This November, in addition to the presidential candidates at the top of the ticket, Maine voters will consider Question 4, which asks whether the Maine minimum wage should be raised to $12 per hour by 2020. If it passes, some workers will get a raise — but many young people will be left behind.
Do minimum wages kill jobs? For adults, there is some evidence that the effect of higher minimum wages on employment is modest. For young people, though, it is quite clear that raising the cost of hiring means less hiring will take place. Unless young people are exempted from minimum wage hikes, Maine’s Question 4 will undoubtedly curtail opportunities for thousands of teenage workers in the Pine Tree State.
Intuitively, this makes sense. Adults, who have often worked multiple jobs and have experience and skills to offer, will have an easier time convincing business owners to hire them. A young person with no work experience and few acquired skills, on the other hand, may not be able to command a wage as high as $12 per hour. Few employers are willing to take a chance on an untested, untrained young person when they must pay so much.
This is unfortunate because a first job is a gateway to a second. Economic evidence indicates that young people in states with higher minimum wages can actually expect lower earnings later on in their careers. Without those crucial first months of work experience, young people will be in a much worse position to bargain for higher wages later.
For this reason, Maine should consider adding a youth minimum wage provision to the Question 4 initiative. While the standard minimum wage would rise, young people would be free to work at a lower rate — fulfilling progressive goals of higher minimum wages while also not cutting off opportunity for those who need it most.
Indeed, federal law already permits teenagers to earn a youth minimum wage of $4.25 per hour for their first 90 days of employment — well below Maine’s minimum wage of $7.50. The trouble is that Maine has not created a parallel exemption for its young workers, and more restrictive state laws always supersede the federal standard. The effect shows — despite having low overall unemployment, Maine’s unemployment rate in 2015 for teens age 16 to 19 was 21 percent, compared with 18 percent for the country as a whole.
In a new report for the Manhattan Institute for Policy Research, I estimate that permitting young Mainers to earn the federal youth minimum wage (conditional on reforms at the federal level) would generate 2,100 new jobs for teenagers in the state, boosting this group’s employment rate by 8 percentage points.
Higher earnings for poor workers are a worthy goal of public policy. But mandates such as higher minimum wages will do more harm than good if not designed thoughtfully. Maine should protect young people from the lack of employment opportunities that is sure to follow a minimum wage hike to $12 per hour. Creating a lower youth minimum wage in line with federal law would be an excellent start.
Preston Cooper is a policy analyst at the Manhattan Institute.