“The minimum wage law is most properly described as a law saying that employers must discriminate against workers who have low skills,” said Nobel Prize-winning economist Milton Friedman. He was right.
The Employment Policies Institute has released a new report detailing teen unemployment in the various states for April of 2012. Based on that data, I created the spreadsheet below listing the states from highest teen unemployment to lowest and indicated which states have higher an elevated minimum wage (red for states above the federal minimum, blue for states at or below).
What the spreadsheet shows is a strong correlation between higher levels of teen unemployment and a higher minimum wage. Of the top 5 states in terms of teen unemployment, four have minimum wages higher than the federal standard. Of the bottom five states for teen unemployment, just one has a minimum wage higher than the federal standard.
Going further, of the 20 states with the lowest teen unemployment just 4 have a minimum wage above the federal level. Of the top 20 states for teen unemployment, nine have a minimum wage above the federal minimum.
Obviously, there are a lot of economic factors that go into unemployment numbers, but the strong relationship between a higher minimum wage and elevated unemployment rates among young and low-skill workers cannot be denied.
Far from helping entry-level workers, the minimum wage hurts them by acting as a defacto tax on low-wage workers. And anything you tax, you get less of.
Better more jobs at a lower wage than fewer jobs at a higher wage.