Minimum Wage: Ben Carson Has a Point
At last night's two Republican debates, economic issues largely took a backseat. But one came up a few times: the minimum wage. In the so-called undercard debate, former senator Rick Santorum suggested raising it gradually. At the main event, Governor Scott Walker defended his previously stated desire to keep it where it is, citing the very real possibility that raising the wage could hurt employment.
One candidate, though, had a suggestion that falls between the two positions. Retired neurosurgeon Ben Carson suggested creating two minimum-wage tiers: a "starter" and a "sustainer." The former, he suggested, would be for younger people starting their careers, while the latter would be for older individuals who might be supporting a family.
In fact, America already has a policy like this. While the current minimum wage is $7.25 per hour for most people, federal law allows employers to pay a special minimum wage of $4.25, provided the worker is under 20 and has worked for the employer for less than 90 days.
While the minimum wage will always have a negative effect on employment, such a two-tiered system can mitigate the damage, since young people are disproportionately hurt by the minimum wage. Texas A&M University professors Jonathan Meer and Jeremy West found that while higher minimum wages had a strong negative influence on the employment prospects of young workers, the effects are much smaller for workers over 35.
This is because young people entering the labor force are more likely to lack the skills that command higher wages. They need to work first, at low wages, to gain experience that will make them more marketable in higher-paid occupations.
There are several problems with America's current youth minimum-wage policy. Most states, when increasing their own minimum wages, do not include a similar exemption for young workers. This renders the federal youth wage largely ineffective.
Additionally, the eligibility requirements for the youth minimum wage are too stringent. According to the Bureau of Labor Statistics, just 21 percent of workers who make at or below the federal minimum wage are under 20 and thus eligible for the program. Since minimum-wage workers skew younger (half are under 25), even a modest increase in the eligibility age for the sub-minimum wage could bring many more individuals under its purview, thus granting them more work opportunities.
Carson needs to develop his two-tiered minimum wage proposal further, but it could work something like this. We could raise the eligibility age for the sub-minimum wage to 25 and remove the 90-day limit. This would allow young workers to get more comprehensive training in jobs that could then lead to higher wages, similar to Germany's wildly successful apprenticeship program. This would be the "starter" wage. Carson would also need to work with states to get them to create similar exemptions in their own minimum-wage laws.
Politicians on the left, with their religious devotion to raising the minimum wage as a poverty cure-all, could then target the "sustainer" wage for workers over 25, who are more likely to use it to support a family. These individuals represent only a tiny fraction of those in poverty, but raising this wage might be an acceptable political concession in exchange for an expanded "starter" wage.
Given the United States' current political climate, some form of minimum wage is probably here to stay. But changing the way it operates could lessen its negative effects while staying within the realm of political feasibility. Carson may be on to one of those rare policy ideas with both political and economic benefits.
Preston Cooper is a policy analyst at the Manhattan Institute and a Young Voices Advocate. Twitter: @PrestonCooper93