New Study Warns of Employment Crisis for Minority Young Adults

Research Finds Low Employment Rates, Unequal Harm for Minorities as a Consequence of Wage Mandates
  • Publication Date: May 2011

  • Topics: Minimum Wage

Today, with employment levels for young adults at historically low levels, the Employment Policies Institute (EPI) released a new study by economists William E. Even of Miami University and David A. Macpherson of Trinity University that quantifies the unequal harm to minority young adults from minimum wage mandates.

Drs. Even and Macpherson examine Census Bureau data from 1994 to 2010, and focus on young males without a high school diploma. They find that each 10 percent increase in the federal or state minimum wage decreases employment by 2.5 percent for young white males, 1.2 percent for young Hispanic males, and 6.5 percent for young black males.

The authors put these percentages in stark context: In the 21 states fully impacted by the 40 percent increase in the federal minimum wage between 2007 and 2009, the consequences of the minimum wage (18,500 jobs lost) for black young adults were actually worse than the consequences of the “Great Recession” (13,200 jobs lost).

A chart with state-specific employment rates for white, black, and Hispanic males is available below. A policy brief summarizing all of the study’s key findings is available here: http://epionline.org/studies/EPI_UnequalHarm_RacialDisparities_web.pdf

“This new research is a devastating indictment of feel-good public policy,” said Michael Saltsman, research fellow at EPI. “Instead of helping our nation’s most vulnerable workers, increases in the minimum wage have put up barriers to employment—with the greatest amount of harm falling on minority young adults.”

“Increases in the minimum wage have raised the cost to hire and train less-experienced young adults, and employers been forced to cut back on jobs or encourage customers to do the job themselves,” Saltsman continued. “As a consequence, many jobs traditionally filled by less experienced applicants—such as bagging groceries—are no longer available.”

Saltsman concluded: “If policymakers at the state and federal level want to avoid a full-blown employment crisis for young adults this summer, they should consider policies that create jobs—not destroy them.”

Five Most Populous States
2010 Percent of Employed 16-24 Year-Olds

1. California

Black – 9.2%

Hispanic – 26.9%

White – 14.8%

2. Texas

Black – 22.7%

Hispanic – 33.8%

White – 24.3%

3. New York

Black – 15.3%

Hispanic – 28.5%

White – 21.3%

4. Florida

Black – 10.7%

Hispanic – 31.6%

White – 21.4%

5. Illinois

Black – 12.1%

Hispanic – 22.8%

White – 22.5%

Note: Mean employment-to-population ratio for young adults without a high school diploma.