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July 2012 Policy Study, Number 12-7

   

Teen Unemployment in Iowa

   

Executive Summary

   

 

For many teens in Iowa, a job is not only a means of earning spending money or saving for a college education, it is a way to gain experience, both at a particular job and the general responsibilities that go along with holding a job. And for those teenagers that graduate from high school and decide not to go on to college, they must find jobs to support themselves and possibly their families. Those who do go to college may work to support their educational endeavors. However, this category of workers often faces difficulty in finding a job.

 

Unemployment rates in Iowa are consistently higher for teens age 16-19 years old and for high school graduates age 18-20 years old than they are for the Iowa workforce as a whole.

 

• According to Census Bureau data, in 2011, the unemployment rate was 13.8 percent for teens age 16-19 years old and 17.6 percent for high school graduates age 18-20 years old. Among all Iowans, the unemployment rate in 2011 was 5.9 percent.

 

• In the last decade, the unemployment rate for teens age 16-19 has never dropped below ten percent.

 

• The unemployment rate for high school graduates age 18-20 has not dropped below ten percent since 2002.

 

With a higher minimum wage, business owners need a certain level of productivity and skill set to make hiring an additional worker worthwhile, and often teen workers do not have the skills required, and thus often remain unemployed.

 

A study by Economists William E. Even of Miami University and David A. Macpherson of Trinity University looked at the impact of the minimum wage on jobs available to teens. In an update of their findings, the increase in minimum wage above the 2005 level of $5.15 per hour resulted in the loss of 3,856 jobs for 16 to 19 year olds in Iowa.

 

One idea for reducing teen unemployment and improving the prospects for teenagers to obtain jobs is to allow a lower minimum wage for teen workers, with more flexibility than Iowa’s “initial employment wage” of $6.35 per hour for the first 90 calendar days of employment.

 

Many teen workers have lower skill levels than adult workers, and part of the benefit of holding a job as a teen is the training they receive as well as learning the basic skills of responsibility and accountability of holding a job. Allowing businesses to hire teen workers at a lower wage level would open up opportunities for more teens to gain this valuable work and life experience.

 

   

 

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