Holiday Season Hits Jobless Mich. Teens Hard

  • Author: Kristen Lopez Eastlick

  • Publication Date: December 2009

  • Newspaper: Detroit News

  • Topics: Minimum Wage, Teen Unemployment

Though the holiday season is traditionally a time of celebration, this year the teen unemployment crisis threatens to be a lump of coal in the stocking of many young Americans.

But it’s not job seekers who have been naughty; it’s their representatives in Congress. In the midst of economic turmoil and a deep recession, Congress ignored the pleas of economists and allowed the third of three planned hikes to the federal minimum wage to go into effect in July.

Teen unemployment has increased 12 percent since then, double the increase in the national unemployment rate. And almost half of African-American teens seeking a job have been unable to find one.

Unfortunately, teens in Michigan haven’t been exempt from these painful unemployment trends either. Teenage unemployment has averaged 26.59 percent over the past year in the Great Lakes State, nearly twice the state-wide unemployment average.

Now, with retailers hiring far fewer seasonal workers than they typically would during better economic times, it’s promising to be a blue Christmas for many teenage Americans.

But it didn’t have to be this way.

In early 2007, Congress believed the emotional argument that poor families would benefit from a 40 percent increase in the federal minimum wage. Because the economy seemed stable, politicians rejected the decades of economic research that showed minimum wage hikes cause declines in the employment of vulnerable groups, particularly high school drop outs, and minority teens.

It turns out that decision could not have come at a worse time. By the time the second 70-cent wage hike was implemented, 370,000 more teens counted themselves among the unemployed. Last Christmas, the teen unemployment rate reached 20.8 percent nationwide, and the retail community posted the lowest seasonal job gain in twenty years.

The teen job loss was so severe that David Neumark, a leading economist who specializes in wage policy, called on Congress to delay the last 70-cent wage hike this summer.

The economic force at work here is called the law of unintended consequences. Instead of helping poor working Americans, Congress’s minimum wage hike made it more difficult for employers to hire and train low-skilled workers who rely on entry-level jobs to get started in the workforce. In a difficult economy, when price increases are tough to pass on to consumers, employers often absorb new labor costs by cutting positions and staff hours.

This Christmas, teens are at the mercy of a perfect winter storm. They face a holiday shopping season where employers don’t have much ability to offer new jobs due to tighter budgets. For the jobs that are available, teens face competition from the skilled workers who make up the more than 15 million unemployed across the US. And since the new minimum wage means employers will hire the most skilled applicants first, teens find they are left out in the cold.

Sadly, the longer our teens are absent from the labor force, the worse off they will be. Studies show teenagers with long periods of unemployment wind up with lower future earnings, and are more likely to become entangled in the criminal justice system.

To make sure teens don’t have a similarly depressing holiday season next year, Congress should make a New Year’s resolution not to add additional financial burdens that would prevent employers from hiring teen workers. That might not keep coal out of Congress’ stocking, but it will help get our country’s youth back to work.

Kristen Lopez Eastlick is the senior economic analyst at the Employment Policies Institute, a nonprofit research group.