Teen Unemployment and The Minimum Wage Study (2012)

Click here for full study (PDF – 4MB)

By Glenn Oppel, MPI Policy Director

As the Great Recession persists, unemployment remains a key concern in Montana and the nation as a whole. Although the jobs situation in Montana is somewhat better than the national average, the unemployment rate for working-age teens (16-19) is historically very high. Moreover, fewer and fewer teens are actually entering the workforce.

Figures provided by the U.S. Census Bureau demonstrate that teen employment prospects are dismal:

• Between 2006 and 2011, the teenage unemployment rate in Montana almost doubled from 10.2% to 19.4%. The highest rate for that period was 24% in 2010.

• Montana teens with less than a high school education have seen their unemployment rate double from 10.4% in 2006 to 20.8% in 2011.

• The average hours worked per week for Montana teens fell from 12.1 to 8 hours – a decrease
of 34%.

• The percentage of Montana teenagers who have a job declined from 48.2% in 2006 to 36.6%
in 2011.

• From 2006 to 2011, teen employment share in all industries dropped from 6.3% to 4.2%; in leisure and hospitality from 18.9% to 13.9%; in retail trade from 10.2% to 5.2%; and for all other services from 4% to 1.6%.

A recent analysis of state-specific employment effects of the minimum wage finds that increases in the federal and state minimum wage rates have accelerated this trend. According to simulations run as part of this analysis, increases in the minimum wage from the base of $5.15 in 2006 to $7.35 in 2011 cost Montana teenagers 1,178 jobs . Teen jobless rates could get even worse as Montana’s minimum wage is adjusted annually to the Consumer Price Index (CPI) despite job market realities or unemployment trends. Montana’s 2012 minimum wage rate is currently $7.65 and will increase to $7.80 in 2013 if the CPI continues to hover at close to two percent.

Minimum wage proponents may see annual increases as “raises” to poorer workers. What they fail to realize is that minimum wage increases serve as a tax on employers that would otherwise employ more low or unskilled workers if not for higher labor costs. This is especially true for working-age teens as our issue brief will show. Policymakers in Washington, DC and Helena should consider the disproportionate impact that minimum wage increases have on our youth as they struggle to find their first job.

Enough Already! – Unsustainable

Unsustainable: New Chart From Mercatus:
The graph compares spending by state and local governments to spending in the private sector by graphing each as a multiple of its 1950 level (all numbers are adjusted for inflation). The differences are startling: since 1950, private spending has increased 5-fold while state and local government spending has increased nearly 10-fold.

State and local governments, of course, receive their revenue from the private sector. In a word, this is unsustainable.

Bozeman Nonprofit Announces School Financial Transparency Web Site

Press Release

Today the Montana Policy Institute unveiled a comprehensive web site containing school financial data from across the state. The site, www.schoolsopenmt.org, provides historical revenue and spending information for every school district in the state, and allows Montanans to compare district revenue, spending, staffing, performance, and other measures across any five districts and with state averages.

The site’s goal, according to MPI president Carl Graham, is to provide citizens, opinion leaders, and lawmakers with a user friendly and comprehensive source of information on school revenues and spending from around the state. The site contains easy to use search tools and graphics that translate raw data from official but difficult to navigate sources into usable and understandable information. “The goal isn’t to pass judgment or change any minds” according to Graham. “We want to raise the level of debate about school spending by providing taxpayers with as much information as possible. Once they see the data they can decide for themselves what the numbers for their district mean.”

The site guides users through historical revenue and spending levels across a variety of categories, including salaries, administrative costs, and more. They can also compare revenues and spending categories along with achievement scores across five school districts of their choice along with state averages. All of the data was gleaned from official state sources over a six month period by scouring government web sites. But not all of MPI’s collection efforts were successful.

“We also wanted detailed district level spending so that we could see more than just how much was spent and actually provide taxpayers with a view of what their dollars were spent on” said Graham. Unfortunately, nearly 45% of all districts did not respond to MPI’s data requests. Another 45% or more responded that MPI could copy the documents in district offices or pay to have them copied and mailed – a challenging task with over 400 state school districts but within their rights under current law. And of the remaining districts fewer than 10% provided any usable data at all. The results of these requests are also at www.schoolsopenmt.org so that people can see how – or if – their district responded to data requests.