Studying Minimum Wage During The Recession? Good Luck

minimum wage recession

To be considered even somewhat conclusive, a scientific study is typically expected to identify just one variable—one aspect of the research which can clearly be shown to have an impact on the outcome. For some reason, the same is not expected in political economy—at least not according to new research which “indicates” (kind of) that higher minimum wages lead to job losses among young, uneducated people.

Conducted by Jeffrey Clemens at the University of California San Diego for the National Bureau of Economic Research, the paper cites higher minimum wages between 2006 and 2010 as the a major reason why employment among young people saw a sharp decline.

“My baseline estimate is that this period’s full set of minimum wage increases reduced employment among individuals ages 16 to 30 with less than a high school education by 5.6 percentage points,” Clemens explains in the abstract adding that “this estimate accounts for 43 percent of the sustained, 13 percentage point decline in this skill group’s employment rate and a 0.49 percentage point decline in employment across the full population ages 16 to 64.”

Clemens’ framework seems sounds on its face—he’s not just comparing unemployment to wages, and has also included additional numbers, including housing declines.

However, at no point does the paper address the documented cultural trend of educated individuals re-entering or remaining in the low-wage workforce as a result of the recession, or the depletion of middle-income jobs during that same time.

It’s no secret that during the Great Recession, workers of all skill and experience levels found themselves without a paycheck, or with a retirement fund that simply wasn’t going to cut it. As a result, many turned back to lower-skilled jobs in service and other industries to make ends meet, effectively crowding out individuals who were less desirable for the same jobs—not because employers didn’t want to pay high wages to unskilled workers, but because there were simply better candidates willing to accept the same minimum wage jobs.

Talking to Bloomberg, economist Richard Vedder explained in 2014 that “the underemployment of college graduates affects lesser educated parts of the labor force,…Those with high-school diplomas that normally would have no problem getting jobs as bartenders or taxi drivers are sometimes kept from getting the jobs by people with college diplomas.”

And it’s unlikely that a lower wage for teens or unskilled workers would have helped those applicants find jobs more easily; the acceptance rate at McDonald’s was lower than that of Harvard at one event in 2014, demonstrating that it’s simply too many people (including college graduates) vying for low-wage jobs, rather than high wages in so-called low-skilled jobs, that’s harming young and unskilled workers.

And while most of the jobs added since the recession have been low-wage jobs, the “bottleneck” remains, as older workers, college students and graduates, and those with careers in shrinking industries returned to or stayed in jobs typically thought to be reserved for the under-30 crowd.

Years later, we’re still wringing our hands about the fact that “good” jobs never did seem to ever rebound, and yet we’re quick to accept the possibility that it’s higher wages, and not a generally unempowered labor class, that are creating the problems. At a time when wages are already so low that full-time workers still require public assistance, it seems unlikely that cutting income for anyone would benefit the economy overall, especially since the loss of higher-wage but low-skilled jobs was one of the biggest problems of the recession itself.

All of which is to say that at a time of economic tumult, when some of the most reliable, accessible, and available jobs were those that paid the minimum wage, it’s extremely difficult to pin wages alone as the reason for low employment among uneducated young people. And even if you’re running with that theory, if the solution is to reduce wages (and thus increase dependence on social services and other threadbare safety nets), you’re all but ensuring that the poor stay poor, the unskilled stay unskilled, and everyone loses.

 

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Hanna Brooks Olsen
Hanna Brooks Olsen is a reporter in Seattle. Her writing about the economy and politics has appeared in the Atlantic, the Nation, Salon, Fast Company, and elsewhere.