Economists have often discussed about the negative impact the $15 minimum wage on businesses and the most vulnerable. But another unintended consequence of the minimum wage is often ignored: the long-term outcomes of youth in poor areas. Since teens and youth are unable to get jobs at an artificially high wage rate they may turn to crime.
This is what Mark Perry of the American Enterprise Institute opines in a recent op-ed published in the Wall Street Journal:
Here is an excerpt from his incredible piece:
Vermont Sen. Bernie Sanders may not be the Democratic presidential nominee in 2016, but his influence can be seen in the $15-an-hour federal minimum wage that is part of his party’s platform in Philadelphia.
The direct and immediate consequences of a higher wage floor on the entry-level job market are well known: fewer jobs for fewer people. Less discussed are the longer-term adverse outcomes for young people who can no longer find work at artificially high wages. If delegates to the Democratic convention in Philadelphia this week need a striking example of why a 107% increase in the federal minimum wage to $15 an hour is a bad idea, they need only travel a few miles north of the city’s convention center on Broad Street.
In the heart of North Philadelphia—represented by ZIP Codes 19121, 19122, 19132 and 19133—the unemployment rate for teenagers averages 42%, according to 2014 data (most recent available) from the Census Bureau’s American Community Survey. The employment rate for teens residing in these ZIP Codes is an astonishingly low 14%—only one in seven has a job. (Nationwide, roughly one in three teens is employed.) Young adults in North Philadelphia ages 20 to 24 don’t fare much better: Their jobless rate averages 28%.
The city’s north side faces these crisis-level rates of youth joblessness with a starting wage—$7.25 an hour. If anything, the current minimum wage is too high, given the large numbers of unemployed youths who can’t find a job. The consequences of more than doubling it to $15 an hour would be disastrous.
By significantly reducing job opportunities at the bottom end of the career ladder, a higher minimum wage increases the likelihood that unemployed teens will seek income elsewhere. A 2013 study by economists at Boston College analyzed increases in state and federal minimum-wage levels between 1997 and 2010. It found that low-skill workers affected by minimum-wage hikes were more likely to lose their jobs, become idle and commit crime. The authors warn that their results “point to the dangers both to the individual and to society from policies that restrict the already limited employment options of this group.”
We’re already seeing the negative effects of the $15 minimum wage all over the country. Restaurant jobs in Seattle are being slashed, bookstores in Sacramento are shutting down and unions are trying to be exempt from the $15 minimum wage so they can unionize workplaces. And, the other problem is, since youth can’t get jobs, they become idle and then live a life of crime.
Here’s another way to look at it: Businesses that refuse to pay a decent wage ($15.00) are causing poverty and crime, because when work doesn’t pay, it doesn’t pay to work. The incentive isn’t there. Better for society if businesses provide good paying jobs, then Americans will have an incentive to go to work; Economics 101. There will also be more demand for the products businesses produce. One business’s worker is another business’s customer.