Monday, September 28, 2009

Suprise! Youth unemployment skyrockets

This really shouldn't be a surprise, but the Labor Department is reporting that unemployment rates among youth have reached a post-WWII high of 52.2%. This story in the New York Post, however, never mentions one of the key contributors to this high rate: increased minimum wages.

It only makes sense that, when unemployment is high in general, as it is now during these recessionary times, employers are going to want the most for their money. Youth workers are the most unskilled, with the least experience. It's just common sense that a government mandate to pay a set amount will cause employers to want to get the most value for that wage, seeking out potential employees with attributes that provide that value - meaning older workers who have some level of skill and experience.

James Sherk, from The Heritage Foundation, arguing for a delay in the planned increase back in July, wrote:

On July 24, the minimum wage increase Congress passed two years ago will enter its final phase, increasing the cost of hiring unskilled workers by 10 percent. Economic research demonstrates that higher minimum wages come at the cost of higher unemployment for low-skilled workers, but when Congress passed the minimum wage increase unemployment was low. Now, in the middle of a deep recession, unemployment has risen sharply for the least skilled workers. Wage growth has flattened since the start of the year. This minimum wage increase will artificially increase costs for struggling businesses at exactly the wrong time. And as a result, it will cost 300,000 teenagers and young adults their jobs.
Most minimum wage research confirms this effect: Two-thirds of recent minimum wage studies find that it reduces employment, with the overwhelming majority of the most rigorous studies reaching this conclusion.

While it's hard to separate the various causes of high unemployment during a recession, one cannot ignore the fact that the increased minimum wage had some impact, contributing negatively to the other recessionary impacts.

Those who support increased minimum wages say this is a 'moral' thing to do ... that 'ensuring decent wages' for all is the proper role of government. However, such beliefs defy reason when you see that the result is higher unemployment for the unskilled and the youth - the very groups such higher minimum rates are supposed to help.

And that's in a normal economy. In a recession/down economy, the negative impact is even greater. But watch politicians campaign on the 'gift' of a higher wages that they've so generously 'given' to us, while ignoring the actual results of their actions.

1 comment:

Hooda Thunkit (Dave Zawodny) said...

If I didn't know any better, I might have attributed it to a Vast Left Wing Conspiracy.

Naaaaaaaaa ;-)

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