19 March 2010

Teen Unemployment Unrelated To Minimum Wage

There is no credible empirical link between teen unemployment rates and the minimum wage in the United States.

Cyclic factors (recessions and booms) are overwhelmingly more important to the point that any link between minimum wages and teen unemployment is impossible to discern. Also, 90% of teens who work make more than the minimum wage, and thus are only indirectly impacted by changes in the minimum wage, if at all.

The empirical evidence is particularly notable because one of the standard conservative responses to the argument that unemployment generally doesn't show any empirical link to minimum wage levels is that teen workers, because they are marginal and lower paid than other workers, do experience major increases in unemployment from minimum wage increases. This argument isn't empircally supported.

1 comment:

Michael Malak said...

BLS' continual redefinition of "unemployment" has hit teens harder than even the general population. According to BLS:

Persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Actively looking for work may consist of any of the following activities:

* Contacting:
o An employer directly or having a job interview
o A public or private employment agency
o Friends or relatives
o A school or university employment center
* Sending out resumes or filling out applications
* Placing or answering advertisements
* Checking union or professional registers
* Some other means of active job search

What teen, when seeing no friends getting jobs, is going to be sending out resumes "in the past four weeks"?