There Is No Good Argument For The Teen Wage
The math just doesn’t add up
In the year 2016, it cost a student $92 to take an AP test. $92 to take the test. $92 just for the chance to get some college credit (which makes $92 a cost savings in the long-run), assuming they’d studied hard and practiced their DBQs and crammed calculus equations and generally been quite studious throughout the year.
$92.
Or, about 22 hours of labor, if the teen in question were being paid the sub-minimum wage—$4.25—that some policy experts believe is most fair and equitable. That figure doesn’t take into account the lost wages of sitting for an hours-long exam, nor does it factor in the potential cost of getting to the testing location (which is often off-site), but let’s just go with that.
22 hours. To take one test. The average student takes three.
Of course, if they’re eligible—if they’re homeless, in a household that receives TANF or SNAP benefits, or if their family lives at or below 185% of the poverty line—a teen may be able to receive a fee reduction, bringing the grand total of an AP exam to $53.
Meaning a homeless student who wanted to go to college and save a little on the front-end by taking AP tests would still be expected to cough up close to $160 to sit for three AP exams—the gross amount they’d made for about 37.5 hours at the teen wage.
Which, according to one newly-minted policy analyst at the Manhattan Institute—who is unsurprisingly a young white male—is totally fine and fair and just because reducing the wages that businesses have to pay teenagers down to $4.25 would increase the labor participation of teens and that’s good for everyone.
From the report:
If all states and the federal government adopted a YMW of $4.25 for individuals aged 16–19, with no 90-day limit, the growth rate of employment for this group could increase by up to 8.9 percentage points, generating up to 456,200 additional jobs in the first year following enactment.
Say! 456,200 jobs! Why, that would account for about 17% of all the new jobs that year if the market continues to add 2.65 million—and it would only require slicing in half the wages of about 13% of the population! Boy, that sure does sound great.
Except for the teens who need to actually pay for things, particularly household necessities and items like AP tests, which could help improve their lifetime earnings and economic stability. For them, it’s not so great.
For the economists and lawmakers who tout the so-called “youth minimum wage”—a 1996 amendment to the Fair Labor Standards Act that allows employers pay workers under the age of 20 (who are, my sources confirm, actually considered adults by most metrics) $4.25 per hour for their first 90 days on the job—the single biggest barrier to teen unemployment is that businesses don’t want to pay a 19-year-old the same wage they’d pay a 20-year old, so they just won’t hire the 19-year-old. Thus, the solution to boosting teen employment is to allow businesses to pay teens less money.
Simple, right?
Because for teens, this line of logic goes, some money must be better than absolutely no money, particularly if you’re following the assumption that the money teens earn almost always goes to frivolous things. Therefore, earning a lower wage isn’t really a problem because it’s not as if the teens need the money to survive. Teen employment isn’t important because teens need money, it’s important because working is good.
This, of course, doesn’t take into account three important factors:
First, that many teens do actually contibute their earnings to household needs or, at least to pay their own way.
Though researchers often cite “eating out” and “clothes” as unecessary expenses for teens, the fact that they spend their money on things parents are typically expected to buy can be hugely beneficial in families where budgets are tight. The USDA estimates that it costs around $55.80 a week to feed a 14–18 year-old male on a “low-cost” plan—so even if a teen boy was working literally just to buy his own meals (at $4.25 per hour, that’s about 13 hours per week of work) he’d be contributing to his family’s total household expenses.
Among teens who’ve dropped out of school, employment is more necessary; 42% of teens who are not currently enrolled in school but are working are actively keeping their families above the poverty line, and a quarter of teens who aren’t in school say they contribute at least 30% of their earnings directly back into the family’s expenses. This is in part because teens who leave school to work are more likely to be entirely self-sufficient, rather than living with families.
For a teen whose wages are critical to their family’s ability to make ends meet (or necessary for keeping their own rent paid), a lower wage will mean longer hours—which, statistically, will impact their schoolwork and their decision-making. Students who work more than 20 hours per week (who, by the way, are disproportionately low-income) have been shown to have higher incidents of substance abuse and lower performance in school.
Essentially, paying teens less may drive them to work longer hours to make up the difference—possibly even prompting them to drop out of school—and, as a result, further trapping them in the cycle of poverty.
Second, that teens are every bit as capable as non-teens at completing tasks, particularly in the service sector, where they are most often employed.
Teens may be viewed as “unskilled” compared to adults, but for many of the jobs that young people work, that really doesn’t matter; on-the-job training in service work is effective, relatively quick—and, in most cases, not something you learn by going to college.
Which isn’t to say that these jobs don’t require skills — I’ve argued before that they very much do — but it is to say that it’s the kind of skill that a teen can pick up exactly as quickly as an adult. A 45-year-old applying for a job as a barista will need to learn the same skills (do you know how to clean a portafilter? Did you learn how to steam milk in your Econ 101 class? No? Great. You’re just as “unskilled” as a 19-year-old getting trained at a Starbucks) as a teen, and they’ll learn them on the clock.
Additionally, there’s not a robust enough body of research (actually, there’s functionally no research) to prove that young people are somehow less deserving of wages than slightly older people. If you believe that by virtue of being 19 years old and 364 days, a person’s time is fundamentally less valuable than someone who has just turned 20, congratulations, you’re ageist.
Instead, what teen wages are likely to do is push adults—who most people would agree need the money more—out of the workplace. If, by the same logic that the Manhattan Institute uses, the ability to pay a worker who’s almost as good almost half the minimum wage, why would an employer hire the more expensive worker?
This might not be such a huge deal if, as the conventional wisdom continues to (incorrectly) preach, the majority of minimum wage workers were 16 years old and making burgers for their pocket change. However, that’s not the case; the Bureau of Labor Statistics reported in 2014 that 56.2% of the minimum wage workforce falls between the age of 16 and 24—but that only 28.8% fall between 16 and 19.
That means that a lot of people over the age of 20 but under the age of 24 (i.e., people who are not elligible for the teen wage but are still young) could see themselves forced out of the labor market by ultra-low teen wages.
Third, that there is no demonstrable, causal link between higher minimum wages and teen unemployment.
Despite the Manhattan Institute’s citation of conservative economists like David Neumark (from 1992—highly relevant in today’s economy!), it’s actually pretty difficult to pin down a direct, non-anecdotal (sorry, but a quote from the chairman of the National Restaurant Association in 1991 doesn’t really stand up) evidence that higher minimum wages directly impact teen hiring.
Sure, 15.6% (where it currently is) is a high youth unemployment rate, but it’s lower than it was this time last year—despite states and cities raising their wages. Since the summer of 2010—again, during a period when cities and states were raising wages—the youth unemployment rate has fallen by several percentage points, which indicates that the spike in teen unemployment is mostly linked to the Great Recession, when many adults were pushed back to lower-wage jobs, not wages themselves.
A quick look at the teen unemployment rate by state shows no discernible correlation between states with low wages and high teen employment rates or vice versa. Alabama, which adopted the federal youth minimum wage (i.e. employers are free to pay teens $4.25), has a youth unemployment rate of 16.3%. Vermont, which has no subminimum wage and one of the highest minimum wages in the country at $9.60 (or more than twice the youth minimum wage), has a youth unemployment rate of just over 13%.
The real problem with the youth minimum wage, though, is that it would do nothing to improve equity and break the cycle of poverty. Allowing employers to pay teens less may help create jobs, but it certainly won’t help the millions of teens from low-income families who need jobs. If anything, reducing the minimum wage for teens would perpetuate an existing employment gap between wealthy and poor teens; a Drexel report from 2015 found that, though 47.7% of teens who have jobs live in families that earn under $40,000, the majority of employed teens come from families whose earnings top six figures.
Much like unpaid internships, jobs of any kind would become the purview of kids who already have means if wages were reduced, furthering inequality between high- and low-earning families (and, necessarily, between white families and families of color). Because, despite the fact that conservatives have been using the specter of unemployment among Black teens as a scare tactic for decades, paying people of color less money in no way actually benefits them or their employment prospects.
Often, “free-market” economists will tout higher minimum wages as a barrier for people of color, noting that employers simply don’t want to pay them more (shrug emoji! The free market is just racist! Oh well!), but the data doesn’t bear that out, either. One study from UC Berkley found that Hispanic teens who work are actually less likely than white teens to earn the minimum wage at all. Raising the minimum wage is an issue of racial equity, and that includes raising the minimum wage for workers of all ages.
But even independent of all of this data—even if you don’t care about the issues of racial equity or that teens are actually just as qualified for a lot of jobs as adults or what the impact might be on adults who will become more expensive by comparison or that a wage of $4.25 is an absolute pittance and there is not a human being alive whose time is worth that little—the youth minimum wage is also just terrible economics because it does not invest in our collective future by giving young people a path out of poverty.
Many, many economists—including the over 600 who signed this letter to the White House in 2014 urging the federal government to raise the minimum wage—agree that the current wage of $7.25 is simply too low, in large part because it has not kept pace with inflation.
A wage of $4.25, then, is laughably low—particularly considering the fact that it hasn’t been raised since it was first enacted in 1996, 20 years ago. Or, around the time that a worker born that year would be due to get the regular, non-youth minimum wage.
Which means that regardless of everything else—everything that’s wrong with the idea of a sub-minimum wage for teens—the teen wage is so low that it doesn’t allow young people to do the one thing we collectively believe they should be doing with their money from their jobs: Saving or paying for college.
Basically everyone agrees that a college education—or even a vocational education!—is a ticket out of poverty and toward better earnings. We’ve heard it so many times before: If you don’t want to make minimum wage, go back to school.
Unfortunately, the teen minimum wage makes that impossible.
In 1996, the cost of college (including tuition and fees) was about of $2,966 per year for a public, four-year school. In 2016, it was roughly $9,410 per year. That’s a 217% increase (adjusted for inflation, it’s still an increase of more than 107%).
Meanwhile, the teen wage has increased by 0%, and its value has decreased by 34%.
In 1996, a teen working at the teen wage would need to work for 697.8 hours to earn a year of college, or about 13 hours per week every week of the year. That’s feasible (although not ideal when in school full time). Working 4o hours per week, you could almost pay for a year of college over the summer.
In 2016, a teen working at the teen wage—unchanged since 1996!—would need to work 2,217 hours to pay for one year of school, or 42.6 hours each week. That is simply not feasible—and that’s for a public school in the state where a teen is a resident.
For a private school like, for example, Swarthmore, where the author of the Manhattan Institute’s study went to school and graduated in 2015, a teen would need to work 31.5 hours per day at the teen wage.
There are, of course, only 24 hours in a day.
And truly, that’s the bottom line with a teen wage of $4.25: It’s not feasible in the real world, in the real economy, where real people (regardless of age) need to earn real money.
The economists at the Manhattan Institute—and the lawmakers who support a subminimum wage for young people—are operating under the assumptions that simply don’t add up in the real world. Paying teens less money might add a relatively small number of jobs but the impact of reducing the earnings of so many young people would be even more substantial, particularly in low-income families.
It sounds great to add a lot of jobs to the economy—but the teen wage, which reduces the ability for young people to pay for college and potentially forces adults out of the labor market, is a terrible way to do it.
