The case for the subminimum wage

Since we were old enough to drive, it has been customary to obtain small, part-time jobs in our communities. In doing this, we learn the American ideals of self-reliance, diligent work ethic and financial responsibility—ideals that have served our parents and grandparents well.

Today, the economic landscape of my high school and early college years, an environment that facilitated easy access to the labor market, has been laid barren. In the wake of the Great Recession, jobs are few and far between. Many acquaintances of mine have expressed frustration in trying to find a source of supplemental income. While college students are hurting and desperate, the two parties in Washington and Montgomery continue their usual dance.

Republicans blindly advocate tax cuts, and Democrats eagerly push irresponsible spending as a panacea. The result is inaction.

What is needed is not more economy orthodoxy or bombastic dogma from either side, but rather a different way to deal with teenage and collegiate unemployment through an old idea from the early 1990s: A two-tiered minimum wage.

The impact of an increased minimum wage on teen and twenty-something unemployment is not recently-found knowledge. In fact, David Neumark, professor of economics at UC Irvine, and economist William Wascher at the Federal Reserve found that every 10 percent increase in the minimum wage leads to a 1.5-2 percent decrease in teen and young adult employment. An overwhelming majority of academic literature supports their findings.

Their analysis was tested during the latest increases in the minimum wage, as a 28 percent increase in the minimum wage (from $5.15 to $7.25 an hour) correlated with the teen unemployment rate increasing from 16 to 25 percent, which, after removing the recession’s effects on unemployment, is remarkably accurate.

We the people have priced ourselves out of jobs, with those aged 16-25 suffering the market’s wrath.

Furthermore, the same authors found that states such as Texas, which had a student-learner wage program, a de facto two-tiered system, had on average 2 percent lower unemployment among the 16-25 demographic than their neighbors with a uniform wage schedule. Of course, this means a more experienced workforce, thus improving productivity and economic growth.

North of the border, Ontario has already adopted student subminimums, and Prince Edward Island is now considering subminimums in the form of training wages. Both provinces have lower youth unemployment rates than the US average.

U.S. Supreme Court Justice Louis Brandeis once likened the states as policy laboratories where new ideas could be tested. The successes of the two-tiered system “experiments” in the past are now a fait accompli, and therefore it is the duty of the Alabama legislators and members of Congress to act on these results by establishing two-tiered systems.

They should also protect the 95,000 full-time minimum wage workers over age 25 by prohibiting layoffs using regulations already in place under the Fair Labor Standards Act.

Will this be a straightforward process? Probably not. But the students in this state are not asking for more grants or student loans. They are asking for jobs and opportunities, and it is the duty of government to provide an environment for increased student employment.

It’s time for legislators to cease the dogmatic preaching, hear the youth’s cri de coeur, and get to work writing a responsible student minimum wage law that benefits both employer and employee.

Gregory Poole is a graduate student in metallurgical engineering.