Paying the price

Esther Smith can't even tell you everywhere she's dropped her resumé. She's posted it on nannying websites, sent it to friends of friends, given it to retail stores, and called to follow up on every job. "I don't even know where my resumé is now," she said. "It's floating around everywhere in cyberspace."

Before she came to New York City, Smith polished her resumé-a sports referee, a cashier at a smoothie place, and four years of experience as a CPR-certified nanny. She contacted the New York friends of people she already knew in Orlando, Fla., and lined up an interview with an Upper East Side mom two days before she arrived. It was $15 an hour to nanny three girls-perfect, but it went to an older, more experienced woman. Anthropologie is hiring 100 new part-time sales associates but hasn't called her back after an interview. Her next interview is at J. Crew.

More than two months after starting her job search, Smith, 18, is still unemployed-another harsh recession statistic who may also be a victim of the July 24, 2009, federal minimum wage increase.

The Labor Department reported on Oct. 2 that the nation's unemployment rate had risen to 9.8 percent, the highest level since June 1983. But unemployment among 16- to 19-year-olds was much worse, 25.9 percent in September-a record high.

This is despite a stimulus bill earlier this year that allocated $1.2 billion to subsidize youth employment. The money goes to programs like New York City's Summer Youth Employment Program (SYEP), which fully subsidized the salaries of 52,000 teens this summer. SYEP received the most teen applications in recent memory-over 139,000-and received an additional $29 million in federal stimulus money to enroll an extra 17,000 teens in the program. In Washington, D.C., SYEP fully subsidized the minimum wage for 19,000 youth jobs.

Yet as the federal government increases the minimum wage to $7.25 per hour, teen unemployment rises. While the higher minimum wage is good for teens who are already employed, that unemployed 25.9 percent will find it hard to get the job skills they need to compete and move up the employment ladder.

Websites like MyFirstPay­­check.com, where employers post job openings for teen job seekers, get an average of 1,000 job seekers a day but are finding it harder to convince employers to post jobs when they already have stacks of resumés on file. And the competition-from adults who would never have considered working for minimum wage before-is stiffer, said CEO Austin Lavin: "Employers are finding more experienced applicants, which makes it harder for teenagers to stand out."

Teens are even competing with adults for internships. According to the National Association of Colleges and Employers, employers are cutting college student internships by nearly 21 percent. Adults looking for career changes often fill those internship spots.

While it's too soon to research the effects of the latest federal minimum wage increase, a 2006 University of Georgia study found that for every 10 percent increase in the minimum wage, teen employment at small businesses falls by 4.6 percent to 9.0 percent. Paul Bachman, director of research at Beacon Hill Institute, explained that when the minimum wage exceeds the worth of an unskilled teenager's work, employers hire adults instead. For instance, if an untrained teenager can only contribute $5 per hour of work and the employer has to pay $7.25 an hour, the employer will hire an adult with more job skills instead. It's the same for other entry level, low-skilled workers.

Using stimulus money to subsidize teen jobs results in two government policies butting heads, said Bachman. The government is first making it unprofitable for businesses to hire teens, then subsidizing teen employment: "You're creating unemployment on one hand and trying to subsidize the same employment with the other hand."

Meanwhile, Smith is talking to older college girls to develop a nanny-job-seeking strategy. She can survive this semester without a job, but soon she'll have to start slashing her budget. "Especially the times right now, I'm sure everybody and their mom is looking for work," she said. And the moms are beating the teens to it.