Yesterday the Senate Commerce & Labor Committee heard testimony on two bills addressing our state’s high teen unemployment rate.
Washington has struggled for over a decade with one of the nation’s highest teen unemployment rates. Since 2002, well before the recession, in all but one year Washington ranked among the top ten states with the highest teen unemployment. Washington also has had the nation’s highest minimum wage. A multitude of studies show there is a cause-and-effect relationship between the two.
The unemployment rate for 16-19 year olds in Washington in 2014 was 23.2%, higher than the national average of 19.6%. Idaho, which has a much lower minimum wage than Washington, and also allows a temporary teen training wage, ended 2014 with a much lower teen unemployment of 14.7%. Ironically, Washington’s rate was the 10th highest in the nation, while Idaho’s was the 10th lowest.
There does, however, appear to be some good news for our state’s teens. According to the Bureau of Labor Statistics, Washington’s teen unemployment rate dropped from 30.7% in 2013 to 23.2% in 2014.
Though it is noteworthy that the unemployment rate for 16-19 year old women last year was unusually low at 17.5%, while the rate for men was 29.8%. In comparison, in 2013 the unemployment rate for teen men was 29.4% and 32% for women. In fact, the 17.5% unemployment rate for teen women in 2014 is the lowest since the years just before the Great Recession (2005-2007).
Based on these figures, it would seem the jump in employment for teen women single-handedly accounts for the fairly significant decrease in our state’s overall teen unemployment rate. What can’t be accounted for is the explanation for such a dramatic rebound in employment for teen women in just one year, while the number of unemployed teen men remained virtually unchanged. One expert I questioned is researching the issue and suggested it could be a mistake in the BLS report.
Even with the lower teen unemployment rate, the fact remains that Washington is still among the highest in the nation. SB 5422 and SB 5421 would help remedy this crisis for teen workers.
SB 5422 would allow employers to pay the 16-19 year olds 85% of the state minimum wage. SB 5421 would also allow a training wage for 16-19 year olds, but only during the “summer” months, defined as June 1 through August 31.
A teen training wage would mean much more than a summer-job for out-of-work teens.
A new study by economists from the University of Virginia and Middle Tennessee State University suggests that entry-level, first jobs for young workers play a significant role in career development. Tracking the career progress of high school graduates in the late 19070s and early 1980s, the study found clear evidence that those who worked part-time while in high school spent less time out of work and earned higher wages nearly 30 years later:
Even for workers who were high school students in the late 1970s and early 1980s, 20 hours of senior-year work experience per week is associated today with annual earnings that are seven percent higher as compared to those who didn’t work.”
This backs up other studies that have found youth unemployment creates a “wage scar” that leaves a lasting impact on a worker’s employment prospects and earning trajectory. The longer the teen remains unemployed, the bigger the scarring effect; those who do not work as teenagers have lower long-term wages and employability, even after 20 years.
SB 5421 and SB 5422 would allow employers to pay 16-19 year old workers a temporary “teen training” wage that is lower than the state minimum wage. Allowing employers to pay teen workers a wage lower than our state’s high minimum wage would give employers an incentive to hire young workers with no skills or work experience and provide them with the foundation crucial to their future careers.
