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Idaho report examines minimum wage impact on teen unemployment

Idaho report examines minimum wage impact on teen unemployment

Parrish Miller
July 17, 2012
Parrish Miller
July 17, 2012

Recent data compiled by the Employment Policies Institute (EPI) and released in a report by the Idaho Freedom Foundation says that almost 31 percent of Idaho teens aged 16-19 were unemployed in 2011. Another study found that at least 2,000 additional Idaho teens would have been employed if the minimum wage had not been increased by more than 40 percent since 2007.

EPI is a nonprofit research group that studies entry-level employment and how it is impacted by public policy issues.

Although the Idaho teen unemployment claim is controversial, it is consistent with the views of Nobel laureate economists Milton Friedman and James M. Buchanan.

  • Friedman said, "The high rate of unemployment among teenagers ... is largely a result of minimum wage laws."
  • Buchanan said that "just as no physicist would claim that 'water runs uphill,' no self-respecting economist would claim that increases in the minimum wage increase employment."

A spokesman for the Idaho Department of Labor (IDL) is not so sure of a link between the minimum wage and teen unemployment, but he recognizes that the current economy is a challenging one for Idaho teens.

"The competition for job seekers with no previous work experience is intense," said Bob Fick from IDL. He considers the impact of the minimum wage on unemployment "negligible," but admits that "the number of companies that have typically had job fairs in the spring to hire for the summer has been off dramatically since the recession began." He also said that his department does not track teen unemployment specifically, but only tracks the broader category of those age 21 or under.

Kevin Hoggan of Hoggan's Custom Leather & Canvas in Rupert, Idaho, is not speculating, however, when he talks about his own personal experience as an employer. "When they raised the minimum wage from $5.15 to $7.25, I had to pay that to anybody that works for me. So I get a high school kid that I used to hire for $5, and now I have to pay them $7.25. I quit hiring them, I couldn't afford to." He said the problem with hiring teens when he has to pay them the same as more experienced workers is pretty simple: "They're unskilled. It takes a long time for someone to get efficient."

He said he deals with having fewer employees by getting less sleep. "I just don't go to bed at night. I stay up later, working."

In addition to the high unemployment rate, another problem for working teens is that their weekly hours have plummeted. In 2006, teens employed in Idaho worked an average of 11.6 hours a week, but by 2011, that number had declined 47 percent to just 6.2 hours a week. It is also worth noting that the percentage of teens who are employed in Idaho has decreased by more than 45 percent from 51.5 percent in 2003 to just 28.1 percent in 2011.

Things may not be improving soon, either. Fick pointed out that "the state economy lost nearly $2 billion in wages through layoffs, work reductions and wage cuts during the recession. That is nearly 10 percent of total wages."

Idaho Freedom Foundation
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