You Need To Let Your Kids Work ASAP

I want to talk to you today about something likely on all of our older kids' minds. No, not that. It’s much more simple. Money. And how can they get some of their own.

Most kids want to earn some cash so they can go to the movies with friends, grab some food after school, or save up for the latest Nintendo Switch. As soon as they start this journey, they’ll want to know from YOU how much they should be getting paid to mow the neighbor's lawn, shovel neighborhood snow, or work a few shifts at Burger King.

What will you tell them?

We know what they’ll hear at government schools. Something about the “minimum wage” most likely. Well, I’m here to tell you one simple thing that you can pass along to your kids.

The minimum wage is zero. Why? Because no one is under any obligation to hire you, ever.

Kids, most of them, do actually love to work. They just want it to be work they choose and have ownership over. We’re not going to talk today about sending kids back to the coal mines… though I know one or two who might find that thrilling.

“Let Them Eat Cake” Economics

Let's start with what happened recently in California, shall we?

Fast food workers at places like Wendy's got a major hourly pay bump in 2024 to $20 per hour. HOORAY?! On the surface, it’s a win for fast-food workers who need a livable wage. A "living wage" is a very common phrase these days, but goes back to the very origins of Marxist arguments about labor versus capital.

Should every job provide this “living wage”? Not every job is meant, or even sought after, to cover every living expense, especially when it comes to our kids. A lot of these jobs are occupied by teenagers living at home with their parents. They don’t need a livable wage; they need a first opportunity to work.

By cutting off the bottom tier of the pay scale, all you're doing is taking away options for the younger people.

Yes. It’s very expensive to live in a place like San Diego. It’s hard to survive. People feel that higher wages are necessary to live in such expensive places. One of the biggest parts of your cost of living is your housing–mortgage or rent. Housing in California is astronomically expensive.

The reason for this is similar to the minimum wage: California has intense minimum building requirements. There are very high bars you have to cross before you can build new housing in that state. What that means is that a house that might cost $300 thousand in Houston costs almost $1 million in San Diego, all because of the rules, regulations, and minimum standards that California imposes on building. I consider these hyper-regulated states to essentially follow a Hunger Games form of economics… let them eat cake economics.

A Brief History of Teens & Work

If you look at labor statistics dating back to 1953, the unemployment rate for teenagers used to be 6.7%. As of March 2023, the unemployment rate was still under 10%, but it's creeping back up. In April 2024, it hit 11.7%.

In the grand scheme of things, we still have relatively low teen unemployment. But what is the reason for these shifts?

I think it's useful to listen to a clip from Thomas Sowell, who pointed out that black unemployment rates were once lower than those of whites as far back as 1890. Black unemployment was lower than white unemployment even in the post-Bellum South, which is a stunning data point.

The reason is rather simple. When there was no federal minimum wage, kids, including black teens, could get employment at any wage they were willing to accept. This allowed them to start learning skills and reach the first rung on the ladder. That’s how people move up quickly.

McDonald’s, for instance, has over 100% turnover a year. People start flipping hamburgers and quickly rise in economic status if they work even a little hard. Then they leave for greener pastures or enter management at the restaurant. That’s how it is supposed to work.

The Fair Labor Standards Act of 1938 set the first federal minimum wage, but inflation in the 1940s rendered it meaningless. The minimum wage became irrelevant, and wages naturally adjusted with inflation.

That’s why teenage unemployment fell: the de facto reduction in the minimum wage. It was legal to hire less experienced workers who had less overall financial need. Remember! Teenagers aren’t usually paying the mortgage. They don’t need a “living wage”.

We talk about social justice a lot these days, but advocates of the minimum wage back then were honest about its purpose: to block opportunities for people they considered undesirable in the workplace. This was explicit in the language they used, and the minimum wage was one of their favorite tools to prevent racial minorities from competing for jobs.

Minimum wages are a form of price control, reducing access for those willing to work for less. If employers are forced to pay a high minimum wage, they're more likely to replace low-skilled workers with machines.

If this resonates with you, check out my full video essay on why our kids should get to work.

Who Determines Worth?

The concept of marginal productivity of labor is central here. Wages are determined by how much value an individual creates for a company. This is why engineers make more money than janitors: the monetary value they generate for the firm is higher. If we want to increase wages, we need to focus on increasing the value that people can create.

For kids, that starts with learning basic skills through work. Work for kids is like school, but it pays them instead of the other way around.

For me and my wife, this belief led us to prioritize work experiences in our son's education. He started working in seventh grade, and by his senior year, he was working at a hospital.

These experiences are crucial for learning basic life skills.

• Showing up on time

• Helping others

• Handling difficult situations

• Working with people from diverse backgrounds.

I want to leave you with a quote from one of my favorite economists, Henry Hazlitt, who said:

“You cannot make a man worth a given amount by making it illegal for anyone to offer him anything less.”

If we want our kids to climb the ladder, they need to start earning now.

Let me know what you think in the comments, and get your kids out into the workforce as quickly as possible. They have nothing to lose and only experience and savings to gain.