Teens Face Skyrocketing Unemployment Rates Amid Summer Minimum Wage Hikes

Teenagers are going to be hard-pressed to find a job this summer. According to a new analysis of Census Bureau statistics, the youth unemployment rate—including Americans between the ages of 16 and 19—surpassed 30 percent in 26 states as of May. Moreover, the jobless rate rose above 40 percent in seven states—including New Jersey, Delaware, Colorado, Nevada, Illinois and Connecticut. Hawaii registered the highest youth unemployment rate at 63 percent.

View a full list of youth unemployment rates by state here.

To exacerbate the problem, as of July 1, more than 20 jurisdictions across the country raised their minimum wages—which will make hiring a summer staff even more expensive. Fifteen areas are raising the wages to $15 per hour or higher. The COVID-19 pandemic and related lockdowns already have business budgets tied-up in knots; increasing labor costs will only tighten them further.

See a full list of jurisdictions that experienced minimum wage hikes in July here.

The relationship between rising minimum wages and higher unemployment rates is well-understood by economists—especially when it comes to youth joblessness. The demographic is typically less experienced and has fewer skills, which makes the group the first to be cut from the labor force when businesses are strained. A 2018 Mercatus Center report from economists David Neumark and Cortnie Shupe found increasing minimum wages to be the “predominant factor” impacting youth joblessness since the turn of the century.

A 2019 analysis from the non-partisan Congressional Budget Office (CBO) found raising the federal wage to $15 an hour would eliminate 600,000 teen jobs; more broadly the report concluded the policy would force businesses to lay-off up to 3.7 million workers. But that was during a bull economy; it would likely have even worse consequences during the pandemic-era fragile one.

The public health crisis and associated lockdowns have already pulled the U.S. economy through the wood chipper and the data suggests America’s youth are among the hardest hit. Now, minimum wage hikes threaten to make their employment prospects even worse. What a summer bummer.