Higher Minimum Wage Cost Young Workers Jobs? Not Likely.

Governing posts unemployment data that might make David Novstrup think his youth minimum wage was a good idea. According to new U.S. Department of Labor data for 2015, unemployment among South Dakota workers age 16–24 was 9.6% in 2015. That beats the national unemployment rate of 10.5% for young workers, but it’s well above the 2.6% unemployment rate for South Dakota workers age 25–54 and the 3.5% overall statewide 2015 unemployment rate. South Dakota ranked 48th for overall unemployment in 2015 (meaning we had the fourth lowest unemployment, with only New Hampshire, Nebraska, and North Dakota posting lower figures) but 35th for unemployment around young workers.

Most remarkably, the ratio between unemployment among the 16-24 group and the 25–54 group in South Dakota is 3.69, the highest in the nation. In North Dakota, that ratio is only 1.67; in Minnesota, 2.20. No one else in the region has a ratio above 3.0.

Oh my—does that mean Senator David Novstrup was right when he said his tinkering with the voter-approved increase of the minimum wage was meant to prevent young people from losing jobs? Did blocking his attempt to cut the minimum for workers under age 18 from $8.50 to $7.50 put teenagers out of work? Will David change his mind, run for Senate, and beat the drum for Referred Law 20 with this statistical hammer?

Unlikely. First, take a look at the overall unemployment trends for South Dakota since the recession:

South Dakota’s overall unemployment rate in 2015 continued the steady downward march that began after the post-recession 2010 peak. (Thanks, Obama!). The minimum wage increase appears not to have bent that curve.

Second, run basic correlation on each state’s minimum wage in 2015 with the ratio of younger-worker unemployment rate to older-worker unemployment rate, and you get zip—actually a negative 0.02, not enough to offer any statistical significance. If Senator David or his dad Rep. Al Novstrup try to argue that the higher minimum wage caused the high relative unemployment among young workers, we can say they can’t even establish correlation, let alone causation.

Third, the data presented by Governing lump the 16- and 17-year-olds whom David Novstrup would have cheated with his lower youth minimum wage in with workers 18–24 who would still have drawn the dollar-higher regular minimum wage. We can’t tell from the Governing numbers what impact might have occurred among teenage workers.

Fourth, look at the original BLS 2015 numbers for South Dakota. BLS breaks the young-worker category into 16–19 and 20–24 subgroups. BLS says unemployment among South Dakota’s 16–19 subgroup was 8.4%. Among South Dakota’s 20–24 subgroup, unemployment was 10.1%. That still doesn’t granulate the data down to what happened among the 16- and 17-year-olds whom we saved from the Novstrup pay cut, but it does say that the subgroup that would have been affected by the youth minimum wage had an easier time finding jobs than their most immediate elders.

Fifth, unemployment among South Dakota’s 16–19 group in 2014 stood at 11.1%. After we raised the minimum wage from $7.25 to $8.50 (+17%), unemployment among our youngest workers dropped 2.7 points (–24%).

Fifth and a halfth, the 2014 BLS data include a note saying that the youth unemployment estimate error range is 7.5 to 14.7. So conceivably, David and Al could dismiss my Point 5 as statistical error, not actual trend. But at that point, they’re still stuck with this conclusion: there is no evidence that the voters’ decision to raise the minimum wage caused increased unemployment among teenage workers.