In the middle of this current recession, many statistics about unemployment and the struggling job market can be seen coming across the internet and airwaves. Yet, the media often glances over a group of individuals that is struggling with unemployment more than any other sector of the economy: the unemployed high school and undergraduate workers. According to a report by the U.S. Congress Joint Economic Committee, workers from the ages of sixteen to twenty four comprise only thirteen percent of all employed workers, yet this same group of individuals make up twenty-six of all the unemployed in the U.S. These workers are on the bottom of the list when employers are looking to hire, and with an increase of older workers seeking employment this year, unskilled and inexperienced workers are having a hard time finding work (Meece). The lack of employment for unskilled workers has become a problem too big to ignore, a problem that America must fix before this downward trend damages the American work force any more.
Although many factors contribute to the high level of unemployment among unskilled workers, a chief problem is the artificially high price of labor set by the minimum wage. Although it is commonly thought that minimum wage helps unskilled, younger workers earn a decent wage, the minimum wage itself actually discourages the hiring of inexperienced and unskilled workers. Companies will only hire workers that produce enough labor to compensate for the cost of hiring them, artificially enforcing a set value of labor prices, and forcing many low-skilled workers out of a job (Sherk). These same workers lose the opportunity to gain valuable communication skills, workplace training, and credible references. Without jobs to occupy young inner-city workers over the summer, youths can often end up joining gangs and dropping out of school. Pa Joof, the principal of the Prologue Early College High School in Chicago made an observation on this situation in an interview with the New York Times: “…you let these kids out there for four or five weeks, [and you] are going to lose some of them. That’s just the nature of the streets.” With wages set at a higher rate than companies can afford to hire them, young workers in tight inner-city job markets are severely hindered in their ability to gain needed work experience. Without job experience on their resume, workers can have more difficulty finding a job when the graduate high school or college. The divide between employers needing experienced workers and able workers without skill must be bridged in order to get America’s job market back on track.
The simplest and most effecting long-term method of reversing this problem is to completely remove the national minimum wage law. Without a minimum wage, businesses would be able to set individual wages at the exact value of workers, even workers who do not possess the skills to command $7.25 an hour, the current minimum wage. Although these workers may earn less than the current wage rates when they are first hired, as their experience increases they will be able to command higher wages, eventuallyexceeding the current minimum wage. An opposing sentiment to this idea is that without a minimum wage businesses would exploit workers by undercutting the wages of unskilled workers in order to save money. However, in an interview, Dr. Michael Zimmer, a professor of economics at the University of Evansville, explained that job market competition would prevent businesses from cheating workers for any length of time, because they would have matched the expectations of workers or risk losing employees. This same principle already prevents skilled labor from being underpriced on the current market, and would apply in the same way to the lower wage jobs if they were market controlled.
By dropping the national minimum wage completely, states would be allowed to set minimum wage laws lower, or to even remove them completely in order to allow businesses to hire workers at their true value, enabling businesses the ability to hire more workers. Giving businesses the ability to set lower starting wages for workers would be especially beneficial for smaller businesses, which have less of a profit cushion from which to pay underproductive employees (Rockwell). In addition to the economic growth encouraged by a lower wage floor, erasing the national minimum wage would help remove the need for failed expensive federal youth training programs such as the National Supported Work Demonstration, the Job Training and Partnership Act, JOBSTART, and Job Corps. With more jobs available, unskilled workers would be more likely to be able to get on-the-job training instead of in government programs, alleviating the need for taxpayers to support these very costly programs. American taxpayers would benefit from the reduction of these programs without worrying about young workers losing valuable job experience.
Although states would not be required to remove statewide minimum wage laws when the national law is removed, the positive economic effect of doing so would encourage states with similar wage laws to do so. Without a national minimum wage law in place, unskilled and inexperienced workers would have the option to move to states with more favorable minimum wages laws if they were unable to find work close to their current residency. Individuals would benefit from the options given them by the removal of the national law, and states would still retain the freedom to enact a minimum wage if they felt it necessary.
The need to remove the national minimum wage is more apparent than ever before, with a hard-hit economy and struggling labor market. The damage being done to the youth labor market by the minimum wage must be stopped. As a citizen aware of this issue, you are enabled to let others know of the need to remove this damaging law. Alerting your federal and local representatives about this problem is a key first step to seeing it removed. Just as equally important, though, is the need to spread awareness of this issue. Despite its harmful effects on the employment of unskilled workers, the minimum wage is often thought to be a protection for unskilled labor instead of a hindrance. Either as workers within the unskilled labor market or workers who will be reliant on their services during retirement, we owe it to the current generation of young workers to remove this detrimental national law.
“Issues Concerning the National Minimum Wage.”Personal interview. 8 Nov. 2010.
Meece, Mickey. “Job Outlook for Teenagers Worsens.” The New York Times Business Day. The New York Times, 31 May 2010. Web. 11 Nov. 2010. <http://www.nytimes.com/2010/06/01/business/01jobs.html>.
Rockwell Jr., Llewellyn H. “Wal-Mart Warms to the State.” Ludwig Von Mises Institute – Tu Ne Cede Malis. Ludwig Von Mises Institute, 28 Oct. 2005. Web. 12 Dec. 2010. <http://mises.org/daily/1950>.
Sherk, James. “How to Minimize the Impact of the Recession on Young Workers: Avoiding a Lost Generation.” The Heritage Foundation. The Heritage Foundation, 1 June 2010. Web. 10 Nov. 2010. <http://www.heritage.org/Research/Testimony/Avoiding-a-Lost-Generation-How-to-Minimize-the-Impact-of-the-Great-Recession-on-Young-Workers#_ftn19>.
United States. Cong. Joint Economic Committee. Understanding the Economy: Unemployment Among Young Workers. By Carolyn B. Maloney. 111th Cong., 2nd sess. Cong. Rept. Joint Economic Committee, 26 May 2010. Web. 09 Nov. 2010. <http://jec.senate.gov/public/index.cfm?a=Files.Serve&File_id=adaef80b-d1f3-479c-97e7-727f4c0d9ce6>.