Time for a sub-minimum wage for teens

Summer is finally upon us – in terms of calendar and temperature – and teenagers are once again discovering the same weak job market that has plagued adults. With teen employment over 24% nationally for teens ages 16 to 19 (including 19% in Wisconsin), and averaging over 25% in half of the 50 states, according to the Employment Policies Institute, it’s time to rethink the minimum wage.

There are many reasons for this condition, including the general economic malaise, but increases in the minimum wage are another factor. Between 2007 and 2009, the height of the “Great Recession,” the federal minimum wage jumped from $5.15 to $7.25 for both working adults and teens. The aforementioned Employment Policies Institute estimates that this increase has resulted in 114,000 fewer teens finding jobs, and even with entry-level wages, that’s a lot of potential tax revenue (not to mention taxpayers) sitting on the sidelines.

If the federal government is serious about promoting new teen hires during the summer and the holiday season, the two periods when employers hire the most extra help, it should consider setting a sub-minimum wage for teens (Wisconsin already has a so-called "Opportunity Wage" of $5.90 per hour, which helps explain its lower teen unemployment rate). Not only would that reduce the cost of creating a new job, it would actually provide some evidence that policymakers have a clue about the high cost of hiring.

Whenever the government raises the minimum wage, there is a trade-off that deserves more attention. A minimum wage increase, which in effect imposes another government-mandated cost on business, limits the ability of businesses to create new jobs and provide higher wages and better benefits. While it also increases compensation for existing employees, the downside is that it reduces employment opportunities for people looking for work.

Given the importance of getting that first employment experience, I don’t think the trade-off is worth it. By establishing a sub-minimum wage for teens, and in fairness, grandfathering in existing teen employees at their current wage, we could begin to move the needle on teen hiring.

The minimum wage is the perfect illustration of how government interference in the private economy can backfire in terms of job creation. The desire to “do good” often is accompanied by unintended (or ignored) consequences, so while the do-gooders, or “goo-goos” in the vernacular of the late, great Chicago columnist Mike Royko, can pat themselves on the back and feel good about making a difference, thousands of teens go unemployed.

Most teens, thank goodness, are still not in need of a family-supporting wage. They are simply trying to get some experience in the workplace and earn some money to defray educational costs, but they need to get hired first.

At the very least, let’s allow for a sub-minimum wage in the $6 range for the first 90 days of employment, or allow teens over 16 to work longer hours, even during the school year, if they so choose, something Wisconsin approved in the recently enacted state budget.

We’re not talking about a return to child labor atrocities here. Nobody advocates forcing 8-year-olds to work in sweatshops, so spare me the absurd argumentation or I’ll put it to music, with a full orchestra.

Just because you start at a low wage doesn’t mean you stay there, but to start climbing the ladder, you need to take that first step. Government should not get in the way of employers who want to give teens that initial boost.

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