Say Anything Blog

The way the Bismarck Tribune explains this, teens and young adults are getting crowded out of entry-level jobs by older Americans who are struggling thanks to the economic downturn.  While I don’t doubt that’s part of the problem right now, I think it’s foolish to ignore the role of minimum wage hikes over the last several years.

Blotter’s job hunt began shortly after Christmas, he said, and ended two weeks ago when a movie theater hired him. He applied at Burger King, KFC, McDonald’s and three mall vendors during his search and followed up with each.

“Icalled every one,” he said, “They said, ‘No, you’re not what we’re looking for.’”

National and state numbers hint at the market’s possible fallout for student workers.

National teenage unemployment jumped from 15.8 percent in March 2008 to 21.5 percent this March, according to USAToday.

Job Service North Dakota’s data show a much smaller increase here.

Last March 7.3 percent of all unemployment insurance claimants in the state were younger than 24. In March 2009, that number had risen to about 8 percent.

And keep in mind that those unemployment numbers may be distorted as the youngest workers in our economy don’t qualify for unemployment benefits:

“Keep in mind, many of the persons in the youngest age categories of the labor force are not eligible for unemployment benefits,” Lelan Bosch, communications and marketing specialist for Job Service, wrote in an e-mail.

“They have to meet certain earnings and employment duration criteria to become eligible.”

The economy downturn is driving a lot of this, but what is undoubtedly exacerbating the situation is the drastic increase in the minimum wage over the last several years.  By this July, the minimum wage for most areas of the country will have gone up roughly two dollars in about two years.  For companies that typically provide entry-level work, that’s a massive inflation in the price of labor.  And most companies are no doubt dealing with it by eliminating part-time or entry level positions.  Or they’re hiring older, more experienced workers who are worth the higher wages for those positions.

We’re often told that the minimum wage is good for low-wage workers because it gives them a pay raise.  The truth is that the minimum wage acts like a tax on low wage labor.  By inflating the price of that labor, without doing anything to increase the labor’s value, it simply represents more overhead for businesses.  And overhead is dealt with either cost cutting (lay offs, etc.) or increased prices.

In the midst of an economic downturn, neither is helping.