Teen unemployment on the rise, blame the minimum wage
While the global economic downturn continues to take its toll, a new United Nations agency report contends that young workers may have been hit the hardest, pointing to a dramatic rise in the number of unemployed youth around the world. While analysts list a host of reasons why young people can’t find jobs, there is one culprit, at least in the United States, that some economists say continues to rear its head: The minimum wage.
Laws that mandate minimum wages for employees block the lowest skilled workers out of the job market — a demographic largely made up by young people — and contribute to widespread unemployment among the group, economists contend. In order for an employer to justify making a new hire, they must have knowledge that the new employee will contribute more per hour than what they are being paid. So if the minimum wage is set at $7.25 (the current federal standard), unskilled workers who cannot produce that level of income for the company are more likely to be out of a job completely.
“When the government forces employers to pay more, it prices some workers out of jobs,” said Donald Boudreaux, an economist at George Mason University in Virginia. “When you deny teenagers the opportunity to work by pricing them out of the labor market with ridiculous legislation, you create a long term problem because you delay entry into the workforce.”
Earlier this year, I posted about a study from Ball State University showing that minimum wage cost the country 550,000 jobs.
Friends of mine that own resturants or small businesses that aren’t necessarily for skilled labor have told me they’ve either had to layoff workers or cut back hours to meet labor costs. That’s something I think most policymakers don’t know…business owners have a set percentage of their budget for labor, the same for costs of materials or any other expense.
As I’ve noted before, raising the minimum wage, especially during a recession and already high unemployment, only leads to more unemployment.