New York State Mulling Minimum Wage Increase

A few weeks ago, the New York Times ran an article asking, “It’s Summer, but Where Are the Teenage Workers?” It’s a good question:

Since 2000, the share of 16- to 19-year-olds who are working has plummeted by 40 percent, with fewer than a third of American teenagers in a job last summer. Their share of the overall work force has never been this low, and about 1.1 million of them would like a job but can’t find one, according to the Bureau of Labor Statistics.

The next paragraph begins, “Experts are struggling to figure out exactly why.” Over the course of more than 1,300 words, the article doesn’t once mention a major culprit: the minimum wage.

The article even features a chart showing a pronounced decrease in teen employment closely tracking the most recent federal minimum wage increase, which phased in from $5.15 to $7.25 from 2007 to 2009. The start of the increase and its impact on teen employment began before the financial crisis made job-hunting more difficult for everyone else, too. In recent years, some cities and states have begun raising their local minimum wages above the federal minimum, helping to keep teen employment at historically low levels.

The Times should look into commissioning a follow-up story for next summer, because the paper is now reporting that New York State is considering implementing a $15 hourly minimum wage for fast food restaurant chains, which heavily employ teens. Increasingly, they are also “employing” automated kiosks.

New York State currently has a statewide $8.75 minimum wage. If the state legislature were to adopt the study committee’s recommendations, the $15 minimum wage would phase in through 2021 throughout the state, and 2018 in New York City, where living costs are higher.

The increase would not affect restaurants with fewer than 30 locations, or other teen-heavy employers, such as retailers.

That means it would disemploy fewer people than would a blanket increase. But while some teens will get hefty raises, othes will be unable to find a job at all.

Advocates of the increase should look not just at the beneficiaries, but at the people it would hurt, too. As Henry Hazlitt points out in Economics in One Lesson:

The art of economics consists… in tracing the consequences of that policy not merely for one group but for all groups.

Iain Murray and I compiled a few other possible unintended consequences of minimum wage increases:

Workers are fired, hours are cut, jobs are not created, non-wage perks, including insurance, free parking, free meals, and vacation days evaporate, annual bonuses shrink, prices rise, (squeezing minimum wage earners themselves), big businesses gain an artificial competitive advantage over their smaller competitors, and crime rates rise. It is a bleak litany.

Many willing workers could be denied a chance to get that first job that could help them gain the experience and skills they need to start to climb up the economic ladder. It’s a lesson more well-meaning people need to learn if they are to reduce poverty outright, rather than help some at the cost of hurting others.