EDITORIAL: Instead of increasing minimum wage, drop it for teens

During his State of the Union address in January, President Barack Obama said “nothing helps families make ends meet like higher wages.” His comments were part of a sales pitch for increasing the minimum wage to make the poor be better off.

The trouble with that argument, however, is that a higher minimum wage, like so many ideas put forth by those in Washington, would end up harming many of the people it was meant to help. Even the slightest mandated raise in income sends people to the unemployment line.

Consider the current situation in Seattle. A $15 minimum wage goes into effect in that city on April 1. In response, several restaurants across the city have decided to close their doors.

The restaurant industry is extremely competitive, operating on average profit margins of 4 percent or less. According to Seattle Magazine, the “impending minimum wage hike to $15 per hour” is playing a “major factor” in the city’s restaurant closings, as “about 36 percent of restaurant earnings go to paying labor costs.” Instead of providing employees at these restaurants with a much-touted “living wage,” the new law has left many workers with no wages at all. As the Washington Restaurant Association’s Anthony Anton puts it: “It’s not a political problem; it’s a math problem.”

But this math problem is not limited to Seattle. State Sen. Tick Segerblom, D-Las Vegas, is one of several legislators who want to nearly double Nevada’s minimum wage. They say doing so would reduce demands for public assistance. Sen. Segerblom, who sponsored Senate Joint Resolution 8, told the Senate Committee on Operations and Elections this month that a $15 minimum hourly wage would mean that people who work 40 hours a week could “earn a stable living wage … and the government would not have to subsidize them.”

In contrast, another measure introduced by state Sen. Joe Hardy, R-Boulder City, would take the state’s minimum wage out of the Nevada Constitution completely and allow legislators to set rates based on the Consumer Price Index.

And Senate Republicans on Friday amended Senate Bill 193, an overtime bill to raise Nevada’s minimum wage to $9 per hour. Nevada’s current minimum is $8.25 an hour. If employers provide health insurance, Nevada’s minimum wage mirrors the federal rate: $7.25.

These measures face significant challenges. What shouldn’t be challenging, however, is understanding the purpose of the minimum wage. Minimum wage jobs are, by definition, intended for the least-skilled members of the workforce. The higher the minimum wage, the more people who are priced out of the workforce. These jobs are not intended to provide a living wage. They’re meant to provide initial work experience, or to provide a wage floor for positions that receive tips.

And, not surprisingly, higher minimum wages are directly responsible for declining opportunities for teens. According to the American Enterprise Institute, when the minimum wage rose by 41 percent between 2007 and 2009, the jobless rate for 16- to 19-year-olds increased by 10 percentage points, from about 16 percent in 2007 to more than 26 percent in 2009 — much faster than the overall U.S. jobless rate.

A higher minimum wage would harm both those with the least experience and fewest skills, as well as the economy as a whole. If anything, Nevada — and the nation — needs a reduced, “training” minimum wage for teens that creates more work opportunities for the young.