The war on jobs
Within hours of Thomas Perez's confirmation as Secretary of Labor last week, he announced that his top goal would be job creation. Strangely, he's also planning to push for a minimum wage hike — a strong sign that the new secretary doesn't understand how to achieve his goal.
In reality, a higher minimum wage will have the opposite effect on job creation, disproportionately hurting the teens and young adults who need entry-level jobs to be successful later in life.
Nationally, the unemployment rate for all teens has been above 20 percent every summer since 2009; it's 18.7 percent in Pennsylvania. But for black teens, unemployment has been above 30 percent over the same period. That's four straight summers — soon to be five — of record teen unemployment.
These disheartening numbers have occurred during or since the 40 percent hike in the federal minimum wage — from $5.15 an hour to $7.25 — from 2007 to 2009. The timing is more than just coincidence.
Writing in 2010, economists at Miami and Trinity universities estimated that at least 114,000 young adults lost job opportunities as a direct result of federal wage hikes. Among less-educated young black males, the same team of economists found that the job losses associated with the federal wage hike in some states were actually worse than the consequences of the Great Recession.
One need only look at the businesses where young adults are employed to understand why. Roughly 40 percent of employed teens work in the leisure and hospitality industry (think restaurants, movie theaters and hotels), while another 25 percent work in retail jobs at grocery stores, service stations and the like.
The profit margins of these types of businesses are generally 2 or 3 cents on every sales dollar. Sudden spikes in labor costs — like a 40-percent jump in the minimum wage in two years — leave these businesses with two options: raise prices or reduce costs.
When raising prices isn't an option — good luck with that in a rough economy, Mr. Perez — the only other option is to provide the same product with less service. This might mean having waiters bus their own tables or opting for a self-service alternative to young grocery baggers. The data bear this trend out: Teens' share of employment in the leisure and hospitality industry dropped by more than 20 percent from 2007 to 2011. In retail, it's fallen by nearly 30 percent over that period.
These losses can be devastating for a teenager's future. Teens start climbing the employment ladder through their first summer jobs. Further minimum wage hikes only postpone their ability to get these jobs. Research published in the Journal of Human Resources found that even a six-month spell of unemployment can have lasting effects for a young adult, the equivalent of forgoing a quarter-year of schooling. On the flip side, part-time work in high school has been linked to better outcomes in the labor market following graduation.
Most Pittsburgh parents want nothing more than a good future for their kids, and attaining that future means part-time work experience now is crucial. Unfortunately, the minimum wage hike that Secretary Perez desperately wants will only put those opportunities further out of reach.
Michael Saltsman is the research director at the Employment Policies Institute.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Moore hopes to see red (zone) in Steelers debut
- Martin’s homer rescues Pirates in 4-2 victory over Brewers
- Steelers notebook: Ravens DL fined for hit on Roethlisberger
- Harhai campaign emails from 2007 under review, Westmoreland County DA says
- Inside the glass: Johnston’s opening practice grueling
- Sears to close store at Century III Mall in West Mifflin
- Family becomes ‘forever’
- City’s plan for Strip flummoxes vendors
- Beaver footprints found along Allegheny River bank, not gator
- Monument to Steel Valley Korean War hero relocated
- Armed officers comb woods for state trooper ambush suspect