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May 11 2016

CBO: Minimum Wage, Gov Policies Leave Men Out of Work, Behind Bars

Patrice J. Lee

Minimum wages help the low-skilled raise their wages, according to progressives and those pushing for federal and state governments to raise the pay floor. Employers, entrepreneurs, and opponents have maintained that raising the minimum wage will hurt the very people it’s intended to help. New research from the nonpartisan Congressional Budget Office (CBO) confirms that minimum wage hikes and other big government policies have disadvantaged young men in the workforce. 

The CBO found that minimum wage laws played a role in the joblessness of the six million young men today. Higher labor costs put entry-level work out of reach for unskilled and low-skilled young men leading them to turn to government support or unlawful behavior to earn a living. The latter of course leads to increased incarceration rates, which further erodes their earnings potential.

In 1980, 11 percent of young men were jobless or incarcerated. In 2014, that jumped to 16 percent leaving five million jobless and 1 million behind bars. Driving this is education. Young men with less education were more likely to be jobless or behind bars. The share of young men who don’t even have a high school diplomas has grown considerably from 1980 to 2014. We have to wonder what is happening to our young men?

Joblessness and incarceration rates hit young black men particularly hard; according to the CBO, they are more likely than other young men to be jobless or incarcerated.

Unrealistic minimum wage hikes aren't the only thing holding back young men. Some of the reasons the CBO identified are economic such as the recession, jobs moving overseas, and more women working. There are several policy changes by federal and local government at play, according to the report:

Changes in federal policy have contributed to the increased joblessness among some young men since 1980. First, employment in the military, which had long been an important source of work for less skilled young men, fell significantly during the 1990s; also, the military now employs more young women than it did in the 1980s, and it has stopped accepting people who have not graduated from high school. Second, the federal government has increased its efforts to elicit child support payments from noncustodial fathers (who now account for a larger fraction of young men than they did in 1980), and that increased enforcement has probably made employment less attractive to some young fathers, because they can now keep less of their earnings. Third, federal spending on means-tested benefits—that is, cash payments or other benefits for people with relatively low income or few assets—increased substantially between 1980 and 2014, possibly reducing young men’s incentives to work.

Higher minimum wages may also have increased joblessness among young men. The federal minimum wage, adjusted for inflation, has not consistently risen since 1980, but there has been an increase in the number of state and local minimum-wage laws in recent years.

The increased incarceration of young men is itself another factor in the increased joblessness of young men. People who are incarcerated are less likely than others to be employed in the future, both because they have a more tenuous connection to employment and because they have a criminal record, which employers generally avoid. That avoidance may have increased of late, as searchable databases have improved employers’ ability to identify people who have been incarcerated.

The Free Beacon captures thoughts by one economist:

Michael Saltsman, research director at the free market Employment Policies Institute, said that the effects of higher wages have negatively impacted an entire generation.

“By eliminating desperately needed opportunities for those at the margins of the workforce, we’re creating a lost generation of young men,” Saltsman said. “Raising the minimum wage is no longer just an economic problem—it’s a societal problem.”

Young men today have been failed by Washington. Public institutions are not turning out a generation of educated, skilled workers.  K-12 education has not educated them with the knowledge and skills for basic work. Zero tolerance policies contributed to a pipeline from schools into the prison system which erodes their opportunity in the future.

Young men are not entirely victims of the economy or of government policies. There is a level of personal responsibility for the choices one makes and that should be a part of the discussion. However, when public policy creates disincentives to work but encourages people to use public assistance even though they are able-bodied or when mandates make workers more expensive to hire, we must challenge the validity of those policies.

Independent Women’s Forum’s mission is to improve the lives of Americans by increasing the number of women who value free markets and personal liberty. Sister organization of Independent Women’s Voice.
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