ERIC Number: ED454419
Record Type: RIE
Publication Date: 2001-Jun
The Effect of Minimum Wages on the Labor Force Participation Rates of Teenagers.
Wessels, Walter J.
In light of pressure on Congress to raise the minimum wage from $5.15 to $6.15 per hour, a study looked at the effects such a raise would have on more than 10 million workers, many of them teenagers. The study used quarterly data on the labor force participation rates of teenagers from 1978 through 1999 and other studies to assess the effects of minimum-wage increases in 1978-81, 1990-91, and 1996-97 on teen employment. The literature shows that while such increases might raise the wages of some workers, it would also eliminate jobs and work opportunities for others. By one consensus view of this effect, a 10 percent increase in the minimum wage would reduce the employment of teenagers by 1 to 3 percent. Employers may react in other ways, also, to a raise in the minimum wage. They may eliminate fringe benefits, raise expectations of workers, and increase hiring standards for entry-level jobs. Many of these adjustments to a higher minimum wage reduce the attractiveness of work. As a result, the study concludes that when minimum wages go up, fewer teens choose employment. Teens with greater skills and experience tend to work, while those with fewer skills and less experience work less. Since work by teenagers has been shown to have beneficial long-term consequences on their subsequent labor force success, the study concludes that higher minimum wages reduce the future economic well-being of those who are displaced from work and discouraged from seeking work when they are teens. (Contains 46 references.) (KC)
Descriptors: Adolescents, Cost Effectiveness, Economic Impact, Economics, Employment Experience, Employment Problems, Employment Qualifications, Entry Workers, History, Minimum Wage, Minimum Wage Legislation, Unemployment, Young Adults, Youth Employment, Youth Opportunities, Youth Problems
For full text: http://www.epionline.org/study_wessels_05-2001.pdf.
Publication Type: Numerical/Quantitative Data; Reports - Research
Education Level: N/A
Authoring Institution: Employment Policies Inst., Washington, DC.