Raising minimum wage while these statistics are declining seems reckless — The Bluegrass Institute for Public Policy Solutions

Bluegrass Institute’s president Jim Waters and Bluegrass Institute Board of Scholars Professor Brian Strow (WKU Dept. of Economics) took part in an interesting debate about raising the minimum wage on KET’s Kentucky Tonight on Monday night.

The back and forth was lively, but I wish someone had discussed this disturbing graph from the US Bureau of Labor Statistics (which I did e-mail to the KET host).

Civilian Labor Force Participation Rate to July 2014

Notice that since the recession started in 2008, the percent of our adult population that has been employed has dropped more or less continually. The latest rate, for July of 2014 is down to only 62.9 percent. From 2004 to 2008 the rate hovered around 66 percent and was holding fairly steady. Now, we are seeing a continual decline despite reports that the economy is slowly improving.

As a note, things look just as unsettled when we look at the decline in the percentage of people who are in the prime working age group of Age 25 to 54 year olds.

Labor Force Participation Rates for Ages 25 to 54 to Sep 2011

So, compared to the number of people in our nation in these age groups, the percentage working is in decline, and that decline has been particularly notable since 2008.Now, take a look at this data, also from the Bureau of Labor Statistics.

Labor Force Participation Rates with Projection to 2022 Table

Notice that for all younger age groups, especially the Age 16 to 24 year olds and the Age 20 to 24 year olds, there has been a notable decrease in the percentage participating in the workforce. This is projected to get much worse by 2022 for younger workers.

So, job decline is a problem in this country, especially so for younger adults. Furthermore, since many younger adults hold low wage jobs, they are the most likely to lose those jobs if the minimum wage is significantly raised.

Thus, it seems risky to take an action right now that will almost undoubtedly force more people at the low end of the wage scale out of employment all together. And, it looks like that job market contraction would most adversely impact the nation’s youngest workers.