casualty.  Another casualty would be the American worker, particularly those just entering the work force.  There would be fewer opportunities among first time workers, they said, for employers would be able to hire fewer workers as a result of this new wage if they hoped to make a profit.

Senator John Sununu said, “When you raise the minimum wage you are pricing some workers out of the market.”{1}

As is usually the case, CNN and MSNBC put forth anecdotal evidence to support the cause.  Most adults, who have been in the workforce for a considerable amount of time, are making more than the minimum.  Most adults, after a time, acquire a skill that puts them above the minimum, or they will receive raises for tenure and loyalty that puts them above the minimum.  If you look hard enough, however, you will be able to find those people that are still working a minimum wage job while trying to support three to four children.  They are out there, but the question is should we be changing national policy based on anecdotal evidence?  How can anyone be so heartless as to be against this, was the general theme of the news pieces.  The pieces described how a couple dollars here and there would mean the world to these poor people that found themselves in such dire straits.  Look at you, in your comfortable five bedroom, two bathroom house, how can you not feel guilty about flirting with contrarian thoughts.  They successfully ginned up enough sympathy that Republicans broke ranks from their leadership and voted with Democrats on this issue.

“The full increase,” according to House Education and Labor Committee Chairman George Miller, D-Calif., “Is enough to pay for 15 months of groceries for a family of three.”{2}

That may be true in the short run, said conservatives, but once these new wages are figured into pricing at these grocery stores, the amount of groceries one is able to purchase will fall back into line with what it was before.  So, to the minimum wage receiving consumer nothing will change in the long run.  The only change that will occur is that the grocer will be able to hire fewer, unskilled laborers.

“According to the National Restaurant Association, the last minimum wage increase cost the restaurant industry more than 146,000 jobs and restaurant owners put off plans to hire an additional 106,000 employees.

“A minimum-wage increase will cost our industry jobs, and the vital discussion of how to minimize this job loss is getting lost in the debate,” said Peter Kilgore, the group’s acting interim president and chief executive officer.{2}

In 2007, the minimum wage went from $5.15 an hour to 7.25 an hour went into effect.  The nation felt more compassionate, until the long-term consequences began to take shape.  The unemployment rate of those 16 to 19 years old went from 14.8 in early 2007 to 27.1 percent in October 2009 shortly after the final stage of the raise took effect. Today, it’s 24.2 percent. {3} The most recent findings on the national teen unemployment rate has been above 20 percent since mid-2008, and it is disproportionately affecting certain minorities. The February unemployment rate for Hispanics age 16 to 19 was 27.5 percent, and for blacks it was more than one-third, at 34.7 percent.{4}

No one knows why teen unemployment is on the rise.  Republican and traditional commentators pin it on President Barack Obama’s policies.  Democrat and liberal commentators stated that it began under the Bush administration.  Neither of them list specifics.  Their arguments are usually more general and partisan, but one look at the proportion of unemployed before and after the final stage of the minimum wage raise was implemented tells the true tale.

{1}http://bringiton22205.tripod.com/id30.html {2}http://www.msnbc.msn.com/id/18847929/ns/business-us_business/t/congress-votes-increase-minimum-wage/ {3}http://www.chicagomag.com/Chicago-Magazine/The-312/July-2011/Teen-Unemployment-Crisis-Victims-of-Minimum-Wage-or-Old-People/ {4}http://www.usnews.com/news/articles/2012/03/15/high-teen-unemployment-could-hurt-future-job-growth


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