New EPI Analysis Shows Teen Unemployment Rate Averages 31.2 Percent in Alabama

New Study Shows Minimum Wage Hikes Responsible for 7.2 Percent Drop in Employed Alabama Teens
  • Publication Date: August 2010

  • Topics: Minimum Wage, Teen Unemployment

WASHINGTON, DC – A new EPI analysis of Bureau of Labor Statistics (BLS) data estimates that the average unemployment rate for 16 to 19 year olds in Alabama was 31.2 percent as of June 2010. New research points to the consequences of recent increases in the federal minimum wage.

“This summer, more than one in four Alabama teens is looking for work without success,” said Michael Saltsman, research fellow at the Employment Policies Institute. “The tough job search isn’t just a product of the recession; minimum wage mandates are keeping teens out of work.”

Economists confirm the harm caused by minimum wage hikes. New research from Miami University’s William Even and Trinity University’s David Macpherson quantified the teen employment loss in Alabama as a result of the 40 percent increase in the federal minimum wage that took place between July 2007 and July 2009.

The study – which controlled for the effects of the recession and state economic conditions – found the increase responsible for a 7.2 percent decline in the number of 16- to 19-year-olds employed in Alabama. For Alabamans with less than a high school diploma, the relative decline was even worse at 12.6 percent.

“Higher minimum wages increase the price of low-skilled labor, forcing employers to raise prices or cut costs,” Saltsman continued. “When employers can’t pass on higher prices to their customers, they’re left with no choice but to increase the use of self-service and automation, leaving fewer opportunities for entry-level employees like teens.”

“Without action from federal legislators to create a lower starting wage for teens, we’re going to continue seeing this generation of teens miss out on the important skills learned in a first job, like customer service, time management, and dealing with co-workers. And research shows that those teens without job opportunities are at a higher risk of dropping out of high school or ending up in the criminal justice system.”