New Ad Campaign: ‘Countdown to Job Loss’ Highlights Effects of July 24 Minimum Wage Hike

  • Publication Date: July 2009

  • Topics: Minimum Wage

WASHINGTON, D.C. – The Employment Policies Institute (EPI) draws the attention of policy makers to the impending federal minimum wage increase as they ‘Countdown to Job Loss’ in D.C. newspapers Politico and Roll Call next week. The print and online advertising campaign offers ‘5 Things You Don’t Know About the Minimum Wage’ and asks readers to ‘Find Out Whose Job is at Risk’ by visiting www.minimumwage.com.

The national unemployment rate rose to 9.5 percent in June 2009 from 5.6 percent in June 2008, a 69 percent increase in one year. According to the Bureau of Labor Statistics, thirty-eight states reported job losses today, contributing to a national unemployment rate that’s at a 25-year high. Minority teens and young adults have been hit especially hard. The unemployment rate for black teens is at 38 percent, more than four times the national rate.

Last summer’s 12 percent minimum wage hike contributed to a 5 percent drop in teen employment. Since Congress began implementing the 2007 wage hike, over 480,000 teen jobs have disappeared across the country. Unfortunately, teens still looking for summer jobs this year will find their efforts undercut by a disastrously timed federal minimum wage hike.

“We are asking lawmakers to put the July 24 federal minimum wage increase on hold,” said Kristen Lopez Eastlick, Senior Research Analyst with the Employment Policies Institute. “Wage hikes always cause a spike in the unemployment rate, and with the country in the middle of a recession, businesses are already struggling to make ends meet. The economy will continue to hemorrhage entry level jobs unless legislators stop this summer’s minimum wage hike from happening.”

Economists are nearly unanimous in pointing out that unskilled workers bear the brunt of minimum wage hikes. According to a 2007 survey from the American Economic Association at the University of New Hampshire Survey Center, 73 percent of labor economists believe increases in the minimum wage will lead to employment losses, which will fall disproportionately on the least skilled workers. 68 percent believe employers affected by minimum wage hikes are less likely to hire teen employees.

Research from the University of California, Irvine concluded that for every 10 percent increase in the minimum wage, estimates are that employment falls 8.5 percent for high school dropouts and young black adults and teenagers. Between June 2007 and August 2009, the United States minimum wage will have increased by more than 40 percent.

Census Bureau data shows that only 16.8 percent of low-wage employees are currently living in poor households and only 6.8 percent are heads of poor households. The average family income of a minimum wage earner is $47,023. For reference, the 2009 federal poverty guidelines for a family of 4 in the contiguous 48 states and District of Columbia was $22,050. Consequently, attempting to target poor families by manipulating wages is an inefficient means of addressing the problem while still placing a burden on business in an exceptionally weak economy.

“Decades of economic research clearly demonstrate that minimum wage hikes result in job loss for the most vulnerable members of society while inefficiently targeting poverty,” said Eastlick. “The unintended consequence of the federal minimum wage hike is pricing some employees out of the workforce, as businesses turn to higher skilled workers. Based on the recent unemployment data, it’s teens – minority teens especially – who are getting hit the hardest.”

“A summer job for a teen is much more than a paycheck: It’s a chance to gain important skills and learn the invisible curriculum that comes from being employed. Unfortunately many teens won’t have that opportunity this summer thanks to legislators who elected to embrace populist sound bites instead of sound economics,” Eastlick concluded.

You can view the entire ad at www.minimumwage.com.

The Employment Policies Institute is a nonprofit research organization dedicated to studying public policy issues surrounding entry-level employment. For additional information or to schedule an interview with a spokesperson contact Samantha O’Neil at 202.463.7650 or [email protected]