Responding to yesterday’s set of posts about the effect of the minimum wage on teen employment, Matt Yglesias is puzzled. Do we even want higher teen employment? It doesn’t really seem like it:
After all, policymakers from both parties are pushing longer school days and shorter summer vacations. We’ve done a lot to encourage more people to go to college. We seem to be pushing more extracurricular activities on high schoolers….Now perhaps this is a huge mistake. But if it’s a huge mistake, it’s much bigger than the minimum wage. And actually the minimum-wage angle could be patched pretty quickly. Jordan Weissmann recently wrote about Australia where the minimum wage is higher than in the United States, but there’s a special low teenage minimum wage.
That reminds me. A few days ago I ran across the following footnote on a Labor Department web page:
5A subminimum wage — $4.25 an hour — is established for employees under 20 years of age during their first 90 consecutive calendar days of employment with an employer.
Am I the only person in America who didn’t know this? Sure, it’s only for 90 days, but it still makes a difference. Summer jobs could certainly all be offered to teens at $4.25. And it significantly reduces the risk of hiring a teen, since they don’t cost very much during the period when you’re still deciding whether they’re any good.
In any case, this went into effect in 1997 and it hasn’t changed since. Surely this is germane to any discussion of the minimum wage and teen employment?