Minimum wages for minors: South Dakota and Minnesota are keeping them low.

Minimum Wages Are Rising Across the Country. Should They Apply to Minors?

Minimum Wages Are Rising Across the Country. Should They Apply to Minors?

Moneybox
A blog about business and economics.
May 29 2015 5:13 PM

Minimum Wages Are Rising Across the Country. Should They Apply to Minors?

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Grocery stores aren't thrilled by the idea of paying kids the same as everyone else.

Photo by Justin Sullivan/Getty Images

The minimum wage is having a moment. As the cost of living sails past them, cities and states across the country are ditching the federal base and raising the pay floor to catch up. Last January, 11 states and the District of Columbia raised their minimum wage as the result of legislative action or voter initiatives. Twenty-nine states currently boast minimum wages above the federal rate, and cities like Seattle, San Francisco, and soon Los Angeles—whose city council is poised to raise the minimum wage to $15—have nearly doubled it. While the popularity of higher base pay isn’t surprising in blue states and progressive metropolises, the minimum wage is also inching up in solidly conservative places like, Arkansas, South Dakota, Alaska, and Nebraska. In some of those places—both blue and red—legislators have tried to make sure one group doesn’t benefit: minors.

South Dakota residents voted to raise the state’s minimum wage to $8.50 last year, but this March, Gov. Dennis Daugaard signed into law a bill that sets a separate, lower rate of $7.50 an hour for workers under the age of 18. (Unlike the wage hike, the minimum wage for minors will not annually adjust for the cost of living.) Last April, Minnesota folded a subminimum youth wage into its overall wage increase. The most recent example didn't quite make it to the finish line: A bill in Nebraska designed to establish a lower minimum wage for student workers aged 18 and younger broke a filibuster and advanced through two rounds of debate before finally dying on the floor of the nonpartisan unicameral Legislature. State Sen. Laura Ebke, a self-proclaimed “Republican and conservative libertarian,” introduced LB599 just months after Nebraska voters overwhelmingly approved a ballot measure to increase the state’s minimum wage from $7.25 to $9 an hour by 2016. Nebraska’s “Student Minimum Wage” proposal fell just four votes shy of the supermajority required under the state constitution to amend a law passed by public vote. Noting a “limited window of opportunity,” Ebke says she has no plans to reintroduce a similar bill in future legislative sessions.

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Why raise the minimum wage, only to try and lower it for the youngest workers? While critics of the Nebraska bill portrayed it as a conservative attempt to dial back the minimum wage and unjustly discriminate against the voteless, its defenders described it as a plan to save high school jobs, provide “educational” opportunities, and boost the rural economy. Echoing their conservative peers in the South Dakota Legislature, supporters of LB599 warned that Nebraska’s recent wage hike could prevent many small businesses from hiring student workers. Without a bill like LB599, supporters claimed, rural mom-and-pop shops hiring high school students for low wages would be more likely to hire part-time adult workers who don’t require hand-holding and can legally handle tasks like selling alcohol or manning power tools. The lower wage, Ebke wrote on her website, “may help to incentivize employers to give young workers their first chance at a job.” (Of course, attempts to secure exceptions from minimum wage laws aren’t exclusive to pay for minors: After aiding in the campaign for a higher minimum wage in L.A., union leaders there are seeking an exemption for businesses with collective bargaining.)

In Nebraska, the effort to reduce the minimum wage for young workers was backed by the Nebraska Grocery Industry Association, whose members are likely among the biggest employers in the state of high school–aged workers. Despite a highly visible, monthslong campaign to increase the minimum wage—and despite the fact that Nebraska (save for minor exemptions) has always enforced a uniform minimum wage—the group and other supporters of LB599 alleged that the original initiative wasn’t clear about which workers it would help and that most Nebraska voters aren’t opposed to paying students less than their senior counterparts. According to Kathy Siefken, executive director of the Nebraska Grocery Industry Association, “no one voted on that.”

Nearly unheard from in the debate were student workers themselves, despite the bill’s underlying question: How much are student workers really worth? Eighteen-year-old Grace Miller, a high school senior in Arcadia, Nebraska, who’s been working part-time jobs since she turned 16, told me, “I think we deserve as much pay as the adults.” For the last eight months, Miller has been working after-school shifts at Orscheln’s Farm & Home store in Broken Bow, Nebraska. “We’ve got as much going on as they do, maybe even more. Most adults just work an eight-hour day, while I go to school and then go to work for four hours.”

Conservatives have long argued that higher minimum wages deplete employment opportunities, especially for young and entry-level workers. To make up for the higher wages, they say, employers will freeze or slow down their hiring practices. Citing the most extreme possibility put forth by a February 2014 Congressional Budget Office study, Republican Minority Leader Mitch McConnell claimed raising the federal minimum wage to $10.10, as President Obama has pushed for, would "destroy half a million to 1 million jobs."

So does lowering the minimum wage for minors really create, or at least preserve, an incentive to hire them? And could it mitigate some of the supposedly deleterious effects of a wage hike? The evidence is hardly conclusive, but several previous studies suggest it might. According to a 2003 cross-national analysis from the Federal Reserve, “the evidence … suggests that the employment effects of minimum wages vary considerably across countries. In particular, disemployment effects of minimum wages appear to be smaller in countries that have subminimum wage provisions for youths." A study of state-sponsored minimum wages conducted by the National Bureau of Economic Research in 1991 offered similar results. To varying degrees, Australia and much of Europe allow for youth subminimum wage provisions. Federal law in the United States allows employers to pay workers under the age of 20 a training wage as low as $4.25 an hour during their first 90 days of employment.

But the Nebraska debate highlights other questions likely to shape the debate if and when similar bills emerge: Should exemptions be made for minors with dependents, or who are no longer enrolled in school? If it’s illegal to ask someone’s age in a job interview, can an employer even legally utilize a youth minimum wage bill? And what message does such a law send to young workers? “As a grocery store manager, I had lazy and inexperienced employees that were over the age of 19, and I had some that, yes, were under the age of 19,” Nebraska state Sen. Adam Morfeld said during a hearing on LB599. “We shouldn’t be characterizing a certain class of individuals as more lazy or less experienced. We should be judging them on their work ethic. We shouldn’t be making arbitrary distinctions based on age.”

No other states are currently considering a similar proposal, but as the minimum wage continues to rise in states and cities across the country, there’s a good chance conservative opposition—having won once already in South Dakota—will try it on for size again.