Thanks, everyone for the comments on this post. I have addressed some issues in the comments there, and added some things in the body of that post.
Some commenters mentioned that using an employment rate instead of total employment might help to get rid of noise due to population shifts, etc. That's a great idea. It's funny how when you're working with data, you don't think of some obvious things.
Many comments have mentioned the effects of the business cycle. Like many of them, I had kind of eyeballed it, and thought there was an unusually high coincidence of recessions following minimum wage hikes.
The comments spurred me to get more specific, and I think, in general, the coincidence isn't as strong as it seems like at first glance. Here are all of the individual graphs from the first post, with the following changes:
1) I changed from teen employment level to teen Employment to Population Ratio (EPR).
2) I added recession bars and also an inverted unemployment rate (for all ages) as signifiers of recession effects.
1956 - a recession coincides with a turndown in EPR, but only for the last few months of the MW period.
1961 - this is coming out of a recession, so there is a downtrend even though the economy should be recovering. There is a recovery in teen EPR after the MW hikes have passed
1967 - no recession during the MW related downturn. Then a brief recovery in teen EPR before a recession that follows
1974 - this MW hike appears to coincide precisely with a recession, so it is difficult to separate the signature of each effect. However, teen EPR begins declining before unemployment. EPR is not usually a leading indicator in recessions.
1990 - the recession begins 4 months after the MW hike. However teen EPR begins declining in the months preceding the MW hike. EPR is not usually a leading indicator in recessions.
1996 - no recession, no MW related decline
2007 - the recession begins 6 months after the MW hike. However, teen EPR begins declining in the months preceding the MW hike. EPR is not usually a leading indicator in recessions.
The Tally
7 Episodes:
1 - no MW decline
1 - MW decline not discernible from concurrent recessionary effects, but does have signature of pre-MW downward shift in teen EPR
2 - MW decline precedes recession, with signature of pre-MW downward shift in teen EPR
2 - MW decline with signature pre-MW downward shift in teen EPR, no recessions near MW inception
1 - MW decline, in spite of economy in recovery phase after a recession
PS. The recessions in 1957, 1960, and 1969 are not concurrent with initial MW hikes, but they appear in these graphs. Note that the fall in the teen EPR does not lead the rise in the unemployment rate in these cases.
Here is the graph for the entire period. Full tally of 10 recession and 7 MW episodes:
3 Concurrent recessions & MW, declining trend
7 recessions without MW, declining trend
3 MW without recessions, declining trend
1 MW without recession, climbing trend
All periods with no MW or recession, climbing or accelerating trend
Very interesting stuff. However, on thing that I have not seen mentioned in the comments here or on Cowens' blog is that under federal law, employers can pay teenagers a sub-min of $4.25 an hour for the first 90 consecutive of employment. In that case, assuming employers wanted to, they could delay the impact of the m/w hike for three months by rotating in new hires (of course, this might no be feasible depending on the need for training for the position and so forth).
ReplyDeleteMoreover, there is another sub-min. established for persons whose primary income is from tips, which hasn't been raised in several years, and are commonly found in the services industries (waitstaff, bartenders, bussers, etc.)--62% of workers paid hourly at or below m/w are in the service industry, and one study done in Oregon found that 1 in 3 teens in that state worked in food services (http://www.qualityinfo.org/olmisj/ArticleReader?itemid=00006533).
Both of these factors would alter the relationship between a rise in the m/w and teen employment.
Lastly, I think it's pertinent to look at the food service industry to see the impact of wages on employment because wages in that industry are typically at or near m/w, and there has been a decline in teen employment (25% of fast food workers were teens a decade ago, not down to roughly 16%). Conversely, older workers are taking those positions, with a surprising growth in college educated workers (roughly 17% of fast food workers holding a bachelor's degree). So, one interpretation of this is that during economic downturns, or periods of stagnant job growth for mid-skill workers, teens working in food service and similar occupations historically more populated with teen workers are being displaced by older, more educated workers who cannot find work in their fields.
Thanks for your input. Definitely some things it would be interesting to look into.
DeleteI would have the same intuition as you about the exchange of younger and older workers as MW rises, but the BLS's Characteristics of Minimum Wage Workers tables covering the last several years show a surprisingly parallel relative rise in MW workers across demographic groups. If the proportion of teens at MW doubled, then the proportion of older workers, men, women, etc. also tended to roughly double.
I agree that a lot of these changes seem to be taking place over a long period of time, but I'm not sure that they have a significant effect on the sudden trend shifts that happen at MW inceptions.
I believe different states have different rules... Not all states allow the sub-min wage. Florida does, but not Georgia, I believe.
DeleteWhat would also be interesting to see would be the cost of living. Raising minimum wage, ultimately raises cost of living, as now everything becomes more expensive.
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ReplyDeleteThis is a fascinating deep dive into the historical correlation between minimum wage hikes and teen employment-to-population ratios. Your observation that EPR is not typically a leading indicator in recessions makes the pre-MW downward shifts in your data even more significant for economic analysis. Just as clear data and specific metrics help us understand complex market trends, having easy access to reliable information is key for everyday decisions. For anyone looking for transparent and up-to-date details on local services and pricing, visiting an official website is always the most dependable route. Great job breaking down these cycles!
ReplyDeleteThis is actually a very interesting breakdown of how minimum wage increases may correlate with changes in teen employment trends over several decades. I like that the analysis also considered recession timing and employment-to-population ratios instead of only raw employment numbers, since that gives better context. Economic trends are often more complicated than they initially appear, especially when multiple factors overlap. In a similar way, people also like having clear and organized information when reviewing food options or dietary concerns through resources like the Cracker Barrel Menu. Detailed data presentation definitely makes analysis easier to understand.
ReplyDeleteThe comparison between recession periods and minimum wage hikes was explained really well here, especially with the addition of unemployment indicators and EPR trends. It’s interesting how some employment declines appeared before official recessions even started, which makes the relationship more complex than a simple cause-and-effect argument. I also appreciate that the post acknowledges limitations and alternative explanations instead of forcing one conclusion. Organized reference resources can be valuable in many areas, whether analyzing economics or checking dining options through the Dunkin Donuts Menu before making decisions.
ReplyDeleteThis post does a good job showing how historical economic data can produce very different interpretations depending on which indicators are used. The addition of recession markers and teen EPR trends makes the graphs much more informative than looking at employment levels alone. I found the “tally” section especially useful because it summarizes the broader pattern without oversimplifying the issue. Structured information like this is always easier to follow, similar to how people browse the Whataburger Menu to quickly compare meals and options in one place.
ReplyDeleteThe updated analysis adds much more depth to the original discussion by separating recession effects from minimum wage timing as much as possible. I think using teen employment-to-population ratios was a smart adjustment because it reduces some of the demographic noise in the data. It’s also interesting that several declines appeared before recession indicators became obvious, which raises important questions about labor market sensitivity. Clear presentation of information is important in every field, whether discussing economic trends or exploring meal details through the Zaxbys Menu for quick comparisons and planning.
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