Unexpectedly Intriguing!
February 9, 2015

Want to see what a structural change in the U.S. economy looks like?

The chart below tells the employment story for U.S. teens between the ages of 16 and 19 using the latest jobs data reported by the U.S. Bureau of Labor Statistics. Only this time, we've broken the story into two different categories: one for teens between the ages of 16 and 17 and another for teens between the ages of 18 and 19.

Employed Percentage of Age 16-19 Civilian Noninstitutional Population (Seasonally Adjusted), January 2005 through January 2015

Some quick notes about the civilian noninstitutional population of U.S. teens during the ten years from January 2005 through January 2015:

  • Looking just at U.S. teens between the ages of 16 and 17 from January 2005 through January 2015, their numbers start out at 8,866,000, rise to peak at 9,419,000 in October 2006 before slowly declining to their lowest number in the period of 8,466,000 in August 2011 and rising once again to 8,860,000 in January 2015. Which coincidentally, is an almost identical value to that recorded exactly 10 years earlier!

  • The civilian noninstitutional population of U.S. teens between the ages of 18 and 19 is always lower than the equivalent population of Age 16-17 U.S. teens recorded two years earlier. While the enlistment of these teens in the U.S. military is the largest factor accounting for that discrepancy, other factors that reduce the civilian noninstitutional population of 18 and 19 year olds include the following in considerably lower numbers: criminal incarceration, psychiatric institutionalization, death, et cetera. Enrollment in school, whether high school or college, does not classify these individuals as being institutionalized.

  • The number of civilian noninstitutionalized teens Age 18-19 begins the period in January 2015 at 7,436,000, before falling to reach their lowest recorded value of 7,367,000 in October 2006. The Age 18-19 population begins to rise to reach its maximum value of 8,284,000 in August 2011 before falling back once more to January 2015's figure of 7,776,000.

  • Adding both subgroups of working age U.S. teens together, the total civilian noninstitutional population of U.S. teens between the ages of 16 and 19 in January 2005 was 16,302,000, which slowly rose to peak at 17,126,000 in December 2008, before slowly declining since to reach January 2015's population total of 16,636,000. Along the way, the total number of Age 16-19 teens was 16,776,000 in October 2006 (when the number of Age 16-17 teens peaked as the number of Age 18-19 teens reached its trough), while the total number of noninstitutionalized U.S. 16-19 year olds was 16,649,000 in August 2011, when the number of 16-17 year olds troughed and the number of 18-19 peaked.

Now that we've covered the population dynamics, or really, the overall stability of the civilian noninstitutional population of U.S. teens in the decade from January 2005 through January 2015, we can see that the combination of large minimum wage hikes in large population states like California and at the federal level coincide immediately precede declines in the percentage of U.S. teens with jobs, whether before, during or after the December 2007-June 2009 recession.

The only exception to that pattern is observed in the period since June 2014, where falling oil and fuel prices across the nation have offset or muted the expected negative impact of the minimum wage rising in California in July 2014. We should note however that unlike teens elsewhere in the U.S., California teens have seen no significant gains in employment.

Also unlike the pattern observed for older Americans, U.S. teens have seen minimal, if any, improvement in their employment situation since the end of the December 2007-June 2009 recession.

Curiously, the percentage decline in the population of Age 16-17 and Age 18-19 teens with jobs is nearly the same - with about 10% fewer of the population of each subgroup counted as having jobs in the aftermath of the implementation of the minimum wage hikes/recession. Coincidentally, even though teens represent up to one quarter of all those who actually earn the minimum wage in the U.S., only about 10% of teens actually earn wages that fall within the range that would be directly affected by the minimum wage hikes that occurred.

As we see in the chart, the practical effect of all the minimum wage hikes that occurred from 2007 through 2009 was to remove the jobs available for this portion of the U.S. civilian noninstitutionalized labor force.

That is the result of a structural change in the U.S. economy, where changes in the laws mandating the amount of the minimum wage at the federal, state and local levels have made it too costly for employers with little ability to increase their revenues to continue to hire the members of the least educated, least skilled and least experienced portion of the U.S. workforce: Americans between the ages of 16 and 19. Their ability to generate revenue for the businesses who might employ them is too little to justify the cost of employing them at the governments' mandated minimum wages.

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