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Economy

The Beacon Ignores the Elephant in the Room Regarding Teenage Employment

By David Stokes on Jun 10, 2010

I was amazed to read an entire article about unemployment among teenagers and college students that did not once mention the minimum wage, even only in passing. If businesses were not forced to pay the current $7.25 minimum wage, there would be more jobs available, and more young people would be able to find summer work.

The Show-Me Institute has released two major studies on this subject. From David Neumark’s conclusion:

Where does all of this evidence leave us regarding the wisdom of raising the minimum wage? The evidence suggests that minimum wage increases do more harm than good. Minimum wages reduce employment of young and less-skilled workers. Although in principle the gains to those who keep their jobs could offset the losses to those who bear the disemployment effects, minimum wages deliver no net benefits to poor or low-income families, and if anything make them worse off, increasing poverty. Finally, minimum wages may also have longer-run adverse effects, lowering the acquisition of skills through various channels and therefore lowering wages and earnings even beyond the age at which individuals are most directly affected by a higher minimum.

Without the minimum wage, there would be more total jobs and more total hours available. Kenneth Troske and Aaron Yelowitz describe how this would help poor families:

The key difference between poor workers and the typical adult worker is in hours of work—workers are poor because, on average, they work 1,120 hours per year compared with 1,853 hours per year for all adult workers. As we will show in Table 4, the poverty rate could be dramatically lowered if poor workers worked full-time throughout the year.

The only good thing I can say about Missouri’s current minimum wage is that it is the same as the national wage (it can be higher than the national wage). But we would all benefit from more jobs, and reducing or eliminating the minimum wage is one certain way to accomplish that.

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About the author

David Stokes

Director of Municipal Policy

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