Minimum-Wage Increase Could Cost Some Teens Their Jobs
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Here's your Money Briefing for Monday, March 29th. I'm J.R. Whelan for The Wall Street Journal. A plan to raise the federal minimum wage was dropped from the recent stimulus package, but it remains a hallmark of the Biden administration's economic plan. And while it would boost wages for millions of hourly workers, many economists say it could also result in teenage workers being pushed to the sidelines.
I talked to one person in the restaurant industry who employs a lot of teenagers, about 25% of his workforce is teens. And if they had to cut jobs, you know, he said teens would be among the first to go.
Coming up, our reporter Allison Prang will discuss why a minimum wage increase could impact teens in particular and the long-term effect it could have on their careers. That's after the break.
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Washington's been debating an increase in the federal minimum wage. Economists say it would lift many workers out of poverty, but also cost many others, especially the youngest workers, their jobs. Our reporter Allison Prang has been looking into the numbers behind this, and she joins me now. Allison, thanks for being with us.
Thanks so much for having me.
What is the issue with a proposed $15 federal minimum wage and teen employment?
So, Allison, let's start by getting a sense of what the employment picture looks like right now for teenage workers. They've had a very tough go of it during the pandemic.
They have. Their unemployment rate in the pandemic hit almost 32 percent at one point. And that's been much, much higher than we've seen the overall unemployment rate for everyone broadly. So teens have really, really been impacted. You know, there's some of those frontline workers. They're working at restaurants. They're working in areas that have really been hit by this virus and how it's shut down business and various aspects of the economy.
Now, the Labor Department says that teens made up 37.5% of minimum wage earners last year. So where do things stand with efforts to raise the minimum wage, and what are the expectations for how it would affect teens?
So the proposal is from Democrats. They're generally who's pushing for this increase. It would be if their proposal passed, it would be raising the minimum wage to $15 by 2025. So it would go in increments. It wouldn't be a boost all at once. The Congressional Budget Office has estimated that that would lead to some job cuts. It would cut about 1.4 million jobs. And they've noted that this in particular could impact people who are young and people who are less educated. And that could potentially include teens.
And we should be clear, we're talking about a potential increase to the federal minimum wage. Many states and cities already have a minimum wage higher than the current federal rate. So why would teens in particular be hurt by a bump in the minimum wage?
So teens are the less experienced workers we're talking about. You know, I talked to one person in the restaurant industry who employs a lot of teenagers. About 25% of his workforce is teens.
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