AMENDMENTS OF 1961 AND 1966, 1947-1972

Has the Federal minimum wage contributed to the persistence of high

A study released today by Commissioner of Labor Statistics Geoffrey H. Moore finds that the teenage unemployment rate has risen to five times the adult rate in recent years--compared to three times the adult rate before 1963--as a result of a number of factors: the unprecedented 40-percent growth in the number of youths aged 16-19, the smaller expansion of job opportunities for youth, high turnover among teenage workers and legal restrictions on youth employment. It concludes: "Increases in the level and expansion in the coverage of the Federal minimum wage may have contributed to the employment problems of teenagers, but it is difficult to disentangle such effects from numerous other influences." Nevertheless, evidence from a variety of sources, including experience in foreign countries, suggests that "a substantial differential between youth and adult rates would increase job opportunities for teenagers."

The study was made at the request of Secretary of Labor George P. Shultz, and was conducted under the direction of Thomas W. Gavett, Assistant Commissioner for Wages and Industrial Relations, Bureau of Labor Statistics.

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Teenage job problems, the report finds, may have been aggravated by the increase, during the 1960's, in the level of the minimum wage relative to average earnings and by the extension in coverage of the minimum wage law to industries in which teenage employment is important. "The magnitude of the employment effects of minimum wage legislation probably has been small," according to the report.

The youth unemployment rate was roughly triple the adult rate in the post-war years up to 1963 when the situation deteriorated sharply as the post World War II baby crop turned old enough to seek employment. Although the unemployment rate for teenagers has declined slightly in recent years, it has not declined as much as the adult rate. As a result, it now is 5.5 times the adult rate.

The report notes that one easy-access labor market for teenagers--the family farm--is now available to fewer youths. The range of employment opportunities for youths is also restricted because of the limited skill and experience teenagers can offer, and for those in school, the time of their availability for work.

A special survey conducted for this study indicated that many employers view teenage job applicants with serious reservations. Employers cite uncer

tainty over the draft, high labor turnover, and the unreliability of teenagers with respect to job performance. They also mention the unwillingness of teenagers to accept wages usually offered for jobs they are qualified to

take, but do not rate this as important as the other factors.

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When it comes to hiring teenagers under age 18, employers most frequently cited restrictions on employment of youth in hazardous occupations as an important consideration. Restrictions on hours of work, the cumbersome machinery of work certificates, union restrictions, and transportation problems also imperil the teenagers' path to work.

The minimum wage was the second most common reason for employers raising hiring standards between 1966 and 1969, the study showed. However, the proportion of firms that did raise standards because of the minimum wage hike was very small.

Regarding the widespread belief that young workers expect unduly high wages, the evidence suggests that wage demands of most unemployed teenagers are generally not greatly different from the actual earnings of employed teenagers. There is some evidence that unemployed teenagers are disinclined to accept the lower wage jobs. The Labor Department study cites two recent surveys which indicate that in most cases teenagers are knowledgeable about prevailing wage levels and adjust their expectations according to differences in levels between areas and over time.

Whether a youth differential in the minimum wage would create job opportunities for young people was also investigated in the study. Youth differentials currently exist in Federal minimum wage legislation in the form of the certification programs. About 5,500 establishments have applied for fulltime student and learner certificates under the Fair Labor Standards Act, but less than half the authorized time has been actually used. The study points out that "the evidence suggests that some employers would be willing to hire more teenagers at lower wage rates but legal restrictions on the

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employment of youth and apprehension over the quality of teenagers are equally relevant, perhaps even more important." Youth differentials also are provided in a number of state laws, usually at a level of about 80 percent of the adult rate. According to a special survey of state experience in 1969, these have had only limited effect on youth employment partly because the state minimums are so low.

"The evidence from abroad indicates that low wages for youth are an inducement to employers to seek young workers eagerly. The relatively low youth unemployment rates abroad are partially a reflection of the fact of low wages for youth. In the United Kingdom, the Netherlands, and Japan, young workers start work at about one-third of the adult rate."

"In the United States in 1967, 15- to 17-year old males received a wage which averaged about 70 percent of the average wage paid those 20 to 25 years old. Much of this difference reflects a different mix of jobs and job status in the two age groups." While youth unemployment rates in the United States have been 5 times those for adults, they are about the same as adult rates in Germany and the United Kingdom and less than twice as high in Japan and the Netherlands. In the Soviet Union, on the other hand, teenagers work shorter hours and get higher pay than adults doing the same work. result, managers have been reluctant to hire youths, and to offset this the goverment has had to establish quotas for the employment of youths.

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Experience with youth differentials and unemployment abroad is not easily translatable into American terms. The study stresses that "low wage rates for youth in Europe cannot be separated from the extensive apprenticeship program in Britain, Germany, and The Netherlands which help to channel