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Teen unemployment in Iowa

In the Public interest

January 21, 2013
By Amy K. Frantz - Research Vice-President , Toledo Chronicle, Tama News-Herald

For many teens in Iowa, a job is not only a means of earning spending money or saving for a college education, it is a way to gain experience in the skills required for a particular job, as well as the general responsibilities that go along with holding a job. And for those teenagers who graduate from high school and decide not to go on to college, they must find jobs to support themselves and possibly their families. Those who do go to college may work to support their educational endeavors. However, this category of workers often faces difficulty in finding a job.

Unemployment rates in Iowa are consistently higher for teens age 16-19 years old and for high school graduates age 18-20 years old than they are for the Iowa workforce as a whole. According to Census Bureau data, unemployment rates for teens age 16-19 were at the lowest rate in a decade in 2006, at 10.3 percent. Likewise, high school graduates age 18-20, with an unemployment rate in 2006 at 10.4 percent, had the second lowest rate of the decade for that category of workers. However, by 2011, the unemployment rate was 13.8 percent for teens age 16-19 years old and 17.6 percent for high school graduates age 18-20 years old. Among all Iowans, the unemployment rate in 2011 was 5.9 percent.

In 2007, the Iowa Legislature and then-Governor Chet Culver adopted legislation to increase the state's minimum wage in two steps. In April 2007, the state's minimum wage increased by $1.05, from $5.15 an hour to $6.20 an hour. Then on January 1, 2008, the minimum wage was increased by another $1.05, going from $6.20 to $7.25 an hour.

The impact of an increase in the minimum wage was felt dramatically by the teen segment of the workforce. With a higher minimum wage, business owners need a certain skill set and level of productivity to make hiring an additional worker worthwhile, and often teen workers do not have the skills required, and thus often remain unemployed.

A study by Economists William E. Even of Miami University and David A. Macpherson of Trinity University looked at the impact of the minimum wage on jobs available to teens. In an update of their findings, the increase in the minimum wage above the 2005 level of $5.15 per hour resulted in the loss of 3,856 jobs for 16 to 19 year olds in Iowa.

One idea for reducing teen unemployment and improving the prospects for teenagers to obtain jobs is to allow a lower minimum wage for teen workers, with more flexibility than Iowa's "initial employment wage" of $6.35 per hour for the first 90 calendar days of employment.

Many teen workers have lower skill levels than adult workers, and part of the benefit of holding a job as a teen is the training they receive as well as learning the basic skills of responsibility and accountability of holding a job. Allowing businesses to hire teen workers at a lower wage level would open up opportunities for more teens to gain this valuable work and life experience.

The views expressed in this column are those of the author and not necessarily those of the Public Interest Institute. They are brought to you in the interest of a better informed citizenry.

Amy K. Frantz, Research Vice-President, Public Interest Institute, 600 North Jackson Street, Mount Pleasant, IA 52641-1328. Ph: 319-385-3462, Web site:

 
 

 

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