Oregon’s Minimum Wage Prices Teens Out

By Michael Nielsen

Oregon’s minimum wage laws are changing our economy, and it doesn’t seem to be for the better. When analyzing Monthly Current Population Survey data from the Census Bureau for 2012, it is suspicious that we are behind the rest of the nation in teen employment, while our lowest paid workers are paid the second highest in the country. Teens, who often hold entry-level, minimum wage jobs, are severely disadvantaged by this policy.

Oregon’s unemployment among high school graduates aged 18 to 20 tops the national charts, with a rise of more than 200% from 2008 to 2011.* This gigantic leap dwarfs the U.S. unemployment rate for the same demographic, which only shows an increase of around 30%. Our minimum wage, being tied to inflation, has increased steadily over the last four years and has been harming the bottom line for employers because of higher labor costs.

It seems impossible that increases in the minimum wage are helping employment rates among teens. Considering that Oregon’s young workers are employed at some of the worst rates in the country, it seems probable that our minimum wage laws are pushing young workers out of the labor market. Our state wage regulations should be seriously reconsidered.

* This number was corrected from “more than 300%” in the original post. While the rate did more than triple from 2008 to 2011, the increase from 11.1% to 35.4% is actually about 218%, not 300%.

Michael Nielsen is a research associate at Cascade Policy Institute, Oregon’s free market public policy think tank.

For more information, visit cascadepolicy.org.

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Posted by at 05:00 | Posted in Economy, Uncategorized | Tagged , , , | 18 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Shane Young

    I think the U.S., in an attempt to increase the average driving “experience” should pass legislation that outlaws the operation of any non-Lamborghini vehicle. Then the only cars on the road would be Lamborghinis! Wouldn’t that be great for everyone?
    Minimum wage laws not only violate our right to self and right to property, but they also cause many people in need to go unemployed as higher wages are traditionally, and rightfully so, tied with higher skill sets. The response, as Michael points out, is tweaking the balance sheet over with our good friends at the Fed, but as we’ve seen over the past couple years, this only causes greater losses to the working man in the long run.

    • valley person

      They violate your right to self? You mean you would cry about losing the right to work for less than minimum? I wonder how many people working at or near minimum would agree with you?

      And the right to property? What? Since when is human labor property?

      If the minimum wage causes higher unemployment, then why did we have full employment prior to the recession? Didn’t we have the same minimum wage back then?

      • Shane Young

        If I was a person in need, being forced into unemployment by the state would be detrimental in many ways. I’m not sure how you think it wouldn’t be. Yet if you’re claiming that people would rather not work than work for below minimum wage, there should be no problem abolishing the minimum wage all together.

        Human labor is property as it is derived from your self. How else do we determine property other than via some mix of item and labor? Do you have an alternative theory of property that does not involve explicit ownership of self and the labor of one’s self?

        Finally, I’m wondering if you’d be willing to provide some sources as to where you get that “we”, either in Oregon or nationwide, had “full employment prior to the recession” as well as how exactly you figure that the minimum wage in Oregon was the same as it was before the recession. In addition, I’d be interested to see if you think that the value of the dollar is the same as it was before the recession (whenever you mark that to be).

  • LC

    So what you’re telling me, is the basic laws of supply and demand are still in effect?!?!
    This just further proves my case that elected officials should be required to take an Econ 101 course every year as a refresher.

  • Rupert in Springfield

    Indexing the minimum wage was done for one reason and one reason alone – ratcheting up wages of union workers whose contracts are often tied to minimum wage increases.

    The vehical to sell this was the plea:

    “come on, give this waitress who works 300 hours a week for pennies an hour a living wage and if you don’t agree with me then you hate waitresses, kid and minorities and are Hitler”

    Obviously that was very successful. It probably still would be. If you think for three seconds that if anyone lifts a finger to get rid of minimum wage indexing will not result in “you hate waitresses” you are crazy.

    Look at what happened to what’s his name the basketball player in the governors race. He mentioned the minimum wage and people went ballistic, the waitress add was on TV within hours replete in a 1950’s outfit with four put upon children in tow. Suddenly virtually every minimum wage earner was the iconic waitress, a no nonsense woman who had heard it all, been put upon by society generally, probably men specifically, and now someone wanted to cut her minimum wage.

    By the end of the day a basketball player who seemed like a generally nice guy had been transformed into a waitress hating Klansman.

    Anyone think that sort of ad campaign was run by a bunch of teenagers who wanted a bump up in pay? Not on your life. That ad campaign was run by people with a real stake in the minimum wage – unions who earn far above it.

    Did anyone have a response to this ad? No, of course not. And that’s the crux of the problem. The issue, minimum wage, was as sure to come up as anything in a campaign. Like measure 67, the Republican response to it was utterly non existent. Like measure 67, Republicans lost on the issue because they were totally unprepaired with an effective response when the oppositions efforts could have been predicted with reasonable certainty.

    Republicans will get absoulty no where in raising these issues unless they can think beyond “gee, this is a good idea” and move on to mounting an effective response as to how to sell the effort.

    Expect the waitress to re appear within moments of any serious effort to reform our minimum wage laws. Expect Republicans to have absolutely no response to the ad as well.

  • How about instead of expecting perfectly capable teens to work for less, we stop being ageist and hire quality employees, so matter the age?

  • ardbeg

    So what’s your point. Minimum wage is 17K a year assuming 50 weeks of work and before any taxes are taken out. Is that too much? Really? Do you live on 17K a year? A college kid trying to save for college or an adult scraping by. What? $4 an hour so we can put more people on government assistance? You make no point in the article like “we should do this”. So, what the heck is your point? If you don’t have an argument or a point “Michael from the Cascade Policy Institute” then quit wasting everyone’s time. What does working for a “policy institute” really mean anyways? Go get a real f-ing job!!

    • Wayland Smithers

      You seem dreamy, ardbeg

      • ardbeg

        Nope, just tired of people who write crap. Does this guy actually draw a salary? Nothing in the article to debate, just blah blah blah. Am I missing something? Did he have a point to make. Is the minimum wage too high? Too low? Should there be no minimum wage at all? He never says/

    • Shane Young

      Let’s say the minimum wage is raised in Oregon from $8.80, what I’m making right now, to $10.00. Because we’re going through such difficult economic times in this country (a reason often given these days for raising the minimum wage), what makes you think that my employer will simply agree to raise my wages (assuming no inflation is involved, which causes its own can of worms)? Paying $10.00 an hour may very well lead to a loss or extreme decrease in profits for many small business employers. So how do employers get back in black? By cutting jobs. Which jobs go first? The ones at the bottom of the scale…which are more than often the ones that paid the initial minimum wage. See the issue? Furthermore, if raising the minimum wage is the easy solution, why not just raise it to $50.00 an hour or $75.00 an hour or, as I mentioned previously, outlaw all non-Lamborghini vehicles? Same problem.

      There is, however, a deeper issue in all this I think. As Murray Rothbard points out, the minimum wage is really just a simple form of “compulsory employment”. If you voluntarily work for below the minimum wage and I voluntarily pay you below the minimum wage, the state has the legal right to punish us and coerce us with force. This suggests to me that not only do I, as an employer, not truly own my business but also that you, as an employee, do not truly own yourself and your labor.

      • Shane Young

        Sorry, the Rothbard quote should be “compulsory UNemployment”.

      • 3H

        Or, conversely, having more money in your pocket may mean that you, and everyone else earning a higher minimum wage, will spend more. More people spending make actually increase your bosses profits despite his paying you more.
        By the way, most workers would only voluntarily work for less because they have to. They are coerced by economic condistions, or by an employer who coerces them with the threat of job loss if they don’t work for less. Which is much more likely to happen with unsklled, or low skilled, minimum wage labor.
        One element seem to be missing in the equation when libertarians talk about the coercive nature of government — the coercive nature of captial: especially large corporations.

        • Shane Young

          Yet having more money (once again assuming inflation is not in play) does not entail spending more money in the same way that losing money entails…losing money (especially in this economy). However, if an employer agrees with your reasoning he is welcome to voluntarily pay his workers more (of course, by doing so, he will most likely increase the pool of potential workers he has and be forced to choose some over others, thus running the risk that those who were previously working for minimum wage don’t get hired…the same situation).

          To say that an employer coerces against an employee when he refuses to pay him X number of funds determined by a small group of people in the state capital is also incorrect as the employer is only responsible for himself and his property. To say that employers must give their employees this number decided by the capital assumes the very thing you wish to avoid, namely necessary dominion over another individual. Furthermore, how are employer/employee relationships typically created in this country if not through a voluntary nature?

          (Also, I use “coerce” here to refer to acts carried out by individuals. If not, we might simply say our own anatomy’s “coerce” upon us by giving us pain when we’re hungry. It’s the reason why, “I hit him because he said he didn’t like my shoes and that hurt my feelings” never worked in grade school).

  • Steve Buckstein

    For a clear explanation of why minimum wage laws hurt the very people they purport to help, watch this decades-old interview with Milton Friedman.

  • valley person

    Lets make poor people more poor. That will fix everything.

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