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Photo: Robin Rayne Nelson/ZUMA Press/Newscom
The Daily Signal
Raising the
Minimum Wage Hurts Teen, Young Adult Employment Rates
Kyle Perisic
February 15, 2018
A new study shows that raising the minimum wage hurts teen employment.
Since 1994, the teen labor force participation rate has been cut in
half. (Photo: Robin Rayne Nelson/ZUMA Press/Newscom)
A new study shows that raising the minimum wage has played a role in
the decline of teen employment and the labor force participation rate,
which has fallen by about half since 1994.
The study, conducted by the Mercatus Center at George Mason University,
examined three possible factors to explain why teen employment has
declined since 2000: higher minimum wages, more labor competition from
immigrants, and rising returns to schooling.
Mercatus found that a higher minimum wage was the “predominant” factor
in lower teen employment.
“The percentage of teens not in the labor force who reported wanting a
job fell by almost half between 1994 and 2009, from 24 percent to 13.2
percent,” according to the study, “Declining Teen Employment: Minimum
Wages, Other Explanations, and Implications for Human Capital
Investment,” published Feb. 7.
The Mercatus Center describes itself as “the world’s premier university
source for market-oriented ideas—bridging the gap between academic
ideas and real-world problems.”
The study found that teen labor participation rates declined much more
than those of adults, which dropped about 3 percentage points,
according to the study. Additionally, the study found that the labor
participation rate of young adults “does not coincide with swings in
economic activity.”
During the period Mercatus studied, many states increased their minimum
wage, and some states raised their minimum wage “quite substantially,”
according to the study, and it found that a “rising minimum wage could
have priced some teenagers out of the labor market.”
A higher minimum wage is associated with a lower share of 16- and
17-year-olds both in school and with jobs, and with a higher share in
school and not employed, the study showed.
There is not a positive relationship between higher minimum wages for
teens and higher future earnings, the study found. Additionally, teens
exposed to higher minimum wages have acquired fewer skills in adulthood
since the year 2000.
The “adverse” effects of minimum wages on employment opportunities, as
well as from immigration “to a lesser extent,” did not result in
greater human capital investment that would raise future earnings for
young workers.
Read this and other stories at The Daily Signal
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