Weak Summer Job Market Predicted As Twelve States Consider Wage Hikes

Employment Policies Institute Points To New Research Bolstering Consensus That Minimum Wage Hikes Decrease Teen Employment
  • Publication Date: March 2011

  • Topics: Minimum Wage, Teen Unemployment

As experts predict a weak summer job market for teens, twelve states are considering ill-conceived policies that have serious unintended consequences for teens searching for work this summer.

According to outplacement consultancy firm Challenger, Gray & Christmas, Inc.’s summer 2011 employment outlook, little improvement is expected from last year when the country experienced the lowest level of teen summer hiring since 1949. And according to an analysis of Census Bureau data by the Employment Policies Institute (EPI), in 2010 twenty states and the District of Columbia had teen unemployment rates higher than the national average of 25.9 percent.

“Even as the overall labor market starts to recover, this new outlook shows that teens still have it rough,” said Michael Saltsman, research fellow at EPI. “With states across the country either raising their minimum wage or considering legislation to do so, it’s no wonder teen job prospects aren’t improving.”

New research from Dr. Joseph J. Sabia, a labor economist at West Point, shows that for every 10 percent increase in a state’s minimum wage, teen employment decreases by as much as 3.6 percent. A one-page policy brief describing his findings is available here.

By increasing labor costs, higher minimum wages force employers to raise prices or cut costs. With consumers unwilling to pay higher prices, employers cut back on customer service or move towards automation– meaning fewer hours and fewer opportunities for entry-level employees like teens.
Saltsman concluded: “With summer just around the corner, it’s time legislators considered policies that help create jobs for teens, rather than destroy them.”