AgdaPkt 2017-09-25 Closed and Joint SA PFA

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The Effects of a $15 Minimum Wage by 2019 in Santa Clara County and San Jose 48 IMPACTS ON SPECIFIC SUBPOPULATIONS Young Adults and Learners California regulation allows for “learner” employees to be paid 85 percent of the minimum wage during their first 160 hours of employment in occupations in which the employee has no previous similar or related experience (California Department of Industrial Relations 2013). Local minimum wage laws typically incorporate state definitions of which employees are covered by state labor law. Of the 18 local minimum wage laws in California: • 11 have no other special provisions for teens or learners • 4 exempt youth training programs operated by a non-profit corporation or government agency (Sacramento, Richmond, Berkeley, San Diego). • 1 exempts publicly subsidized job-training and apprenticeship programs for teens (San Francisco) • 2 extend the state learner provision to 480 hours or 6 months (Santa Monica, Long Beach) • 2 restrict the learner provision to youth under the age of 18 (Los Angles, Pasadena) The goal behind exempting young workers from minimum wage requirements is to avoid creating disincentives for hiring such workers. In theory, higher minimum wages could reduce the incentive for employers to hire less skilled workers, thus disadvantaging teens. On the other hand, higher minimum wages might draw more teen workers into the labor market, leading to an increase in teen employment. Teens make up a shrinking share of the workforce. We estimate that teens will constitute 4 percent of workers affected by the proposed increase (see Table 4). A large body of research suggests that the effect of minimum wage laws on teen employment is either negligible or very small, and may run in either direction (Manning 2016). Giuliano (2013) finds a small increase in relative employment of teens after a minimum wage increase using personnel data from a large U.S. retail firm. Neumark and Wascher (1992) find a modest negative impact on teen employment through cross-state comparisons. Allegretto, Dube and Reich (2011) follow Neumark and Wascher’s methods, but control for regional differences and find no measurable impact on teen employment.26 On the downside, subminimum or training wages for teens may create an incentive to hire middle-class teenagers over low-wage adult workers in high-turnover industries such as food-fast restaurants. When state or federal law has included a subminimum wage for teens, very few employers made use of it (Card and Krueger 1995).27 To summarize, it appears that differential treatment for teens beyond what is already permissible in California law is not necessary. 8.A. - Page 62