Employment among 16-to 19-year olds in May grew by just 6,000, the smallest increase since 1969, when teen jobs fell by 14,000, according to government data analyzed by employment firm Challenger, Gray & Christmas. In May 2008 and 2009, teen employment grew by over 110,000.Given that the unemployment rate for the economy is 9.7%, it is not surprising that the market for low skilled workers is bad as well. The problems with employment are so severe that college grads and other employees who are normally work at jobs one or two rungs above the skills needed for these entry level low-skill jobs are being pushed down the skill ladder and taking jobs from teens.
The poor state of the economy is the major explanation for high unemployment, but the ill timed increase in the minimum wage may also explain part of the increase. The minimum wage is a price floor. Employers may pay more but not less than the minimum. It is binding if it forces employers to pay a wage above the equilibrium wage in their market. Under this circumstances, the supply of low skilled jobs falls while the demand for employment rises. Beginning in the summer of 2007, the minimum wage by legislative mandate increased $.70 per hour for three consecutive years. The teenage unemployment rate began at 15.9% in May 2007, and increased every year thereafter reaching 26.4% this May.
Jobs traditionally given to teens are apparently going to older workers who are willing to take low paying job to make ends meet. Employment among 20- to 24-year-olds grew by 270,000 in May, an unusual spike, considering that employment in the same age group fell by 261,000 in May 2009.
"Also impacting the job market for young adults are the large number of older adults who are willing to accept even a temporary, seasonal position simply to generate some income," said Steven Rothberg, chief executive officer of CollegeRecruiter.com, an online entry-level job-posting site.
"We're seeing experienced candidates taking jobs normally reserved for college grads and college grads taking jobs normally reserved for college students," said Rothberg.