Wednesday, November 18, 2009

The Minimum Wage and Teenage Jobs

Copyright, The New York Times Company

Teenage employment has fallen sharply since July. The most recent minimum wage hike may be an important factor.

Many economists expect the minimum wage, if it has any effect, to (among other things) raise employer costs and therefore reduce employment, especially among those who are likely to work in minimum-wage jobs, like teenagers and restaurant workers.

In July 2007, the federal minimum hourly wage was increased for the first time in 10 years, from $5.15 to $5.85. It was increased again a year later to $6.55, and increased yet again this July to $7.25.

Because the minimum-wage law still permits employers to pay more than the minimum, economists agree that a low minimum wage has smaller effects than a high minimum wage. The inflation-adjusted federal minimum wage had gotten to its lowest in decades by early 2007, so the July 2007 increase should have had the smallest effects of the three.

The July 2009 increase should have the largest effect, because the combination of the two previous hikes and some deflation ($6.55 bought more in June 2009 than it did the previous summer) had already gotten the inflation-adjusted minimum wage relatively high.

The chart below shows a seasonally adjusted index of the percentage of 16- to 19-year-olds with jobs. That group is especially likely to be affected by minimum-wage legislation. Of course, this is a recession period in which employment has been falling for essentially all groups, so for reference the teenage percentage has been converted to an index by dividing by the percentage for all people, with July 2009 set as the benchmark (i.e., the teenage employment rate that month has been set to 100).

The chart shows teenage employment index values greater than 100 early in the recession, which means that employment rates fell in greater percentages for teenagers even before the July 2009 increase, as it did in prior recessions (even recessions without minimum-wage increases). With the index falling somewhat less than 1 percent a month before July 2009, we would expect the index to be somewhat below 100 after July 2009 even if the minimum wage hike had no effect.



But the teenage employment after July 2009 seems sharply lower. By October 2009, the index had fallen to 92.1 — a drop of about 8 percent in just three months — whereas the prior 8 percent drop had taken more than a year. This suggests that the 2009 minimum-wage increase did significantly reduce teenage employment.

Before this recession, economists hotly debated the employment effects of the minimum wage, with special attention to a 1992 minimum-wage increase in New Jersey (this book got it started, and this book is a good source for the opposing view).

More work is needed to determine whether the 2009 experience is fundamentally different from the earlier episodes that have been studied, but next week I will describe a new study that “weighs in” on those episodes.

41 comments:

Milton Recht said...

There is also some research showing that a rise in minimum wage increases high school dropout rates, but I believe the issue is still unsettled and debated.

vishnuprasath said...

One of the best ways is to upload your profile in this jobs site. so that you can get your dream job without much effort. This job site includes the fresher jobs in India and vacancies in Indian cities like Mumbai, Chennai, Bangalore etc.

University said...

This is a great reading. Thanks for the post. we have audience that like to read this kind of posts. we will add this to our site. I have a suggestion for a great site that helps to provide all the information about college and university for the higher academic study for the better career so that the aspirants will able to get proper information regarding their career and studies.Thanking you. college jobs

marina said...

Hay did yall know that ICICI Fellows is looking for the top youth talent in the country. They wi9ll also give a fixed monthly stipend of Rs. 12,000 and travel reimbursement by Tier III AC in train and a medical insurance of Rs 1 Lakh per year. To know more about it check out their site www.icicifellows.org?um=1

Research Writer said...

I appreciate the work of all people who share information with others.

College Research Papers

marion said...

I recently came across your blog and have been reading along. I thought I would leave my first comment. I don't know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Lucy
http://dataentryjob-s.com

Alexa Lie said...

Is there any update for this news in early 2010? As we all know that during the summer there are many employers hiring teenagers (especially the amusement park, resort, etc). I need some facts and figures about jobs for 16 year olds. Anyone knows where can I find data about the minimum wages for employment in 2010? Thanks a bunch.

Ashok Kumar said...

Unemployment is the worst case, but these can be minimized through education to everyone. In India, Government has made compulsory education to the all the children's and i hope in future there are more jobs in mumbai and everyone gets benefited.

Sara Zmith said...

Real fact of life. Nice thing to share. It is really worth full for new comers. I know what a job worth me before starting business of incontinence products and bard catheters

Dan said...

There are many teenage jobs available. I have helped thousands of students and teens with jobs since the start of ehotjobs.com. Good Luck!

Tarun Kumar said...

you are right... you can also find latest Fresher jobs alerts online.

Tarun Kumar said...

you are right... you can also find latest Fresher jobs alerts online.

Tarun Kumar said...

you are right... you can also find latest Fresher jobs alerts online.

legend said...

I’m impressed, I must say. Really rarely do I encounter a blog that’s both educative and entertaining, and let me tell you, you have hit the nail on the head. Your idea is outstanding; the issue is something that not enough people are speaking intelligently about. I am very happy that I stumbled across this in my search for something relating to this.

how to write a resume

muzammal khan said...

and property taxes, with only the residual remaining for the owners of components.bubblegum casting

kavin paker said...

new studies show that the amount of water in the molten rocks that our proto-earth was comprised of could have been enough to bubblegum casting

salman khan said...

Often it is the surprising lack of way of life of someone near that provides this home; and then the frequency of hospital visits and memorials progressively starts to select up amount, like a drumbeat in the woodlands. old school new body f4x reviews

Yasir Khalid said...

Due in part to improved requirement for ethanol and sugarcane shortages, Brazil's govt lately declared in its yearly farming plan for 2012-2013 that lovely sorghum would be regarded a ideal plants. Saran Wrap Weight Loss

salman khan said...

The Buddhist way to all of this is quite genuine, really. Buddhism understands of that from the perspective of ego the opportunities of lack of way of life is generally difficult. The ego cannot think about being deceased. It has no way of it. But there is another aspect of interest that not only can understand it, but already knows about it. There is a saying in the Zen customized, “Birth and lack of way of life are the outstanding problem. Quick Move Now

kavin paker said...

I really like the dear information you offer in your articles. I'm able to bookmark your site and show the kids check out up here generally. SEO Conference

kavin paker said...

How to make animal liquid manure and comfrey (and other herbs or even weed) tea. You won't get your dilution ratio's wrong with this poster seo miami

kavin paker said...

I have bookmarked it and I am looking forward to reading new articles. Keep up the good work! high pr backlinks

kavin paker said...

Would it be very wrong if I made this cake and eat it all by myself? free skype vouchers

kavin paker said...

I am hoping the same best work from you in the future as well. I wanted to thank you for this websites! Thanks for sharing. Great websites! new asian games

kavin paker said...

I just stumbled upon your blog and wanted to say that I’ve really enjoyed reading your blog posts stone things

kavin paker said...

I wanted to thank you for this websites! Thanks for sharing. Great websites! cheap backlinks

kavin paker said...

It help me very much to solve some problems. Its opportunity are so fantastic and working style so speedy. CPA miami

kavin paker said...

I must say that a succesful family owned business in this day and age is a very refreshing sight ! As well as this is a very refreshing site. vehicle history report

kavin paker said...

What a really awesome post this is. Truly, one of the best posts I've ever witnessed to see in my whole life. Wow, just keep it up. ads in free

kavin paker said...

Yeah you are right that storage services are beat if they give best deals to their clients. I also want to know how I can search out best and trustworthy LOW obl backlinks

kavin paker said...

They should make themselves as animals. It’s one of the first activities in breaking out.boca movers

kavin paker said...

Thank you for sharing This knowledge.Excellently written article, if only all bloggers offered the same level of content as you clash of clan hack

kavin paker said...

They picked blueberries for smoothies, popping more in their mouths than into their bowls. move your house easily

kavin paker said...

As you are providing a very nice information to everyone, this is a great place with tons of information all together. remy hair

kavin paker said...

Through the information you include but today’s blog would be the most appreciable. move your house easily

kavin paker said...

I don’t know what has happened to the custom of delivering consistent good articles. Boca House movers

kavin paker said...

I really like the dear information you offer in your articles. I'm able to bookmark your site and show the kids check out up here generally.google penalty remover service

kavin paker said...

To test squeeze a small amount together: If it is crumbly add more ice water tablespoon at a time. Meet seo expert in uk

kavin paker said...

I love blueberry pie in the summer, and the addition of peaches sounds wonderful! hack candy crush easily

kavin paker said...

I have both in the kitchen right now, and I think your pictures just convinced me as to what I'm making next. flowers

kavin paker said...

Steady stream through feed tube. Pulse until dough holds together without being wet or sticky. internet marketing conference