Maxing out the Minimum
By Ocean on Jun 18, 2008 in Articles of Interest, Featured
An article in Reason Magazine outlines a curious fact: this is poised to be the worst summer for employment since World War II. While we all know the credit crunch and economic woes that are going on, this article deals with Summer jobs for teenagers. These would be cheap alternatives to full time employees for companies seeking extra help. They will only need to be paid minimum wage and will only work until the end of the summer. Yet they are not finding jobs either.
To find a reason for this we need to go not back, but forward. On July 28th the national minimum wage will increase 12%, to $6.55 / hour. Could it be that many employers would rather not hire anyone than pay this amount to a summer worker?
Full article here.
(5 votes, average: 8.6 out of 10)
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My sister just got back from college and she is also finding it hard to find a summer job. And, from what she tells me, her friends aren’t that much better off either. I’m curious to understand where all the jobs have gone if not for the reason you mentioned in your article.
AnonyMouse | Jun 18, 2008 | Reply
My belief is that there are not many small businesses out there to provide the summer jobs in the first place.
If people aren’t spending and prices are going up, how are the mom and pop shops going to survive? That leaves only the big corporations to look at the labor pool but they can only provide so many positions to so many people.
Andy | Jun 19, 2008 | Reply
Andy: Actually that’s a major factor as well. On the other hand, the mom and pops would be able to afford more people if they could pay them less. The major corporations would also see fit to hire more workers at a lower price. So it becomes a vicious cycle: hiring fewer people means fewer wages paid out, which means less expendable income, which drives down economic growth. While many people want to raise the minimum wage, it seems that this was extremely unfortunate timing to do so for the US economy.
Ocean | Jun 26, 2008 | Reply
Is it me - or did you break one of the fundamental rules of economics with your last comment?
Jason | Jun 26, 2008 | Reply