July Unemployment Numbers Reveal Minimum Wage Impact

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  • Publication Date: August 2009

  • Topics: Minimum Wage

Washington, DC – Following today’s announcement that job losses slowed last month, the Employment Policies Institute’s (EPI), www.epionline.org, Senior Research Analyst Kristen Lopez Eastlick released the following statement:

“Teens are undoubtedly in the midst of an unemployment crisis. Not only is the teen participation rate – those teens both working and actively looking for employment – down almost 7 percent from July 2008, the teen employment-to-population ratio – those employed compared to the teen population – has fallen over 10.5 percent.

While decreases are to be expected in a recession, the effects have been much higher for teens looking to gain essential employment skills from summer jobs. The national participation rate and employment-to-population ratio have declined less than 1 percent and 4.5 percent, respectively.

One reason for the erosion in the teen job market has been multiple increases in the mandated minimum wage, including a 70 cent increase on July 24. Increasing the price on entry-level employment means that these first-time workers will miss out on learning the “invisible curriculum” that helps them with later employment.

Particularly troubling, African American teen unemployment and employment-to-population rates are dropping even faster. Compared to July 2008, the participation rate of black teens fell 7.7 percent, while their employment-to-population ratio dropped close to 13 percent. Since July 1999, the black teen employment-to-population ratio is down a disturbing 36 percent. This echoes the findings of decades of research that shows minimum wage hikes disproportionately affect young minority groups.
Research out of Johns Hopkins University showed that black and Hispanic teens in central urban areas are more likely to become idle – neither employed nor enrolled in school – as a result of a minimum wage hike.
A 1995 Michigan State University study showed a higher minimum wage was found to increase the number of idle teens by as much as 20 percent.
Politicians continue to use minimum wage hikes as a “feel good policy,” without regard for current economic conditions or the decades of research showing their negative effects on job growth. This summer teens were hit especially hard by the wage increase and the full effects will be felt for years to come.”
The Employment Policies Institute, www.epionline.org, is a non-profit research organization dedicated to studying public policy issues surrounding employment growth. In particular, EPI focuses on issues that affect entry-level employment.

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