Tyler Cowen, who hates minimum-wage increases, offers a chart purporting to demonstrate that minimum-wage hikes have reduced teen employment. Kevin Drum, who loves minimum-wage increases, is not convinced. Of course, in general, nobody changes their mind about anything as well-aired in the political sphere as the minimum wage and time-series data of the sort deployed by Kevin Erdmann to make the chart is typically the least-persuasive kind of evidence.
Still this raised another question in my mind: Are we trying to maximize teenage employment?
The framing of the debate suggests that if minimum-wage hikes suppress teen employment that would be a bug. But I was under the impression that the long-term trend toward a lower teenage labor force participation rate (which is clearly happening regardless of the ups and downs of the minimum wage) was something public policy is trying to encourage. After all, policymakers from both parties are pushing longer school days and shorter summer vacations. We’ve done a lot to encourage more people to go to college. We seem to be pushing more extracurricular activities on high schoolers. Obviously once upon a time it was common for 14-year-olds to be working full time. But as America became richer and the economy became more education-intensive, we got early teens out of the labor force and into school. These days nobody is talking about amending child labor laws to ban 17-year-olds from working, but it seems to me that we’re pretty clearly trying to nudge older teens out of the labor force and into schooling.
Now perhaps this is a huge mistake. But if it’s a huge mistake, it’s much bigger than the minimum wage. And actually the minimum-wage angle could be patched pretty quickly. Jordan Weissmann recently wrote about Australia where the minimum wage is higher than in the United States, but there’s a special low teenage minimum wage. As a result, Australia gets a segmented labor market where low-productivity sectors like fast food rely heavily on a short-term teen labor force. The idea, obviously, is that Australia wants teenagers to work—at very low wages if necessary—as part of its larger vision of how Australian society and the Australian economy should look.