Similar to today, you can find a correlation between the youth unemployment rate and the minimum wage in the United States 50 years ago.
The American Enterprise Institute (AEI)’s Mark Perry has an interesting chart that looks at the teenage unemployment rate and the minimum wage between 1966 and 1971. During this time, the minimum wage went from $1.25 to $1.60. As you would expect, the teenage jobless rate surged from eight percent in late 1966 to just under 12 percent in early 1971.
Here is the chart:
The AEI also published an op-ed written by legendary free market economist Milton Friedman in 1966 in which he predicted this exact same thing.
Here is an excerpt:
The shockingly high rate of unemployment among teenage Negro boys is largely a result of the present Federal minimum-wage rate. And unemployment will be boosted still higher by the rise just enacted. Before 1956, unemployment among Negro boys aged 14 to 19 was around 8 to 11%, about the same as among white boys. Within two years after the legal minimum was raised from 75 cents to $1 an hour in 1956, unemployment among Negro boys shot up to 24% and among white boys to 14%. Both figures have remained roughly the same ever since. But I am convinced that, when it becomes effective, the $1.60 minimum wage will increase unemployment among Negro boys to 30% or more.
Many well-meaning people favor legal minimum-wage rates in the mistaken belief that they help the poor. These people confuse wage rates with wage income. It has always been a mystery to me to understand why a youngster is better off unemployed at $1.60 an hour than employed at $1.25.
The rise in the legal minimum-wage rate is a monument to the power of superficial thinking.
Even with a plethora of evidence at their fingertips, the Fight for $15 crowd, politicians and anti-poverty activists want to raise the minimum wage to $15. It just suggests that perhaps these individuals really do detest the impecunious in society.
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