CBO: Higher Minimum Wage, Smaller Military Leads to Jump in Male Unemployment, Incarceration

Rates of jail-time, joblessness up nearly 50 percent for young men

minimum wage

Minimum wage policies may have played a role in the significant jump in unemployment and imprisonment among young men, according to a new report.

The nonpartisan Congressional Budget Office found that 6 million young men are jobless or behind bars, about 16 percent of all males aged 18 to 34. That represents a nearly 50 percent increase from 1980, when 11 percent of men were jobless or in the prison system. These rates are higher for less educated men: 20 percent of young men with high school diplomas lack work or freedom.

"Young men with less education were likelier than those with more to be jobless or incarcerated. For example, in 2014, about 1 in 5 young men with only a high school education was jobless or incarcerated," the report says.

The CBO found that minimum wage laws have played a role in today’s jobless situation. Higher labor costs have denied unskilled or inexperienced men the ability to find employment. Without entry-level work, these men often turn to government support, driving up costs to welfare programs while lowering taxpayer funding levels.

"Higher minimum wages may also have increased joblessness among young men," the report says. "In the future, they will probably earn less than they would have if they had gained more work experience or education when young, resulting in a smaller economy and lower tax revenues."

Michael Saltsman, research director at the free market Employment Policies Institute, said that the effects of higher wages have negatively impacted an entire generation.

"By eliminating desperately needed opportunities for those at the margins of the workforce, we're creating a lost generation of young men," Saltsman said. "Raising the minimum wage is no longer just an economic problem—it's a societal problem."

The CBO also found that young men have less of an incentive to find work because of federal welfare policies, as well as cuts to the military—a popular vocation for less educated men. Decreasing the take-home pay of young men can leave them with less motivation to find work when welfare benefits can subsidize their living.

"Employment in the military, which had long been an important source of work for less skilled young men, fell significantly during the 1990s; also, the military now employs more young women than it did in the 1980s, and it has stopped accepting people who have not graduated from high school," the report says. "Federal spending on means-tested benefits—that is, cash payments or other benefits for people with relatively low income or few assets—increased substantially between 1980 and 2014, possibly reducing young men’s incentives to work."

Saltsman said that the 2016 presidential election will determine whether these trends continue.

The minimum wage has been at the center of the Democratic nomination fight between Sen. Bernie Sanders (I., Vt.) and former secretary of state Hillary Clinton, who support $15 and $12 minimum wages—up from the current $7.25 rate. Likely Republican nominee Donald Trump has also expressed a willingness to hike minimum wages.

Saltsman said these rates do not come without costs.

"When young men are priced out of the entry-level job market today, they become less employable in the future and more likely to need income support programs," Saltsman said. "Taxpayers shouldn't be fooled into believing they'll save money when the minimum wage goes up."