The black teen unemployment rate spiked to 38% in January. The dramatic increase represented almost a 10% increase over December’s 35.5% unemployment rate. Overall, the teen unemployment rate for all races was 21%, a modest increase from December.
This increase in teen unemployment comes as President Obama and Democrats have made a minimum wage hike the central plank of their economic agenda. Only 2% of hourly workers in the US earn the minimum wage, but the overwhelming majority of teen workers begin work earning the minimum wage. While minimum wage hikes don’t lead to many job losses in the overall economy, they can have a large effect among teen workers. The minimum wage, after all, is simply a starting wage.
It is worth noting that several states did increase their minimum wage at the start of this year. A number of states even index their minimum wage to inflation, resulting in annual increases in the starting wage. More than two-thirds of minimum wage earners receive a raise within the first 12 months on the job. You can’t earn a raise, however if you don’t have the job in the first place.
If Democrats were successful in raising the minimum wage, a number of starting jobs will disappear. Rising teen unemployment may be the new normal.