THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, September 1, 1995 TAG: 9509010053
SECTION: DAILY BREAK PAGE: E11 EDITION: FINAL
SOURCE: BY LUIS PAREDES, HIGH SCHOOL CORRESPONDENT
LENGTH: Medium: 82 lines
A RAISE IS SOMETHING we would all like to see in our next paycheck. But how about a raise in the minimum wage itself? Sound good?
To most teens it does, but what they don't know is that a higher minimum wage has the potential to hurt them - now and in the long run.
President Bill Clinton this year proposed a $1 increase in the minimum wage. But that could actually increase the number of dropouts and unemployed youths by 20 percent, according to a report released in August by the Employment Policies Institute Foundation, a non-profit research organization based in Washington, D.C.
``When you first hear about it, it sounds good,'' said Ruby Hsiu, 18, a 1995 graduate of Cox High School. ``It's a bit risky because it might have some unwanted side effects.''
Clinton and supporters of a minimum wage hike say it can preserve the middle class standard of living and help the working poor move up. But according to EPI's research, a higher minimum wage would knock low-skilled teens and minorities out of the job market. These groups would be the ones hardest hit by the increase.
``By artificially raising labor costs, we are creating a ripple effect that will yield a higher dropout rate among teenagers and higher unemployment among low-skilled teenagers, whose job prospects grow dimmer each day they remain idle,'' said Richard Berman, EPI's executive director.
How exactly this will happen is still up for debate, but Michigan State University researcher David Neumark has a theory. His ``substitution hypothesis'' suggests that a higher minimum wage will increase the need for higher-skilled teens, and they in turn will be lured into working full time, even at the expense of their education. This, in turn, will reduce the need for low-skilled teens, who will find themselves out of a job and possibly out of school.
``As employers substitute toward these higher-skilled teenagers, lower-skilled teenagers are displaced from the labor market,'' Neumark said.
The probability that minority youths will become unemployed after a minimum wage increase is even higher, Neumark said. The same process will displace black or Hispanic teenagers who were previously employed full-time and who subsequently became neither enrolled or employed, Neumark said, adding that his research shows that, on average, black and Hispanic teenagers are less skilled than non-black and non-Hispanic teens - or they are perceived that way.
But becoming unemployed doesn't seem to be a concern among local teens. Inflation on the other hand, is apparently what they fear the most from a wage increase.
``If you raise the minimum, the big companies will have to raise their prices,'' said Dominic Miele, 16, a senior at Cox High School.
Local students did agree that an increase in the minimum wage could result in an increase in the dropout rate.
``If it went up, I'd be very tempted to leave school and work full-time. Definitely,'' said Kevin Putman, 18, a rising senior at Bayside High who is employed at Burger King.
Kevin is just one of many teenagers who said they might leave school to work full-time - living proof of EPI's research. The report also warns students that ``declines in the level of education attainment are associated with declines in lifetime earnings.''
Still, eight out of 10 teenagers interviewed for this story support a minimum wage increase. But while a 21 percent raise might sound good now, what we have to ask ourselves is whether Clinton has a good idea. At first it may seem that he does, but then again, teens will have to live with possible sacrifices and side effects.
``In the short run, it sounds good,'' Dominic said, ``but in the long run, it might not be worth it.'' ILLUSTRATION: Graphic
MINIMUM PAY
Recent minimum wage increases:
1978 $2.65
1979 $2.90
1980 $3.10
1981 $3.35
1990 $3.80
1991 $4.25
by CNB