FOR SEVERAL YEARS the idea of legislating a lower minimum wage for youth has been simmering on the congressional back burner, flaring up now and then to throw terror into the heart of organized labor. Although it is a serious idea, Ronald Reagan's attempt even to discuss the subject in the campaign was greatly distorted and attacked by his opponents. But now, with Mr. Reagan elected and the Republicans ascendant in the Senate, Sen. Orrin Hatch, the heir apparent to the chairmanship of the Senate Labor and Human Resources Committee, has announced his intention to introduce such a bill at the start of the new session.
Economists keep emphasizing that a strong economy is the biggest factor in improving job prospects for the young, but few would argue that lowering teen-age wages wouldn't increase youth employment somewhat. The question is how much and at what cost -- to whom?
Available evidence shows that each 10 percent decrease in the overall minimum wage, relative to average manufacturing wages, might increase youth employment by between 1 and 3 percent, and somewhat more if the wage reduction were limited to youth. Translating this into expected levels for 1981, you get a 25 percent reduction, such as Sen. Hatch has proposed, producing between 85,000 and 255,000 jobs for youth. If all the new jobs were taken by youth currently in the labor force, this would lower the youth unemployment rate (now at 18.4 percent) by less than 3 percentage points at the outside.
Some and perhaps many of the additional jobs for youth would come at the expense of either school work or, as William Raspberry suggests on the opposite page, work formerly done by low-wage adults. Neither prospect is appealing, and in the latter case there are immediate budget and social costs as well. About 70 percent of low-wage workers are adults and, unlike low-wage teen-agers, the great majority of them are from lower income families. Many have dependents to support. Displaced from their jobs by relatively cheap teen-age labor, these adults and their families are likely to end up on unemployment or welfare rolls.
That brings us to one more question. Is this really a problem requiring government action now? It is true that the measured youth unemployment rate is high, relative to the adult rate. But it is also true that a higher proportion of youth are working than ever before. About 46 percent of youth aged 16 to 19 are now employed, even in the midst of a recession, compared with 38 percent 10 years ago. And very few of these teen-agers are working because they really need to. Many experts view high unemployment rates among youth as a normal part of the school-to-work transition. They also say that demographics may solve the youth unemployment problem as the number of youths entering the labor market in the next 10 years will decrease by over 4 million compared with an increase of almost 3 million in the last decade.
An urgent problem does exist among minority youth, particularly in inner cities.Black teen-age unemployment has been between 30 percent and 40 percent for the last several years, and many more black than white youths are both poor and out of school. But it is the better equipped white suburban youth who are likely to be the main beneficiaries of youth wage-differentials. In fact, minority youth might be made worse off as their low-wage parents got displaced by youthful job-takers.
Putting all this together, you can conclude two things: One is that if there is a long-run youth employment problem (and we're not so sure there is), it isn't clear that a youth sub-minimum wage is the proper remedy for it. The other is that it still isn't clear that the side effects of the cure wouldn't be worse than the original ailment. This one looks to us like a prime candidate for inaction.