Obama is hindering summer jobs for teens
President Obama recently asked business owners to help create summer jobs for teenagers. He reminisced about his first job at an ice cream parlor and lamented that getting hired is harder than ever for young people. He’s right.
Unfortunately, one of the president’s favored policies — the minimum wage — exacerbates this problem. Minimum wages incentivize employers to substitute higher-skill workers — like adults and college students — instead of lower-skill, inexperienced teenagers. Minimum wage increases also cause poor teens to face increased competition from more affluent teens. Most important, minimum wages appear to hinder future opportunities.
President Obama’s comments highlight his Summer Opportunity Project, which aims to connect young people with their first job. This is important because research shows that the experience a first job offers is an important steppingstone to a successful career.
The long history of minimum wage research consistently shows that minimum wages cause the substitution of higher-skilled workers for lower-skilled workers. Since teens constitute the lowest-skilled workers, they’re often the first to suffer the negative effect of the minimum wage.
Higher minimum wages prompt more workers to seek employment. This means that teens from affluent families are more likely to compete for the same jobs as poorer teens. If affluent teens have competitive advantages in getting hired and staying employed, then the minimum wage harms the employment opportunities of poor teens. Research by Mark Turner and Berna Demiralp at Johns Hopkins University shows that African-American and Hispanic teens in urban areas are more likely to become “idle” after minimum wage increases.
A minimum wage limits future opportunity as well. Recent research by Jonathan Meer and Jeremy West at Texas A&M University illustrates that minimum wage increases tend to reduce future job growth, especially in low-skill jobs where much of the increase typically occurs.
Former Labor Secretary Robert Reich argues that minimum wage increases benefit businesses by reducing employee turnover, decreasing overall hiring costs. However, this is actually bad for workers, since they have less opportunity to move into better jobs as their skills increase.
President Obama’s Summer Opportunity Project is laudable. Early experience in the workforce is a key element of long-term career success. However, the higher minimum wage policies that he consistently advocates for actually prevent teens from being hired.
Michael Farren is a research fellow with the Mercatus Center at George Mason University in its Project for the Study of American Capitalism. He wrote this for InsideSources.com.