Saturday, September 05, 2009

Teenage Unemployment Rate Reaches Record Levels

Unemployment among teenagers is at record levels. It's at the highest levels since the statisticians began tracking that metric.
This August, the teenage unemployment rate — that is, the percentage of teenagers who wanted a job who could not find one — was 25.5 percent, its highest level since the government began keeping track of such statistics in 1948. Likewise, the percentage of teenagers over all who were working was at its lowest level in recorded history.

“There are an amazing number of kids out there looking for work,” said Andrew M. Sum, an economics professor at Northeastern University. “And given that unemployment is a lagging indicator, and young people’s unemployment even lags behind the rest of unemployment, we’re going to see a lot of kids of out work for a long, long, long, long time.”

Recessions disproportionately hurt America’s youngest and most inexperienced workers, who are often the first to be laid off and the last to be rehired. Jobs for youth also never recovered after the last recession, in 2001.
The Times appears mystified as to why this is the case and only notes higher minimum wages in passing. They note that the economy is in bad shape, so there are fewer jobs to be had.

Here's a clue.

When Democrats raised the minimum wage, I warned that it would lead to increased unemployment. Guess what - it did. Employers have to increase the amount of money paid to entry level workers, which means that there's no incentive to bring on additional workers in a down economy when it costs more. Moreover, higher costs get passed on to the consumer, so higher prices are another outcome of this policy. The reason there are fewer entry level jobs is because employers have to pay more for those jobs, so they'd rather keep existing entry level workers and make them work more (improving efficiencies, which the Bureau of Labor Statistics notes in their most recent report), rather than hiring new workers, which costs more in training and other related costs.

In other words, the Times gets it backwards.

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