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Minimum wage exemption to help train state's unemployed youth fails
By Kylee Zabel
WNPA Olympia News Bureau
Washington has the sixth highest teen unemployment rate in the nation at around 28 percent. The national average is 17 percent.
But that figure failed to launch legislation this session that could have improved opportunities for teens and young adults to enter or return to the work force.
GOP legislators introduced statutory proposals in each house — companion bills similarly worded — that would have created a training wage in Washington State. Both House and Senate measures fell flat this session, failing to make it past cut-off March 13.
HB 1150 and SB 5275 would have allowed small businesses (50 employees and under) to hire new employees at a less-than-minimum wage for the first 680 hours of work completed.
Sponsor of the House version, Rep. Cary Condotta (R-Wenatchee), said the bill was intended to address the chronically high rate of teen unemployment in Washington by incentivizing businesses to provide jobs to young workers with little to no work experience.
The Employment Security Department stated that between February 2012 and January 2013, 124,100 16 to 19 year-olds were estimated to be in the civilian workforce. Of those 89,000 are currently employed and 35,100 are unemployed and actively looking for work.
According to the legislation proposals, the Department of Labor and Industries would be required to provide a training certificate that would allow employers to pay new employees 75 percent of the state minimum wage or the full federal minimum wage, whichever is greater.
The current hourly state minimum wage is $9.19, with 75 percent of that being $6.89. The federal minimum wage is $7.25. So, according to current minimum wage standards, if the proposals had been adopted, qualifying new employees could be paid $7.25 per hour, thus saving employers nearly $2 per hour from the mandated minimum wage.
Last year young adults ages 18 to 24 had an unemployment rate of 16.7 percent in Washington. This is a six-percentage point increase from 2011, where the age-group unemployment rate was 10.6 percent. Job prospects improve for those in the 25-to-64 year age bracket, with an unemployment rate of only 7 percent.
There would have been restrictions under terms of the legislative measures:
• The training period for an employee, during which time he or she would earn the training wage, would not exceed 680 hours. For a five-day, 20-hours-per-week job (many teens juggle school with part-time employment), their training period would expire in a little over five months.
• No more than 10 percent of the workforce may be working under a training certificate.
• An employer may only use the certificate once per new employee.
• If an employee working under a training certificate was fired before completing his or her 680 training hours, the employer of that worker may not hire a replacement to work under a training certificate for at least one year.
• The training certificate would only apply to entry-level positions.
While the measures intended to primarily address teen unemployment, HB 1150 did not specify an age bracket to which the legislation would apply. The sponsor explained that discriminating against different age groups would only incentivize employers to hire younger workers at the expense of older applicants. For example, if the bill applied to those 18 and younger, an employer would avoid hiring a 19 year old, even if that 19 year old was facing a greater economic hardship, cited Condotta.
Concern remained that employers would discharge their established workforce in order to save money by hiring workers under the training certificate. Teresa Mosqueda of the Washington State Labor Council (AFL-CIO) claimed the legislation is actually a poverty-creation bill when it comes to working families, not a jobs-creation bill as the sponsors have stated.
Because the certificates would be held by the employer instead of the employee, another expressed concern is that employers would begin to replace seasoned employees with green new-hires. As a result, families barely able to make ends meet would take the largest hit, according to opponents of the bills.
"You're taking money directly off the kitchen table," said Mosqueda.
These workers that are removed from their jobs would then be eligible for various social services, causing government to ask even more of the already strained taxpayers, Mosqueda added.
Nevertheless, proponents and the two sponsors agreed that the sideboards the legislation establishes and its effect on only entry-level jobs would maintain job security for existing employees.
There is also the question of whether it would be practical for employers to discharge their already-trained employees for lower skilled replacements, taking into account the time it may take a new employee to develop the skill levels of current employees.
Angus Lee, prosecuting attorney in Grant County, predicted that taxpayers would be picking up the tab if the legislation did not pass as more teens would be on the streets and in gangs than in school and learning a trade. According to Lee, most gang members are relatively young and a major obstacle that restricts them from getting a job is their lack of work experience and practical skills.
If employers had the financial flexibility to take on the risk of employing low-skilled workers, Washington's skilled workforce would expand and hope would be given to impoverished and troubled youth, he stated.
"Employers need an economic incentive to take a gamble on a young worker who is unskilled, has no work history and no experience," said Erin Shannon of the Washington Policy Center.