Teen Unemployment Over 50% In Major US Cities.

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According to a recent study by the Employment Policy Institute, joblessness amongst teenagers without a high school diploma is more than 50% in two of the largest US cities.

As CNS News reports:

Using U.S. Census Bureau data from May 2013 to April 2014, the analysis reveals that in Riverside-San Bernardino area of Southern California, the unemployment rate for teens ages 16 to 19 years old who don’t have a high school diploma is 54.2 percent.

In the Portland-Vancouver-Beaverton, Ore., metropolitan area, the unemployment rate from that population is 53.8 percent.

“These numbers are staggering,” Michael Saltsman, director of research at EPI told CNSNews.com. “Teens across the country this summer are missing out on valuable work experience as they continue to suffer through an extended period of high unemployment and difficult job prospects.”

Three other California metropolitan areas round out the Top 5 cities with the highest unemployment for the least skilled young people – Los Angeles-Long Beach-Santa Ana (39 percent), San Diego-Carlsbad-San Marcos (37.5 percent) and San Francisco-Oakland-Freemont (35.2 percent).

Youth unemployment in America is, in general, getting worse. It has been on a downward trend over the past 20 years. There are a few different reasons why this is the case; one major reason is the continued increase in the Minimum Wage across most states, and federally.

The Minimum Wage produces unemployment. It is difficult for many people to understand this. They think of the Minimum Wage as a sanction against greedy employers who want to exploit workers; but that isn’t the case at all. The Minimum Wage is a sanction against workers. The laws as-written say “No employer can pay less than X dollars per hour.” But what the law really says is this: “No employee can work for less than X dollars per hour.

The Minimum Wage outlaws work. Anybody whose labor is worth X dollars per hour or less suddenly cannot find a job when the minimum wage goes over X dollars. What kind of workers are at risk? The unskilled, the elderly, the disabled, and the young. These are called “marginal” workers, because they sit on the margin of employment. When the costs of employment are forced up (i.e. raising the Minimum Wage), the margin widens, swallowing all of the workers whose labor is now worth less than the Minimum Wage.

Young people, specifically teenagers, are unskilled. That’s why many teens often find their first jobs at restaurants and retail stores: the grunt jobs at these places require basically no skill. Taking meal orders and scanning barcodes is not skilled work. Employers see the opportunity here: teens often want money to spend, but have basically no skills. Their services are not in high demand. Nobody is bidding for their work. So the fast food restaurants and retailers offer them unskilled jobs at low wages. Teens may be more unreliable than their adult counterparts, but adults generally do not want to take a grunt job, while the teens are largely OK with it. These employers are willing to take the risk on an unreliable teenager, because the savings on wages can be substantial. The employers are happy because they have cheap labor, and the teens are happy because they have money and are building valuable work experience.

The problems arise when the government steps in to ruin the voluntary agreement. Some politician steps in to demand that these employers offer a minimum wage of X dollars, because Y dollars is far too low. This starts to eat away at the whole basis of the agreement. The employer hired the unskilled and potentially unreliable teen because of the low wage benefits. The teen accepted the employment because they don’t have any skills or much work experience and couldn’t get a much better job.

At the institution of this Minimum Wage, the employer is now going to have to adjust his operating expenses to face the new cost of employing workers. Another thing Minimum Wage supporters don’t think about: Employers are not the ones that are going to suffer (unless the wage drives them out of business). If the Minimum Wage goes up, the employer will make whatever change they need to stay profitable; maybe they’ll fire people, or shrink operations. The business-owner may be annoyed, but the point is that they can deal with it. What of the unskilled teen? If the value of their labor is now beneath the Minimum Wage, how are they supposed to deal with this? Maybe the employer will take pity and keep him or her on… or maybe not. Maybe the employer will decide that the teen is not worth the new Minimum Wage of X dollars, and will simply fire the worker. They’ll have to look for a new job; but the Minimum Wage generally applies across the board, unless they’re a waiter or waitress, or working on farm. If they can’t find anything, then they probably need to try to increase their worth through skill-building. For some people, this is easy; for others, not so much.

When young people compete against older folks for low paying jobs, the Minimum Wage overwhelmingly favors the older folks. Middle aged and old people tend to be far more reliable and at least somewhat more skilled. Their labor is likely worth more to the employer. The only way that the teens can counteract this is to offer to work for less. Because most teens are still under their parent’s roof and being taken care of, they can afford to work for bargain-basement low wages compared to most older folks. Many teens, if allowed to, could totally undercut the wage of an older worker. The Minimum Wage puts a stop to this. It creates a price floor under which no worker is allowed to sell their labor. This totally removes that advantage from the young worker, because now they are forced to compete for the same pay against a worker who probably has more subjective value in the eyes of the employer.

The situation gets more complicated when you consider youth unemployment in the inner-city ghettos. Kids from the ghetto are generally considered huge risks by employers. Employers are wary to hire young teens out of the ghetto, because they perceive them to be unreliable and even a liability. It may be unfair, but that’s the way it is. In general, the subjective values that employers place on these kid’s labor is extremely low. They would only hire these kids if the deal was sweet enough, meaning the willingness to work for a super low wage. It is the only thing that offsets the risk involved. It is similar in principle to demanding a high interest rate on a loan to an unreliable borrower; the deal needs to be sweet enough.

The Minimum Wage does not allow this to happen. The Minimum Wage doesn’t give these teens the opportunity to prove to employers that they aren’t a risk, because it prices them out of the market. That’s partially why the youth unemployment rates in these localities are so high; the employment that is available is priced too high for young workers to compete with older and more skilled workers. This is coupled with the fact that a lot of businesses leave the ghetto anyway. But if there were no Minimum Wage, they might think twice, because the wage savings could make it worthwhile.

Some people say that pricing kids out of the labor market is a good thing, because a young teen shouldn’t have to work at all, much less for such a low wage. They think it’s demeaning or somehow morally wrong. I say, why not give them the choice? Let’s say that Detroit, the crumbling graveyard of America, fully repealed the Minimum Wage. Let’s say that a factory opens up and offers unskilled jobs on the assembly line for $5 per hour, which is $2.40 less than the current Minimum Wage. $5 is pretty low. I probably wouldn’t apply anytime soon. But maybe some people would. Maybe some kids who are hungry for work, but can’t find a job anywhere else, would be hired. Maybe other workers, like the elderly or disabled, would apply for $5 per hour because they have trouble finding work anywhere else. The point is that these people would now have the choice between $5 per hour at the factory, or $0 per hour sitting at home and being unemployed. $5 an hour is not a great wage, and a given worker might reject the offer; but at least they’d have the choice. As it stands right now, many of these marginal workers do not even have the option. Their only choice is to be locked out by the Minimum Wage at $0 per hour.

As long as the Minimum Wage mindset holds steady in America, this nation will suffer from chronic youth unemployment issues. Unfortunately for us, it seems like the Minimum Wage mindset is still strong in America. I think many of the supporters have good intentions. They genuinely believe they’re fighting for the greater good and the rights of poor workers. Unfortunately, these good intentions have unintended consequences. Furthermore, many Americans are never exposed to critiques of the Minimum Wage. They learn about the Minimum Wage and that it was a hot issue in the 1930s, but that’s about it. Republicans and Democrats quibble over the exact amount of the Minimum Wage, but both parties generally agree on the institution of a Minimum Wage. We rarely hear any counterarguments to the institution.

Meanwhile, the Minimum Wage continues to wreak havoc on an entire generation of young people. They aren’t being allowed to develop the employment skills they need to look for better work as adults. This has a huge impact on the course of their lives. Many people look at the utter misery of the inner-cities and wonder “Why?” The Minimum Wage is one such reason why.

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