No link

The Press reports:

Labour youth affairs spokeswoman Jacinda Ardern said yesterday there was no link between youth rates and joblessness.

No link? I’m sorry Jacinda, but that is a grossly illiterate comment to make, economically. Are you really saying the cost of labour has absolutely no impact on whether said labour is hired?

This is like saying there is no link between the cost of cars and the numbers of cars people buy.

“The current youth unemployment rate is at similar levels to those reached in the recession of the early 1990s when youth rates [existed].”

But they key difference is that overall unemployment is far less than in the early 90s. For most age groups, it is only half what the peak was in 1991. It is only the under 20s which have reached the same peak.

This graph show the total level of employment (in 000s) for the two youngest age groups. Now do you really want to say there is no link, considering when it was youth rates were abolished?

Labour and Jacinda could argue that they would rather have say 110,000 young people earning $12.75 an hour than say 130,000 young people in work where some only earn say $9 an hour. That sort of trade off is what setting minimum wages tends to be all about.

But to claim there is no link at all between the cost of hiring a young worker, and the number who are in work, is just not possible.