Teenagers’ Right To Work

Teenagers, if you couldn’t find a job this summer, call your senator or representative, because Congress wants to make it even harder next year. Tell Congress to stop pricing you out of a job.Next July, New York’s minimum wage will rise to $7.25 from its current level of $7.15 to match the new federal rate. This will be the third in a series of increases in the federal minimum wage, following increases to $6.55 last month and $5.85 in July 2007. All this represents a significant increase from the $5.15 rate that had prevailed for a decade.With the increase in teenage unemployment rates, Congress should rethink next year’s minimum wage hike.Last week’s July employment data showed that teenagers are paying the price of Congress’s generosity. The overall unemployment rate rose to 5.7% in July from 5.5% in June, but teen unemployment rate rose faster, to 20.3% from 18.1%.It’s even worse compared to last year. The overall unemployment rate has increased by one full percentage point, to 5.7% from 4.7%, yet teenage unemployment has risen five full percentage points, to 20.3% from 15.3%. This is an unprecedented historical increase for an economy that is still growing. Prior increases of this size have only occurred during recessions, and, press hype to the contrary, America is not in a recession.Teenagers are particularly vulnerable to minimum wage increases due to their relatively low levels of experience and job-learned skills.Congressional representatives, notably Democrats Carol Shea-Porter of New Hampshire and Phil Hare of Illinois, who assert that the minimum wage doesn’t affect employment, as they did in last week’s House Committee on Education and Labor hearing, aren’t thinking about teenagers and low-skill workers. According to Ms. Shea-Porter, those who oppose a higher minimum wage favor “a permanent underclass.”New Hampshire and Illinois have minimum wage laws that exceed the federal one, so their residents aren’t affected by the new law. So do California and Massachusetts, homes to House Speaker Nancy Pelosi, House Education and Labor Committee Chairman George Miller, and Senate Health, Education, Labor and Pensions Chairman Edward Kennedy, who led the charge for the higher federal minimum wage.Yet the workforce in California, Massachusetts, and Illinois is declining, with residents migrating to fast-growing states without state minimum wage laws such as South Carolina and Alabama. Increasing the federal minimum wage is the latest in the blue state vs. red state battles, with the congressional leadership spreading the pain and reducing the growth of states with more sensible policies.Minimum wage workers are overwhelmingly young, part-time, and work in the food service industries. Workers under the age of 25 make up roughly half of the 1.7 million minimum wage workers. Employed teenagers are almost five times more likely to be among the minimum wage earners than workers older than 25.Members of Congress assume that if the minimum wage were raised, all workers would retain their jobs. But, according to my calculations, an increase to $7.25 an hour, plus the mandatory employer’s share of social security, unemployment insurance, and workers’ compensation taxes, brings the hourly employer cost close to $8, even without any benefits.Teenagers already are feeling the unemployment pinch: next year, those whose productivity is worth less than $8.00 an hour to their employer won’t be employed.It sounds compassionate to alleviate poverty by mandating that employers give away their money. But employers won’t necessarily cooperate. Instead, they will only employ workers who can produce $8.00 an hour of goods or services. That will be fewer people, especially teenagers, than they employ today. Employers can change technologies or hire more skilled workers to keep their firms in business.Denying work opportunities to those whose skills and output don’t add up to $8.00 per hour is not compassionate, it’s manifestly unfair. The federal government essentially would be mandating that workers below a given level of skill have no right to work.Much of Europe keeps a quarter of its youth unemployed, not with minimum wages, but with generous benefit packages (also proposed by Congress) that discourage work. The predictable effect is high unemployment rates with a substantial percentage out of work for more than a year, leading to deteriorating skills and a permanent underclass. This is not a good route for America.Most American employers have to pay more than minimum wage just to attract and hold the workers they need. More than 140 million workers now earn above minimum wage, not because of federal or state law, but because that is the only way that firms can attract and keep employees with skills.Rather than increasing the minimum wage in 2009 and taking away teenagers’ right to work, Congress should focus on increasing their skills and growing our economy. Then, next summer, the unemployment rate might go down instead of up.Ms. Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute.

Teenagers’ Right To Work

Teenagers’ Right To Work

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