The Law(s)

A new minimum wage law took effect in Arizona last month, raising the state minimum wage from $5.15 per hour to $6.75 per hour, an increase of $1.60. As is the case with so many things in life, however, a second law simultaneously took effect -- The Law of Unintended Consequences. This second law lowered the minimum wage for many teenagers from $5.15 per hour to zero, zip, nada -- a decrease of everything, right down to unemployment.

As reported in the Arizona Republic by Chad Graham (New wage boost puts squeeze on teenage workers across Arizona, February 10, 2007), the new minimum wage has employers compensating for the increase in their payroll costs by cutting back on employees. And who are the first to go? Entry-level workers. Those who are new to the job market with as yet unproven track records and undeveloped job skills. In other words, teenagers.

This is not new information. 2003 data by Federal Reserve economists show that a 10% increase in minimum wages results in a 2-3 % decrease in employment, and economist Milton Friedman postulated that minimum wage laws were a major contributor to high teen unemployment rates. Even advocates of the new minimum wage in Arizona recognize this possible consequence, but supported the new wage based on helping the "breadwinners in working-poor families", and stating that teens typically have "other means of support".

But what about the teens who don't have "other means", or who are their family's "breadwinners", or whose "other means" are not healthy, or perhaps even legal, means? What about them? And how are teens supposed to get into the job market to develop the skills that will eventually make them worth the higher wages?

Granted, its a tough call for a youth advocate. At face value, the law seems like a good thing. I'd much rather see teenagers being paid $6.75 than $5.15. But what if paying them $6.75 means that they don't get paid at all. If the choice is between a lower wage and the opportunity to enter the job market, or a higher wage where they remain unemployed -- which would you choose? But I guess what really bothers me as an advocate for youth is that the knowledge that minimum wage laws hurt teen employees is dismissed with the attitude that teens have "other means of support". The attitude that we are willing to take actions that negatively affect teen opportunities, and that its no big deal, is what I really find objectionable.