One more item on minimum wage
Commentary here:
The news that the unemployment rate jumped half a percentage point in May has certainly received plenty of coverage in the news. A closer look at the data reveals some interesting sub-plots.
As several analysts have pointed out, the rise in the unemployment rate is probably picking up a significant increase in the labor force participation rate resulting from high school and college students going into the labor market with the end of school. The civilian labor force grew by 577,000, comprising 2/3rds of the 861,000 increase in the number of unemployed (the remainder were those who lost jobs they had).
But what only one or two people have noted is the two groups where the jump in the unemployment rate was the largest: teenagers, where the rate went up 3.3 percentage points and blacks, where the rate went up 1.1. The unemployment rate for adult men is 4.9% and 4.8% for adult women, but for teenagers it is 18.7% and 9.7% for African-Americans.
It is at least possible that in addition to the more general problems in the US economy, last summer's increase in the federal minimum wage as well as the next jump coming in late July are behind the particulars here. Last July, the federal minimum wage increased to $5.85/hr and it will go up to $6.55 on July 24 of this year. With a sluggish economy, it certainly seems possible that the higher minimum wage is discouraging employers from hiring lower-skill workers whose productivity cannot justify paying them that wage, particularly if they know they will have to give them a raise come late July.
Does anybody have the slightest doubt that if the Republicans had taken over the House and Senate in 2006 after twelve years of Democrats running things, that every last newspaper out there would now be calling this "The Republican Economic Crisis?"