How the Minimum-Wage Grinch Stole Christmas Jobs

  • Author: Michael Saltsman

  • Publication Date: December 2010

  • Newspaper: Shreveport Times

  • Topics: Minimum Wage, Teen Unemployment

You might have children who get straight As and do their chores. But they were more likely to get a lump of coal than find a job this holiday season.

Winter break always has been a great opportunity for teens to make a few extra bucks during their time off from school. But job-searching teens who had a blue Christmas in 2008 and 2009 have had little reason for cheer in 2010. A recent survey found half of all hiring managers planned no new hires this holiday season, lacking the budget or the business to support them.

The sluggish economy certainly hasn’t helped; teen employment has been trending downward since the beginning of 2007, a consequence of traditional teen employers (like restaurants, retailers and grocers) reacting to the recession.

But a bad situation was made worse by Congress’ 40 percent increase in the federal minimum wage between July 2007 and July 2009. A recent study by economists David Macpherson and William Even found the “raise” priced more than 114,000 teens out of a job.

Employers who use minimum-wage labor tend to have razor-thin profit margins. Macy’s, for instance, sees less than three cents in net profit for every dollar of revenue.

Raising labor costs forces these businesses to raise prices or cut costs. Holiday bargain shoppers are unwilling to shoulder the former, so employers must cut back on customer service and the number of people they employ.

When you go Christmas shopping this year, notice how much you do yourself. You’ll use an electronic price checker instead of asking an employee to do it for you, and you’ll probably find fewer sales staffers on the floor. You might even use the self checkout lane to pay.

Those missing entry-level jobs are crucial for teens and society as a whole. There are certain skills in life best learned in an entry-level job. Teens learn the importance of showing up on time, taking responsibility for different tasks and helping customers. These lessons require real-world experience and can’t be taught in a classroom.

The cost of denying teens a holiday job could be much greater than missing out on the new golf putter you wanted as a gift. Research from Northeastern University shows unemployed teens — especially those from economically disadvantaged backgrounds — are more likely to drop out of school or get caught up in the criminal justice system.

None of this has stopped well-intentioned lawmakers at the state and federal levels from playing Grinch with teen job prospects. As children come home for the holidays, remember they need a shot at entry-level employment to grow into responsible adults — and a future increase in the minimum wage could keep them from that chance.

Michael Saltsman is a research fellow at the Employment Policies Institute in Washington, D.C.