Credit the Washington Research Council for connecting the dots. The WRC calls attention to a teen wage subsidy tucked into President Obama’s proposed budget.
Today President Obama proposed a budget for 2017. It includes $5.5 billion to “open doors to a first job.” Of that, $3.5 billion would be used
to create new partnerships with companies and communities to get nearly 1 million young people into first jobs over the summer and 150,000 young Americans who have been out of school and work into up to a year of paid work.
Funds would “be disbursed to localities to cover up to half of the cost of wages for a young person.” The President’s budget argues that the wage subsidy would help “young people gain the work experience, skills and networks that come from having a first job.”
As WRC analyst Emily Making writes,
Still, the first job provision is instructive. It implicitly acknowledges that teenagers who are new to the workforce may not be skilled enough to warrant hiring, given minimum wage laws.
The impact of minimum wage increases on youth unemployment is well documented. We noted it in our foundation report.
Research is mixed on the effects of incremental increases in the minimum wage, but large increases are clearly associated with declining job opportunities for the young and unskilled.
The WRC post provides additional evidence that Washington’s minimum wage has been associated with increased teen unemployment. It suggests an alternative to the wage subsidy.
A simpler solution to the problem that President Obama identifies would be to allow for a teen wage that is lower than the minimum wage. Doing so would also help young people gain work experience, skills and networks — and the number of teens it would help wouldn’t be limited by federal budget constraints.
As changes in our state minimum wage policies continue to be discussed in Olympia and may even factor in the November election, policies that mitigate the effects of wage hikes on young and unskilled workers should be among the factors considered.
