Minimum-Wage Increase Could Cost Some Teens Their Jobs

Summary

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WSJ Your Money Briefing

Episode: Minimum-Wage Increase Could Cost Some Teens Their Jobs

Date: March 29, 2021
Host: J.R. Whalen (B)
Guest: Alison Prang, Wall Street Journal Reporter (C)

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Overview

This episode examines how a potential increase in the federal minimum wage—a key part of the Biden administration’s economic plan—could disproportionately affect teenage workers. While raising the minimum wage would benefit millions of hourly workers, economists and on-the-ground stories suggest that teens, who already face elevated unemployment in the pandemic, might be among those most likely to lose their jobs if businesses are forced to cut costs.

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Key Discussion Points & Insights

1. The Current Job Market for Teens

[02:15–02:45]

• Pandemic Impact: The pandemic hit teenage workers hard, with their unemployment rate peaking at nearly 32%, significantly higher than the overall unemployment rate.

  “Their unemployment rate in the pandemic hit almost 32% at one point... teens have really, really been impacted. …they're some of those frontline workers... in restaurants, in areas really hit by this virus…” — Alison Prang [02:23]

2. Details of the Minimum Wage Proposal

[02:45–03:26]

• Federal vs. State Minimum Wage: Many places already have higher minimum wages, but the proposed rise would take the federal rate to $15 by 2025, phasing in gradually.
• Projected Job Losses: According to the Congressional Budget Office, about 1.4 million jobs could be eliminated, with younger, less-educated workers (often teens) at particular risk.

  “The Congressional Budget Office has estimated that [a $15 minimum wage] would lead to some job cuts... in particular could impact people who are young and people who are less educated, and that could potentially include teens.” — Alison Prang [03:14]

3. Why Teens are Especially Vulnerable

[03:26–04:12]

• Less Work Experience: Employers may hesitate to keep or hire inexperienced workers at higher wage rates, prioritizing older or more experienced staff.
• Employer Example: A restaurant industry employer, with a quarter of staff as teenagers, noted teens would “be among the first to go” in layoffs prompted by higher labor costs.

  “If they had to cut jobs, you know, he said teens would be among the first to go... if people are going to have to pay people more money, they're not going to be able to afford to hire more inexperienced workers.” — Alison Prang [03:38]

4. Long-term Effects on Teens

[04:12–05:14]

• Loss of Work Experience: Missing out on entry-level jobs means teens lose valuable skills and real-world experience, like punctuality and adult interaction, which are important for future careers.
• Skill Development: Jobs teach responsibility, work ethic, and can help teens discover career paths—not just provide pocket money.

  “There's something about being in the workforce and having a connection to it. Your experience is really valuable... you’re learning to interact with adults... essential things for teenagers.”—Alison Prang [04:21]

• Financial Responsibility: Many teens use earnings for real expenses—not merely leisure.

  “She pays her phone bill, she's raised by a single parent... they're using money for things similar to what adults would.” — Alison Prang [05:04]

5. Nuanced Effects of Wage Hike

[05:14–05:58]

• Some Will Benefit: Not all impacts are negative—some teens with jobs may see a pay bump if they’re able to keep positions.
• Financial Reality for Teens: While many teens have lower living expenses, some contribute to household bills or save for college.

  “Some of these teens are paying for something more substantial like a bill... if you’re saving for college and need spending money… those are real costs that teenagers have.” — Alison Prang [05:26]

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Notable Quotes & Moments

• On the risk of teen job loss:

  “If they had to cut jobs, you know, he said teens would be among the first to go.” — Alison Prang [03:38]

• On the broader purpose of teen jobs:

  “You’re actually learning about valuable life skills from working and you’re learning to interact with adults.” — Alison Prang [04:25]

• Challenging stereotypes about teen earnings:

  “We picture a teenager as… bringing in disposable income, which is true, but they also have real expenses.” — Alison Prang [05:31]

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Important Timestamps

• 02:23 – Pandemic’s impact on teen unemployment
• 03:14 – CBO estimate: 1.4 million job losses, teens at risk
• 03:38 – Employers likely to cut teen jobs first
• 04:21 – Long-term value of teenage work experience
• 05:04 – Teens’ real financial needs

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Final Thoughts

The episode provides a balanced look at the complex effects of raising the minimum wage. While higher pay could help many, it also threatens job prospects for America’s youngest, least experienced workers—potentially depriving them of vital first job experiences and hard-won lessons in financial responsibility. The debate around a minimum wage hike thus has high stakes, not just for adults but for the next generation entering the workforce.

Transcript

[A]

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[B]

Here's your money briefing for Monday, March 29th. I'm J.R. whalen for the Wall Street Journal. A plan to raise the federal minimum wage was dropped from the recent stimulus package, but it remains a hallmark of the Biden administration's economic plan. And while it would boost wages for millions of hourly workers, many economists say it could also result in teenage workers being pushed to the sidelines.

[C]

I talked to one person in the restaurant industry who employs a lot of teenagers. About 25% of his workforce is teens. And if they had to cut jobs, you know, he said, teens would be among the first to go.

[B]

Coming up, our reporter Alison Prang will discuss why a minimum wage increase could impact teens in particular and the long term effect it could have on their careers. That's after the break.

[A]

This podcast is brought to you by reliaQuest. Cyber criminals are constantly attacking. They want your data. They want your identity, they want your innovation. RelioQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise. Learn more at reliaquest.com that's R E L I A Q U E-S-T.com.

[B]

Washington's been debating an increase in the federal minimum wage. Economists say it would lift many workers out of poverty, but also cost many others, especially the youngest workers, their jobs. Our reporter Alison Prang has been looking into the numbers behind this and she joins me now. Alison, thanks for being with us.

[C]

Thanks so much for having me.

[B]

So, Alison, let's start by getting a sense of what the employment picture looks like right now for teenage workers. They've had a very tough go of it during the pandemic.

[C]

They have their unemployment rate in the pandemic hit almost 32% at one point and that's been much Much higher than we've seen the overall unemployment rate for aver. So teens have really, really been impacted. You know, there's some of those frontline workers. They're working at restaurants, they're working in areas that have really been hit by this virus and how it's shut down business and various aspects of the economy.

[B]

Now the Labor Department says that teens made up 37.5% of minimum wage earners last year. So where do things stand with efforts to raise the minimum wage and what are the expectations for how it would affect teens?

[C]

So the proposal is from Democrats. They're generally who's pushing for this increase. It would be, if their proposal passes, it would be raising the minimum wage to $15 by 2025. So it would go in increments. It wouldn't be a boost all at once. The Congressional Budget Office has estimated that that would lead to some job cuts. It would cut about 1.4 million jobs. And they've noted that this in particular could impact people who are young and people who are less educated, and that could potentially include teens.

[B]

And we should be clear, we're talking about a potential increase to the federal minimum wage. Many states and cities already have a minimum wage higher than the current federal rate. So why would teens in particular be hurt by a bump in the minimum wage?

[C]

So teens are the less experienced workers we're talking about. You know, I talked to one person in the restaurant industry who employs a lot of teenagers. About 25% of his workforce is teens. And if they had to cut jobs, you know, he said teens would be among the first to go. And the situation with that is that, you know, if people are going to have to pay people more money, they're not going to be able to afford to hire more inexperienced workers. And teens themselves are actually all a little bit worried, should the minimum wage go up, that it could affect kind of their subsect of workers.

[B]

So if teens are affected and it's harder for them to find an entry level job, what could the long term effect for them be?

[C]

That's a really good question. One economist I talked to just noted, you know, there's something about being in the workforce and having a connection to it. Your experience is really valuable. You're learning that, you know, not showing up to work, things like that, that they have consequences. You're actually learning about valuable life skills from working and you're learning to interact with adults. Those are really essential things for teenagers. For some people too, they're learning maybe industries they might want to go into. I Talked to one woman who works at a bakery. She's not right now because of the pandemic and her family is immunocompromised and she's, that's something she's actually interested in. It's not just necessarily something to just earn side money in. And it could also impact like it impact anyone what they're bringing in. And some teens are actually paying bills. I talked to one teenager who, she pays her phone bill, she's raised by a single parent. And you know, so it's not just teens, you know, affecting, oh, I have less money to go out with my friends sometimes. It's that, you know, they're, they're using money for things similar to what adults would.

[B]

Right. And let's not forget the flip side here. Some teens, like the one you just referenced, they'd be receiving raises. But then of course the counter argument is that teens might not need that much money because they've got lower living expenses.

[C]

I think that's generally something we can assume about a lot of teenagers. But like I said, you know, some of these teens are paying for something more substantial like a bill. You know, we picture a teenager as kind of this, you know, 16 year old who's working at a movie theater, working at a restaurant and they're just bringing in disposable income, which is true, but they also have real expenses. You know, if you're saving for college and you need spending money in college, those are real costs that teenagers have. It might be different than say having to pay, you know, a monthly rent on an apartment, but they're still, there's still legitimate expenses that these young people have and need money for.

[B]

All right, that's Wall Street Journal reporter Alison Prang. Alison, thanks for coming on the show.

[C]

Thanks so much.

[B]

And that's your Money briefing. I'm J.R. whalen for the Wall Street Journal.

[A]

This podcast is brought to you by reliaQuest. Cybercriminals are constantly attacking. They want your data, they want your identity, they want your innovation. ReliaQuest fortifies your business with agentic defense AI that detects, contains and eliminates cyber threats in minutes. It helps your security team move faster at the work that matters most to protect the business now and delivers insights to help them predict what's next. ReliaQuest agentic defense for the enterprise. Learn more at reliaquest.com that's R E L I A Q U E-S-T dot com.