Editor’s note: Employment Policies Institute: According to the Bureau of Labor Statistics, only 32.6% of teenagers ages 16 to 19 were employed in 2008. It was a historic low, down from 45.2% in 2000. This year, all the economic indicators point to the unemployment rate rising even further. And that means more bad news for youths looking for work because now they’ll be competing with adults for the same jobs. This leads to the question: If this President is for American business, then why is the most energetic and willing part of the workforce being sacrificed?
Raising The Minimum Wage Will Hurt Job Creation, Say Researchers At Texas A&M
COLLEGE STATION, Texas, March 1, 2013 /PRNewswire-USNewswire/ — President Obama’s State of the Union Address proposal to raise minimum wage from $7.25 an hour to $9, with annual increases for inflation, has fired up both sides of the issue with proponents arguing that all workers should earn a good living and opponents saying the increase will cost jobs.
Research at Texas A&M University shows that raising the minimum wage will reduce job creation, but not affect employee turnover or layoffs.
Source Document Available
In the study “Effects of the Minimum Wage on Employment Dynamics,” Jonathan Meer, an assistant professor of economics at Texas A&M who specializes in public economics, and Jeremy West, a graduate student in economics, “focused on employment dynamics – job creation and job destruction directly, rather than just net employment,” Meer explains.
“We very carefully controlled for a number of factors that could conflate increases in the minimum wage and changes in employment, and found that job creation was reduced substantially, but job destruction did not increase.
“Net job growth falls in response to an increase in the minimum wage, but employee turnover is unaffected.”
“This makes intuitive sense: firing people is unpleasant and costly, so adjustment takes some time as employers reduce their hiring of new or replacement workers,” Meer explains.
“Some previous studies, especially ones with shorter time horizons, have failed to find an effect on the level of employment because it takes time for these effects to be reflected in total employment.”
“When something costs more, people purchase less of it. Low-skill labor is no different.
“If workers are providing more value to employers than they cost, then they will be hired.
“If they aren’t, then they will not be hired.
“If you’re never hired and get the chance for some job experience, you can never move up the ladder.
“While some people may get slightly higher pay and be somewhat better off, being unemployed is really, really bad, and there’s no reason why we should be focusing on the people who currently have these jobs (and will keep them) rather than those who are trying to get these jobs but can’t.”
Meer contends that this hypothetical family is very different from the typical minimum-wage earner.
“According to the Current Population Survey from the Bureau of Labor Statistics, in 2009 fully half of minimum-wage earners were 25 years or younger, about two-thirds (67%) were working part-time, and only a fifth (20%) were heads of household with dependents,” he notes.
“There’s strong evidence that people make relatively rapid transitions out of the minimum wage.
“About two-thirds of workers (67%) who earn the minimum wage in one year and are still in the workforce a year later, earn more than the minimum wage ― on average, $1/hour more.”
“This money just represents a transfer from employers to workers (or possibly from consumers, through higher prices in response to the higher labor costs).
“So someone somewhere else will be spending less.
“Business owners – many of them small business owners – are consumers too, and now they’ll have less money to spend,” he contends.
“… which provides as much as a 45% subsidy for low-income earners,” he notes, “not to mention the slew of other income-support and transfer programs at both the federal and state level.
“A single parent with two children earning $14,500 would receive $5,236 in the EITC alone, before any other transfer programs.
“People who support increasing the minimum wage are often well-intentioned, but it’s quite likely that the minimum wage does more harm than good for low-income people.
“There are other policies, like the EITC, that do a much better job of alleviating poverty.”
What Are Your Thoughts??
✔ As a manager with a budget, or a business owner, what changes in plans do you have with a new minimum wage?
✔ This pattern was evident in the past, every time the minimum wage was increased during a down-economy. Will this help your business at all?
✔ What can employers do to minimze the lack of skills our teens will have as a result of this?
Please share your thoughts with our audience in the comments section below!
About Research at Texas A&M University
As one of the world’s leading research institutions, Texas A&M is in the vanguard in making significant contributions to the storehouse of knowledge, including that of science and technology. Research conducted at Texas A&M represents an annual investment of more than $700 million. That research creates new knowledge that provides basic, fundamental and applied contributions resulting in many cases in economic benefits to the state, nation and world.
Follow TA&M on Twitter
SOURCE Texas A&M University
Lesley Henton, News & Information Services at Texas A&M University, +1-979-845-5591; firstname.lastname@example.org
Web Site : More news about Texas A&M University
Starting at $799, the all-new Surface Pro 3 is in a category all it's own.
Short URL for This Content
Author Bio and Latest Posts
Press Releases are broadcasted by The HRIS World from various resources as well as individual requests.
We feature press releases that have a high relevancy and importance to our audience.
Our audience are professionals in Cloud, ERP, HRIS, HR Tech, Project Management, Recruiting, HR, and C-level Executives who live and work in 90+ countries.
We can provide your press release to our focused audience of 50,000+ a month for a flat fee of $45.
As we have several revenue streams available to us, we can afford to offer this low price to bring your press release to a focused group.
For further information, contact us at by social media or via email by clicking your choice below...
Latest posts by Press Releases (see all)
- Selecting the Right HR Software - Wed, 30-Jul-2014
- New Site for Nortek People Management Software - Wed, 23-Jul-2014
- Cyber Security Unlocked — with Sogeti and IBM - Wed, 16-Jul-2014
- India: The Conference Board Leading Economic Index® Increased in June - Wed, 16-Jul-2014
- How Renishaw Achieves Global Data Visibility Through Talentia Software’s HCM System - Wed, 16-Jul-2014