Article — Youth unemployment hits 25.9% in U.S. in September, Wall Street Journal

“The September teen unemployment rate hit 25.9%” — There always needs to be bottom-rung entry-level jobs (and to be fair, people who aren’t too proud to do those jobs, a concept some teens and 20-somethings don’t always get). I’m not a fan of the push for 100% college-attendance rates for teens, since college graduates now average $20k+ of debt upon graduation and that also assumes everyone knows what they want to spend 4+ years studying when they’re 18. But I think it’s also stupid that there’s a lack of jobs out there for someone just entering the workforce who doesn’t have a college degree. A nasty problem all around.

“The Young and the Jobless”, Wall Street Journal editorial, October 3, 2009

The article itself places more emphasis on the effects of minimum wage on youth unemployment. And it’s quite eye-opening:

Yesterday’s September labor market report was lousy by any measure, with 263,000 lost jobs and the jobless rate climbing to 9.8%. But for one group of Americans it was especially awful: the least skilled, especially young workers. Washington will deny the reality, and the media won’t make the connection, but one reason for these job losses is the rising minimum wage.

Earlier this year, economist David Neumark of the University of California, Irvine, wrote on these pages that the 70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers.

The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July.

The biggest explanation is of course the bad economy. But it’s precisely when the economy is down and businesses are slashing costs that raising the minimum wage is so destructive to job creation. Congress began raising the minimum wage from $5.15 an hour in July 2007, and there are now 691,000 fewer teens working.

. . .

Two years ago Mr. Neumark and William Wascher, a Federal Reserve economist, reviewed more than 100 academic studies on the impact of the minimum wage. They found “overwhelming” evidence that the least skilled and the young suffer a loss of employment when the minimum wage is increased.

Every time the minimum wage is raised, there’s a debate in the press and among the chattering classes and pundits about whether it’s a good or bad thing. Those who want to raise the minimum wage cite how difficult it is to live on whatever the current minimum wage is, and how people who work those jobs deserve better wages.

Yet, as one of my college economics professors pointed out, very few people stay at an one wage level for a long time. At any given time, there will be a certain number of people making minimum wage. And if you suddenly have a lot of people drop from above-minimum-wage to right-at-minimum-wage, that would be a cause for concern. But if you follow each person who is making minimum wage, you’ll find that a lot of them don’t make minimum wage their whole lives. Or as the article put it:

“According to new numbers from the Labor Department, in 2008 only 1.1% of Americans who work 40 hours a week or more even earned the minimum wage. In other words, 98.9% of 40-hour-a-week workers earn more than the minimum. The data also show that teenagers are five times more likely to earn the minimum wage than adults. Minimum wage jobs are nearly all first-time or part-time jobs, and an estimated two of every three minimum wage workers get a pay raise within a year on the job.”

And just to make everyone mad at me, I have to wonder about the following question: what percentage of these unemployed teens are sitting on their parents couch all day, whining about how they’d work if there was a job out there that was sufficiently “interesting” or “challenging”?

I know at least three teenagers (well, two teenagers and one former teenager who turned 20 just four months ago) who are hard workers and who are actively looking for work; while the work they are finding is spotty, they are looking. And I’ve worked with all three of them on various projects and can vouch that all three of them are hard workers.

But I also know people in their 30s and 40s who have said a lot of teens and 20-somethings have a very poor work ethic and general bad attitude about working and the obligations of work.

In any case,

“Study after study reveals that there are long-term career benefits to working as a teenager and that these benefits go well beyond the pay that these youths receive. A study by researchers at Stanford found that those who do not work as teenagers have lower long-term wages and employability even after 10 years.”

So those who are looking hard to find jobs now will find it pays off over time.

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