The cost of no youth minimum wage

The Department of Labour has published a report they commissioned on the impact of the decision by Parliament in 2008 to replace the youth minimum wage (set at 80% of adult minimum wage) for 16 and 17 year olds with a new entrants minimum wage that lasts for 200 hours only (5 weeks full-time).

They found:

This research found that this minimum wage increase accounted for approximately 20–40 percent of the fall in the proportion of 16 and 17 year olds in employment by 2010. Overall, this implies that the introduction of the NE minimum led to a loss of 4,500- 9,000 jobs for 16 and 17 year olds (employment of 16 and 17 year olds fell from 61,400 to 39,500 between 2007 and 2010).

I want readers to quote that figure to both Labour and National MPs and candidates if they ever talk about wanting more young people in jobs. Tell them you don’t want platitudes but will they reverse a decision that put up to 9.000 young people out of jobs.

The change did not just affect 16 and 17 year olds though. It also led to some people working fewer hours and earning less money than before the change.

The research also found that, relative to 20 and 21 year-olds, average hours worked by 16 and 17, and 18 and 19 year olds fell after 2008, as did their earnings and total incomes.

This study is based on the 100,000+ pieces of data collected in the Household Labour Force Survey over the last few years, so it is not just a “view point”, but a rigorous study based on extensive research.

I hope National has the guts to do the right thing, even if not the popular thing, and announce they will at a minimum reintroduce a youth minimum wage. They could even grandfather current rates in, so leave the current youth rate at $13/hr until it hits the floor of 80% of the adult rate which would take several years to occur, being $16.25 an hour.

Or they could be really ballsy and just announce that the minimum wage in future only applies to those aged 18 and older rather than 16 and older.