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MU prof: Wage increases hurt minority teens

Teen jobless rate 23% in April

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By Randy Tucker, Staff Writer Updated 9:43 AM Monday, May 16, 2011

DAYTON — While minimum wage increases have contributed to higher unemployment rates for all teens, the impact on minority youth, especially black teens, has been “scary.”

That’s according to William Even, a Miami University economics professor who helped conduct a study on wages and teen employment for the nonprofit Employment Policies Institute in Washington, D.C., a conservative think tank.

Increases in the minimum wage — which rose 10 cents to $7.40 an hour in Ohio this year — have priced young black men out of the entry-level job market more than twice as fast as their white counterparts, according to the study, based on figures reported by the Bureau of Labor Statistics from 1994 to 2010.

The study found that for each 10 percent increase in the minimum wage, employment for young black males without a diploma fell by 6.5 percent. By comparison, the drop in employment was 2.5 percent for white males ages 16-24 with no diploma, and 1.2 percent for Hispanics.

Even blacks who remained on payrolls after minimum wage increases saw their hours cut back more than any other group in the survey, which concluded that for each 10 percent increase in the minimum wage, hours were reduced by 6.6 percent for young black males, 3 percent for white males and 1.7 percent for Hispanics.

“Our study suggests that when the minimum wage goes up, it causes the difference between black and white unemployment rates to rise,” Even said.

The reasons for the employment gap are open to debate. But the survey’s findings support consistently bleak employment trends for black youth, especially black teens who last month had a national unemployment rate of 37.5 percent. That compares to unemployment rates of 20.7 for white youth and 23.4 percent for Hispanics.

Even said some of the job losses tied to wage increases can be attributed to the geographic distribution of black workers and their representation in certain industries.

“More blacks are concentrated in the South, where minimum wage increases have a bigger effect on job losses,” he said. “Blacks are also concentrated in industries, such as food service, where you get the most layoffs in response to minimum wage hikes.”

Such factors don’t completely explain the discrepancies, however. Even suggested that discrimination could play a role.

“It could be that when the minimum wage goes up, firms fire workers, and they disproportionately fire black workers,” he said.

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