Marilyn Watkins: Lowering wages for working teens is the wrong approach

Testimony | January 30, 2014 | By Marilyn Watkins

Executive Summary

Given before the Senate Commerce and Labor Committee on SB 6471

Good afternoon. I am Marilyn Watkins with the Economic Opportunity Institute, testifying in opposition to SB 6471.

I applaud the concern of the sponsors for our state’s young people, but lowering wages for working teens is the wrong approach. The trend Washington has seen of declining levels of employment among teenagers is part of a longer term, national trend. Particularly high levels of teen unemployment are unfortunately occurring around the nation, as our country continues to recover sluggishly from the recession.

Teen employment fell sharply nationwide between 2000 and 2010. Summer  employment has been declining since 1990, from about half of teens employed in summer in 1990 to only a third in 2010.[i]

Economists have identified a number of factors that contribute to the decline in teen and young adult employment. These include:

  1. More youth attend school. In 1990, 77% of 16 to 19 year olds were in school, compared to 84.6% in 2010. Attendance in summer school has especially increased, nearly 3 fold over 20 yrs.[ii]
    A recent study published by the Federal Reserve Bank of Boston concluded that teens were more likely to be either in school or working in 2010 than they were in 1980 or 1990.[iii]
  2. Greater academic pressures are also factors, including longer school years and tougher graduation requirements. The average credits of high school graduated rose from 21.6 in 1982 to 26.7 2005.[iv]
  3. Meanwhile, federal support for youth employment  has fallen.[v]

Washington’s teen unemployment rate is unfortunately high. This is related more to experiencing 2 recessions over the past decade, as youth and young adults who are typically the last hired and first fired.

The most recent, economically sophisticated studies that have analyzed the effects of differing state minimum wages over the past two decades show no significant impact on employment numbers resulting from minimum wage increases, including among teenagers. These studies have found that an increased minimum wage did result in higher average monthly earnings for all groups, especially for teens in restaurants, substantial drops in job separations and turn over, and no substitution of teens for older workers. [vi]

When workers stay in their jobs longer, employers have lower hiring and training costs, and productivity increases. This helps explain the ability of employers to pay higher minimum wages without reducing jobs.

The federal minimum wage has remained at $7.25 since 2009 – only $2.13 for tipped workers. Congress is unlikely to raise it anytime soon.

Teen workers along with everyone else need to receive fair compensation for their labor. Many are saving for college or trying to put themselves through school, in the face of skyrocketing tuition rates at public colleges and technical schools.

I urge a no vote on these two bills.

Thank you.

Video:


[i] Morisi, Teresa. “The early 2000s: a period of declining teen summer employment rates” (May 2010). Monthly Labor Review. Available at http://www.bls.gov/opub/mlr/2010/05/art2full.pdf; US Bureau of Labor Statistics, Spotlight on Statistics, “School’s Out,” 2011, http://www.bls.gov/spotlight/2011/schools_out/.

[ii] Morisi, Teresa. “The early 2000s: a period of declining teen summer employment rates” (May 2010). Monthly Labor Review. Available at http://www.bls.gov/opub/mlr/2010/05/art2full.pdf.

[iii] New England Public Policy Center at the Federal Reserve Bank of Boston, “Uncertain Futures? Youth Attachment to the Labor Market in the United States and New England,” by Julia Dennett and Alicia Sasser Modestino, http://www.bostonfed.org/economic/neppc/researchreports/2013/rr1303.htm.

[iv] Morisi, Teresa. “The early 2000s: a period of declining teen summer employment rates” (May 2010). Monthly Labor Review. Available at http://www.bls.gov/opub/mlr/2010/05/art2full.pdf.

[v] Morisi, Teresa. “The early 2000s: a period of declining teen summer employment rates” (May 2010). Monthly Labor Review. Available at http://www.bls.gov/opub/mlr/2010/05/art2full.pdf

[vi] Arindrajit Dube, T. William Lester, and Michael Reich, “Minimum Wage Effects Across State Borders: Estimates Using Contiguous Counties,“ The Review of Economics and Statistics, November 2010, http://www.mitpressjournals.org/doi/abs/10.1162/REST_a_00039; Allegretto, Sylvia, Dube, Arindrajit, Reich, Michael, “Do Minimum Wages Really Reduce Teen Employment? Accounting for Heterogeneity and Selectivity in State Panel Data,” Industrial Relations, April 2011, http://www.irle.berkeley.edu/workingpapers/166-08.pdf; Dube, Lester, and Reich, “Do Frictions Matter in the Labor Market? Accessions, Separations and Minimum Wage Effects, ” October 12, 2010, http://www.irle.berkeley.edu/workingpapers/222-10.pdf.


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