South Dakota Could Offer the Key Fix to the Minimum Wage Controversy

South Dakota doesn’t get a lot of love these days: North Dakota has the oil, Montana has the mountains, and millions of elementary school students mispronounce the name of its capital city of Pierre every year. (It’s “Peer,” not “Pee-yair.”)

But this fall, South Dakota voters have the chance to approve a really good idea that the rest of the country should pay attention to: allowing employers to hire teenagers for less than the state’s minimum wage.

That’s the biggest problem with the ever-popular idea of raising the minimum wage: It pushes people with less-valuable labor — young people, immigrants, workers without a high school diploma — out of the workforce. Teen labor simply isn’t worth very much, but getting them into the workforce comes with big benefits. (More on that in a bit.)

By lowering the minimum wage for teenagers, we can get some of the benefits of a higher minimum wage — higher wages for people who might lack bargaining power with their employers — while avoiding one of the major downsides and making it harder for young people to find a job.

South Dakota Republicans proposed the teen minimum wage in 2015, in response to a ballot initiative that raised the state’s minimum wage from $7.25 to $8.50. The teen wage was signed into law by Republican Gov. Dennis Daugaard, but opponents put it on hold by sending the measure to voters this fall.

Having the question on the ballot is not optimal: Voters tend to love raising the minimum wage, even in deep-red states like South Dakota. (The state’s 2014 minimum-wage increase passed as a ballot question 55-45.) Subjecting economic policy questions to a popular vote just isn’t a great idea, but it’s what we’ve got.

Thankfully, this is a different kind of battle than your typical minimum-wage fight: This isn’t about whether employers should have to pay a so-called living wage, though Democratic talking points in favor of the minimum wage on that question are well worth challenging.

Rather, it’s a more politically favorable question for the Right: whether we want to make it easier or harder for teenagers to find work.

Most parents don’t need to be convinced, but the benefits of getting teens to work are huge — and obvious. It gives them something to do after school and in the summer, boosts their skills and work discipline, and starts to build a work history and set of references.

There’s considerable evidence that these benefits are lasting: Americans who have jobs as teenagers work and earn substantially more in their 20s than they do if they didn’t hold down a job as a teen and working a moderate number of hours boosts high school graduation rates, for starters.

And the issue is more acute than ever: Teenage employment is at historically low levels (see below). It’s recovered less than half the way it dropped during the 2008 recession, and the level even before the recession was way down from where it had been up through the 1990s. (Twenty-somethings are working at historically low levels, too; it may not be a bad idea for the lower minimum wage to extend up to, say, 21.)

Source: Federal Reserve of St. Louis

So does a youth minimum wage work as promised? Yes: Studies find nations with a youth minimum wage tend to have more young people employed than the United States does, and the same goes for states.

The effects can be quite significant. Using established economic evidence of the effect of minimum wages on employment, the Manhattan Institute’s Preston Cooper recently calculated that a minimum wage of $4.25 an hour for teens would, in just a year, raise their employment levels back to about where they were before the recession.

Note that we already have evidence about whether a teen minimum wage like South Dakota’s would work at helping young people hold down jobs. In part that’s because the federal minimum wage law does allow for a lower wage for teenagers ($4.25 an hour). But it only applies for workers employed for less than 90 days, and it only applies in 15 states (including South Dakota). Other states have laws that further restrict the use of the teen minimum wage, or supersede it with higher minimum wages of their own.

So there may be room for action at the federal level: Republicans in Congress have resisted pressure over the past few years to raise the federal minimum wage, but should the situation change, an increase should include a broader federal youth minimum wage. Certainly, right-leaning states that don’t already have teen minimum wages should consider following South Dakota’s lead.

Meanwhile, a teen minimum wage is a good way to reduce some of the harm from unprecedented increases in the minimum wage now being passed by some blue states and cities, where liberals are rallying around the idea of a $15 an hour minimum wage. This aggressive movement is pitched as the best way to boost wages for working families — which, of course, it’s not.

But that leaves open the possibility that even the movement’s proponents will acknowledge most 16-year-olds might have a pretty hard time getting hired to do a $15-an-hour job. Urban teen employment, in fact is a goal shared by both liberals and conservatives. (See the efforts devoted, with limited success, to trying to create summer jobs for kids.)

Conservatives certainly should be doing their best to stop the liberal crusade to eliminate thousands of jobs with their “fight for 15.” But where we lose, a teenage minimum wage will help mitigate some of the worst effects, and liberals might well have a hard time saying no to it.

Just don’t tell them South Dakota thought of it already.

Patrick Brennan is a contributor for Opportunity Lives. You can follow him on Twitter @ptbrennan11.