New wage boost puts squeeze on teenage workers across Arizona

AZCentral: New wage boost puts squeeze on teenage workers across Arizona (HT: Presbyweb)

Employers are cutting back hours, laying off young staffers.

Oh, for the days when Arizona's high school students could roll pizza dough, sweep up sticky floors in theaters or scoop ice cream without worrying about ballot initiatives affecting their earning power.

That's certainly not the case under the state's new minimum-wage law that went into effect last month.

Some Valley employers, especially those in the food industry, say payroll budgets have risen so much that they're cutting hours, instituting hiring freezes and laying off employees. advertisement 

And teens are among the first workers to go.

Companies maintain the new wage was raised to $6.75 per hour from $5.15 per hour to help the breadwinners in working-poor families. Teens typically have other means of support.

Mark Messner, owner of Pepi's Pizza in south Phoenix, estimates he has employed more than 2,000 high school students since 1990. But he plans to lay off three teenage workers and decrease hours worked by others. Of his 25-person workforce, roughly 75 percent are in high school.

"I've had to go to some of my kids and say, 'Look, my payroll just increased 13 percent,' " he said. " 'Sorry, I don't have any hours for you.' "

Messner's monthly cost to train an employee has jumped from $440 to $580 as the turnover rate remains high.

"We go to great lengths to hang on to our high school workers, but there are a lot of kids who come in and get one check in their pocket and feel like they're living large and out the door they go," he said. "We never get our return on investment when that happens."

For years, economists have debated how minimum-wage increases impact the teenage workforce.

The Employment Policies Institute in Washington, which opposed the recent increases, cited 2003 data by Federal Reserve economists showing a 10 percent increase caused a 2 percent to 3 percent decrease in employment.

It also cited comments by notedeconomist Milton Friedman, who maintained that high teen unemployment rates were largely the result of minimum-wage laws.

"After a wage hike, employers seek to take fewer chances on individuals with little education or experience," one institute researcher told lawmakers in 2004. ….

And the sad thing is that if this is true in a middle-class environment like the one discussed here, how much more is it true in poor urban neighborhoods where unemployment rates are already two or three times higher, and workers are even less skilled? While the minimum wage will benefit those with jobs, it will eliminate some existing jobs. It prevents the creation of many other entry-level positions for the unskilled. The first rung on the economic ladder out of poverty has just pulled a bit higher out of reach. But what the heck? At least voters can feel good about having "helped" the poor.