A summer bummer for young job-seekers
Coming minimum wage hikes make summer employment scarce
On July 1, 17 states and localities will make a difficult youth summer job market even worse by raising their starter wages. These raises follow the 42 separate wage hikes that took place on New Year’s Day.
For those skeptical that incremental minimum wage increases reduce job opportunities, a new University of Washington study out this week is instructive. The paper, authored by a nonpartisan group of leading labor economists, concludes Seattle’s incoming $15 minimum wage has caused employers to cut payrolls, put off new hiring, reduce hours and let their employees go. It has also resulted in a fewer number of starter jobs available. Co-author Joseph Vigdor said the minimum wage was “removing the bottom rung of the career ladder.”
These lost job opportunities couldn’t come at a worse time for young people looking to pick up some summer work experience. Fewer than one in three youths across the country currently has a job, well below the historical norm and one of the few labor market indicators that hasn’t shown much of a recovery since the Great Recession.
Last year, the Congressional Budget Office released a report showing that one in six young men aged 18 to 34 was either jobless or incarcerated — up from one in 10 in 1980. The report identified the swath of starter wage increases at the state and local level as one reason for the declining employment prospects.
These statistics are brought to life in the numerous examples of low-margin businesses that have had to lay off employees or close altogether because of starter wage increases. In Flagstaff, Ariz., where the minimum wage will hit $10.50 this weekend, Satchmo’s BBQ and Flagstaff Nut House have laid off employees. And Buster’s Restaurant and Bar, Country Host restaurant and Cultured Cafe have all closed entirely because of minimum wage costs.
In Washington, D.C., the rising minimum wage, which hits $12.50 this weekend, chased off two planned Wal-Mart Supercenters to be located in parts of the city desperate for economic development and job opportunities.
In San Francisco’s Bay Area, where several cities are raising their starter wages on Saturday, there has been what one local publication calls a “death march” of restaurant closures. Business operators cannot absorb 40 to 50 percent increases in their labor costs without dramatic consequences. (Specific stories can be found at Facesof15.com.)
These are businesses that once hired a mostly young work force — often staffing up for the summer. And when youths can’t get summer work experience, they lose out on more than just a paycheck that can go toward movies and shopping. They lose out on learning the soft skills such as punctuality, customer service and teamwork that help them throughout their careers.
Academic research shows that these soft skills picked up at first jobs help employees earn significantly more throughout their careers than their counterparts without such experience. As Federal Reserve Chairwoman Janet Yellen recently pointed out in a speech in Washington, D.C., those with early work experience also fare better during economic downturns.
Sadly, the lack of summer youth employment opportunities — exacerbated by minimum wage increases — hits poor communities the hardest. Many cities in the country already have youth unemployment rates above 30 percent. But in some zip codes — including the South Side of Chicago or in D.C. east of the Anacostia River — the youth unemployment rate exceeds 50 percent. Two Brooklyn teenagers recently penned an op-ed in the New York Post explaining how the city’s $15 minimum wage has only made their summer job search more difficult.
However, there are some encouraging signs. In Cook County, where the minimum wage increases by more than 20 percent on Saturday on its way to $13, over 50 villages have opted out — citing the negative impact on local businesses and starter employment prospects. Given that public policy usually changes through the copycat phenomenon over independent judgment, it’s an encouraging sign that dozens of local leaders have stood up to liberals and their threats to the entry-level job market.
These opt-outs, along with other signs, like Baltimore’s Democratic mayor vetoing $15 legislation, suggest the Fight for $15’s momentum is being hijacked by stark economic realities. That’s a small silver lining to the dark clouds over tens of thousands of young people looking to get hired this summer.