PI Original Adam Doster Thursday September 11th, 2008, 10:21am

New Radio Ad Draws False Link Between Teen Job Loss And Minimum Wage

The first rule you learn in any statistics class is that correlation does not equal causation. Apparently, the folks at the Employment Policies Institute missed that lecture. Who is this organization, you might ask? According to Source Watch, it's "one of several ...

The first rule you learn in any statistics class is that correlation does not equal causation. Apparently, the folks at the Employment Policies Institute missed that lecture. Who is this organization, you might ask? According to Source Watch, it's "one of several front groups created by Berman & Co., a Washington, DC public affairs firm owned by Rick Berman, who lobbies for the restaurant, hotel, alcoholic beverage and tobacco industries." With its funders reliant on low-wage labor, it's no surprise that the Institute's researchers would drum up an ad campaign blaming high teen unemployment rates on the minimum wage hike pushed through by Congress in 2007.  Here's an excerpt from the ad, which is airing in Alabama, Arizona, Illinois, Iowa, Michigan, and Tennessee

Mom 1: We had the same problem. Matt walked around at the mall and at restaurants—he even tried getting a job doing yard work for the city. There was nothing available for kids.

Mom 2: The worst part is that they are playing video games instead of getting the experience we had when we were teens—earning a paycheck, having responsibility, and working with others.

Male Voiceover: In 2007, the United States Congress passed a measure that raised the minimum wage by 41 percent. Since then, the teen unemployment rate has shot up 33% percent. This was the worst summer since World War II for teens looking to find a job. When minimum wages for unskilled work increase dramatically in a weak economy the first people to lose are the ones we were intending to help.

What this campaign overlooks is that declining teen employment is standard for recessions. As Dean Baker noted earlier this year, the employment-to-population ratio for teens fell 6.8 percentage points between April 2000 and May 2002, a recessionary period in which there was no change in the federal minimum wage. In 2005, the Economic Policy Institutes' Jeff Champman rebutted a Wall Street Journal editorial making similar claims, connecting unemployment data with state minimum wage rates:

It ascribes a significant part of the problem of high teenage unemployment rates to high state minimum wages (or "maximum folly" according to the editorial). This claim disintegrates, however, under even the most cursory examination. Here's why. Teenage unemployment rose from 13.1% to 17% between 2000 and 2004. According to the Journal's argument, the increases in teen unemployment should have been higher in states with higher minimum wages than in those with low minimum wages. What actually happened was the reverse: Teenage unemployment rose 3.4% in the high minimum wage states, compared to 4.2% in the others.

Nice try, EPI. A small increase in the minimum wage isn't the main factor tightening the labor market and employees of all skill levels deserve a just wage for their efforts.

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