Policy Institute Urges Minimum Wage Increase Delay

Policy Institute Urges Minimum Wage Increase Delay

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On the surface, a minimum wage increase sounds like the right tonic that the doctor ordered. Delving a little bit deeper and it soon becomes apparent that while some workers will benefit, others are likely to lose their jobs at least that is the contention of the Employment Policies Institute (EPI) which is urging Congressional delay of the next increase which will kick in on Friday.

The EPI is behind a move to stop the next wage increase, pointing out that with our country experiencing a 9.5% unemployment rate, teens will among those likely to suffer when layoffs take place. Indeed, the EPI mentioned that current teen unemployment is 24%, which is the highest level seen in seventeen years.

Minimum Wage And Teen Employment

Higher unemployment for teenagers is on the horizon thanks to yet another federal minimum wage increase slated to kick in on Friday.

Higher unemployment for teenagers is on the horizon thanks to yet another federal minimum wage increase slated to kick in on Friday.

In 2008, when the minimum wage was increased by 12%, teen unemployment rose by five percent.  According to the U.S. Bureau of Labor Statistics, for every ten percent increase in the minimum wage, teenage employment at small businesses is estimated to decrease by 4.6 to 9.0 percent.

“We are asking lawmakers to put the July 24 federal minimum wage increase on hold,” said Kristen Lopez Eastlick, Senior Research Analyst with the Employment Policies Institute. “Wage hikes always cause a spike in the unemployment rate, and with the country in the middle of a recession, businesses are already struggling to make ends meet. The economy will continue to hemorrhage entry-level jobs unless legislators stop this summer’s minimum wage hike from happening.”

Manage Wage Increases Lead To Unemployment

According to the EPI, economists are nearly unanimous in pointing out that unskilled workers bear the brunt of minimum wage hikes. A 2007 survey from the American Economic Association at the University of New Hampshire Survey Center, revealed that seventy-three percent of labor economists believe increases in the minimum wage will lead to employment losses, which will fall disproportionately on the least skilled workers. Sixty-eight percent believe employers affected by minimum wage hikes are less likely to hire teen employees.

“Decades of economic research clearly demonstrate that minimum wage hikes result in job loss for the most vulnerable members of society while inefficiently targeting poverty,” said Eastlick. “The unintended consequence of the federal minimum wage hike is pricing some employees out of the workforce, as businesses turn to higher skilled workers. Based on the recent unemployment data, it’s teens – minority teens especially – who are getting hit the hardest.”

“A summer job for a teen is much more than a paycheck: It’s a chance to gain important skills and learn the invisible curriculum that comes from being employed. Unfortunately many teens won’t have that opportunity this summer thanks to legislators who elected to embrace populist sound bites instead of sound economics,” Eastlick concluded.

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Source: Employment Policies Institute

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Categories: Money News

About Author

Matthew C. Keegan

Matt Keegan is a freelance writer and editor as well as publisher of "Matt's Musings", his personal blog. Matt covers campus, consumer, business and financial topics on various websites and blogs, and has been published in the "Houston Chronicle", "Sam's Club Magazine" and "Wisconsin Golfer".