Arguing with a rightie about youth minimum wages

Written By: - Date published: 11:43 am, March 20th, 2010 - 29 comments
Categories: minimum wage - Tags: ,

With one eye firmly on the polls and an awareness that cutting wages by stealth is one thing but actually lowering wages is another, National has decided to oppose Roger Douglas’s youth minimum wage reduction bill.

That hasn’t stopped the right activists from promoting it though, so I thought it would be worthwhile having a wee post summarising the arguments on both sides:

Rightie: Youth unemployment is out of control! It’s all due to the abolition of youth rates!

Leftie: OK, first, the youth rate only ever applied to people aged 16 and 17 whereas the ‘out of control’ youth unemployment age group you’re talking about is 15-19. It’s a fair bet that most of the unemployed in this age group are 18 or 19, since most of the rest are at school.
Second, we’ve got rising unemployment thanks to a recession and a do nothing government. Who loses their jobs first when jobs are cut? The least experienced, the lowest skilled, those without a family to support (bosses are human too). Kind of describes young people, eh? In fact, youth unemployment is always significantly higher than general unemployment and you could expect youth unemployment to go up at at least the same rate as general unemployment. That’s what has happened, it is nothing to do with youth rates.

Rightie: I stopped listening at ‘OK’, all that maths stuff is phooey. Statistics can be made to mean anything, 68% of people know that. If we cut the youth minimum wage back to where it was, employers will be able to pay a wage that reflects the amount of wealth the worker produces and, so, could afford to employ more youth workers. Currently, it’s just not worth their while to employ someone who is inexperienced.

Leftie: Well, wages aren’t directly tied to productivity like you’re assuming anyway. Wages are determined by supply of labour and demand for it with a bottom constraint set by the minimum wage, not the productivity of that labour. But well since you’re just going to ignore the empirical argument, how about an argument from principle? How is it right for one person doing the same job as another to be paid less? Why should an 18 year old flipping burgers get $12.50 ($12.75 soon!) while the 17 year old beside him doing the same job gets $10? How is that right?

Rightie: Having a lower minimum wage for teenagers is exactly that a lower floor. How the hell you translate that into youths should be paid automatically at a lower rate I do not know. Once again this is about a floor not a ceiling, not an automatic rate that you must apply to teenagers.

Leftie: But isn’t the whole crux of your argument that employers are being forced to pay teenagers more than they otherwise would and so aren’t employing them at all? If reducing the youth minimum wage to a lower rate than the ordinary minimum wage wouldn’t see employers lower the wages they pay youths (and supposedly employ more of them) what’s the point? Actually, the point of minimum wages is that they increase wages at the bottom end of the scale, that’s why you righties are always opposing increases.

Rightie: Um…

Leftie: And if it’s right to lower the youth minimum wage because you think it is making them unemployable, why not apply that logic to other groups? Maori minimum wage? The logic is exactly the same.
Why not face the facts? You really just want wages at the bottom end to be nice and low so you’re business’s profit margins can be higher. 16 and 17 year olds are a soft target because they can’t vote. Then you’ll be able to use them as a source of cheap labour to hold down the wages of adults in similar jobs.

Rightie: Shut up. This conversation is boring.

29 comments on “Arguing with a rightie about youth minimum wages”

  1. Descendant Of Smith 1

    I’m also still waiting for the employer who says give me tax cuts and I’ll pay my workers more.

    Youth became unemployed because many were employed in industries hit by the recession e.g. cafes, tourism, building industry, retail.

    Most employers laid people off because there was no work. Had very little to do with wage rates.

  2. Nick C 2

    Objective as ever Marty.

    The only leftie arguement there that actually makes sense/has an element of truth is the last one, and thats an argument for lowering the overall minimum wage.

    Plus it ignores the fact that high youth minimum wage has been proven to incentivise kids leaving school early, and the argument that young people benefit more from work experience than they actually do from the money they recieve.

    • Rex Widerstrom 2.1

      Nick raises a good point… and one of the primary reasons I can’t make my mind up decisively on this issue.

      When I was a teenager I was repeatedly told I was “too young” for a job in radio (as though most DJs had done an advanced PhD in babbling). Never having been inclined to take no for an answer I tried ringing Radio Windy and asking for part time work in their newsroom. When I got the predictable response I told them I’d worked out it would cost me about $80 a week (IIRC) for the bus and train back and forth to Wainuiomata and they could have me for that.

      They agreed. Having been given a chance to show what I could do, within a short while I got more work and better pay (though not as much as they’d have had to pay a “real” journalist). But I lived at home with mum and dad and didn’t have expensive hobbies – radio was my hobby – so I could afford to do what I viewed as investing in myself.

      From that I finangled my way into being a stringer for RNZ, and by the time I left school a few years later I had two offers on the table, one from private and one from public radio.

      Whenever I’ve held a senior media position since, I’ve tried to do the same thing – create positions for young people to gain experience even if I wasn’t given the budget to do so and thus had to pay them crap money – or no money at all (yes, I have been an exploiter!!). Some of my “graduates” are now in senior positions in media themselves, in NZ and Australia.

      It was only later that I discovered the term “internships” – used extensively in US politics to give young people an entry into a profession they’d otherwise find impossible, but which often pay literally nothing.

      Where the argument falls to pieces, of course, is when someone is paid crap to work in fast food just because they’re 17. There’s no advanced skill set being learned there, and just simply having a job – any job – to plonk on your CV doesn’t I think, counteract being under-rewarded.

      So what’s the answer? A Youth Rate Tribunal to whom employers have to apply, setting out what the young people they employ will receive in experience in return for working for peanuts?!*

      I have children, two of whom are in the workforce. One is in his twenties and has children but if the other (late teens) one of them was offered an amazing opportunity to get into an industry he longed to work in and which provided real experience and challenge, but it was an unpaid internship, I’d urge him to go for it. While if he were offered a job slinging burgers for $X, even if X = more than the adult rate, I’d probably try to talk him out of it.

      Like everything else in this world, this isn’t a black/white, left/right divide… it’s just that lefties and righties want to make it so.

      (* I’m joking)

      • Descendant Of Smith 2.1.1

        “If one of them was offered an amazing opportunity to get into an industry he longed to work in and which provided real experience and challenge, but it was an unpaid internship, I’d urge him to go for it.”

        Can we assume then that you would be continuing to financially support him, house him, clothe him.

        For lots of our youth this isn’t an option and there is crass exploitation by employers of these youth.

        My son at 18 lost his job as the owner was pressured to employ his nephew by his family. The firm was small and he was a good boss but only had enough work for one of them. Forced into a choice it was inevitable that my son missed out.

        When looking for work a kitchen / bathroom place advertised for a worker. My son turned up at 7:30 in the morning to do a days trial work as requested. Boss wasn’t there so other workers gave him some work to do which he did competently until boss finally turned up at 9:00.

        Boss checked work and then offered him a months trial. Only catch was it was a month trial on no pay – he expected either the parents or the state to support him while he worked for a month for free.

        There are loads of examples like this. I’ve just used one from my own personal experience.

        At the time coincidently we were going to use the firm for doing our bathroom renovations – not only did he get told to stick his offer where the sun doesn’t shine he also lost $15,000 worth of work for his trouble.

        A youth rate tribunal could be an option but based on what I’ve seen with the process and lack of fairness around the system for underrate pay for people with disabilities I wouldn’t think it would be any good.

        • Rex Widerstrom 2.1.1.1

          I should have pointed out I was 14 when I landed that Windy job… I was annoyed because I’d started applying at 11 😀 Obviously as a kid gets older the argument becomes less valid.

          Yeah, I’d continue to support my son if he was offered an internship in the same way (and for the same reasons) I’d do so if he’d chosen to go to university.

          The type of position your son was offered is the other sort – crass exploitation with (I imagine) very little to learn.

          In Australia it’s recognised that there are perfectly valid reasons why some positions ought to be filled only by a person of Aboriginal or Torres Strait Islander descent. I believe the method employed is that there’s a set of criteria which must be met. Then the job is advertised as meeting those criteria and thus restricted to applicants of only that ethnicity.

          If someone feels it’s wrongly classified, they can ask to have it reviewed.

          Perhaps we need something similar for internship / low wage but great opportunity positions versus exploitative wankers like your son’s would-be employer? A job would need to meet certain criteria before an employer was allowed to advertise it at youth rates, and anyone aggreived that it was mis-classified could complain.

          • Descendant Of Smith 2.1.1.1.1

            There is of course some existing provision for employers to take on unemployed people (limited to those getting a benefit ) for up to four weeks on a trial basis where some upskilling is needed and a Straight To Work programme to help address local skill shortages.

            In many respects there are options for employers if they wish to use them.

            Work Experience

            They could also choose to train workers up at their own cost as well.

            For those disgruntled employers they can kill two birds with one stone. Find a worker and have one less dole bludger to moan about. You know become part of the solution.

            While I’m a little uncomfortable with employers being subsidised by the tax payer and the worker only getting a benefit instead of a wage it is a mechanism that currently exists and provides protection to both the worker and the employer. Without an approved program the worker would be at risk of losing his dole – he’s not unemployed even though he’s not being paid and the employer would be at risk for a claim of wages because legally they need to pay minimum wage for work done.

            I suspect many employers are lucky their free workers don’t lodge a claim for wages through the employment court.

      • Pascal's bookie 2.1.2

        Yeah, it is tricky, but i suspect that a huge percentage of the jobs we are talking about are the ‘burger slinging’ type, rather than the internship model. Paying min wage for an intern worth his/her salt should still be a bargain.

        One wrinkle that I think accounts for a part of the rise in youth unemployment is that we are talking about min wage jobs.

        Where the job is such that it is min wage, the employer is essentially like me when I needed to buy a new TV, – price sensitive.

        So it makes sense to me that if the employer is price sensitive, and there is a lower rate for youth, then youth s/he will employ. If that price differential is removed then when choosing between a youth and another applicant, price is no longer a factor, so s/he may well opt for someone older.

        The thing to note is that the job still exists, the increase in youth unemployment from this effect is countered by a decrease in older unemployment. This is most likely to happen I suspect when jobs are scarce and employers budgets are tight, like now in other words.

        Therefore if, like Nick, we want youth to be in school rather than working in ‘dead end’ jobs, then we shouldn’t incentivise employers to choose youth over older applicants.

  3. SPC 3

    Since the USA decided to increase in May 2007 to increase the minimum wage from 5.15 to 7.50 (in 3 steps and after years with no increase at all), the right have focused on rising youth unemployment to call for a youth rate for teenagers ($5).

    They have used the recession (and thus few new jobs) to suggest that young unskilled people are not hired because of the higher MW. All to imply that if the MW was lower there would be more jobs for young people – so if people care about young people they will oppose a rise in the MW, or have them work for less.

    To those who believe there is evidence of a higher bump in unemployment of young people in this recession than would have occured without the end of the youth rate – note in the USA where there was no youth rate to begin with they claim the same thing simply because the MW was increased.

    The “evidence” is there only because in any recession the unemployment of youth goes up. It would have gone up even if there was no minimum wage, as any group dependent on new jobs being created to get into a job is vulnerable when there is a recession.

    As for the idea that there are more jobs for youth if they have a lower rate, this is only true to the extent that people 20+ are displaced by younger workers.

    In the end they simply claim a lower minimum wage means more jobs. Thus the real ambition of the right is to keep the MW at $US7.50 for another 10 years and here to reject the call for a NZ$15 rate here (12.50. 12.75, 13.00, 13.25 etc).

    If the right really cared about new jobs, they would focus on employment growth policy.

  4. SPC 4

    Nick C, young people can now access work experience while staying at school – there are programmes where this can occur and these are expanding.

    Denying people the dole till 18, means that people only have an incentive to leave school if they have a job to go to.

    So we have the right claiming on the one hand that higher wage means no jobs are vailable and on the other the higher wage means they have an incentive to leave school. The contrdiction between the two arguments makes a joke of rationale.

    If a youth rate means more low paid jobs for young people – there is incentive to leave school early – and the price is people over 18/20 without work and unable to access tertiary education because of cut-backs. Talk about the right wing being stupid, no wonder even this government saw through that nonsense and rejected the Douglas bill.

  5. Leftie: OK, first, the youth rate only ever applied to people aged 16 and 17 whereas the ‘out of control’ youth unemployment age group you’re talking about is 15-19.

    Rightie?: Actually, until 2001, the youth rate applied to those aged 16-19.

    • Ari 5.1

      Youth unemployment among the 15-19 age group started trending down slightly after 2002 until the recession began to hit, so there was no obvious impact on youth unemployment after the policy was implemented.

      • I’m not saying it made a difference, but when you’re making fun of people for not knowing the facts, it helps to be correcting erroneous beliefs with factual ones.

    • Marty G 5.2

      Completely irrelevant Graeme.

      Don’t be such a muppet.

  6. gingercrush 6

    I think the problem is you’re answering the wrong questions. If this was legislation that was going to make youth rates the same as adult. Many of the right’s arguments would be persuasive and were persuasive at the time youth rates were changed to match adult rates. I.e. that more young people would be unemployed etc..

    But to reverse youth minimum wage and have that lowered to adult was always rather nonsense. Would it open up more employment opportunities for the young? Quite possibly. One would reasonably assume some small businesses would take advantage of the fact they could employ people at a cheaper rate. But that likely wouldn’t lessen unemployment. Unemployment would remain the same only with more adults unemployed while than the young. And even then the employment opportunities would be extremely small.

    Therefore, while I have sympathies with the legislation that Roger Douglas was proposing and I wasn’t in favour of youth rates matching adults rates in the first place. A move to then change that was always going to be problematic. Both politically and practically. In the end National saw that and decided to not vote for the bill.

    • Ari 6.1

      There’s two factors to consider when setting the minimum wage:

      1) The impact on the number of people employed. A higher minimum wage decreases the incentive to use human labour, or to adequately staff more marginal businesses.

      2) The overall positive social impact of lifting the wage floor, and the “rising tide” effect it has on wages that are pegged directly or indirectly to minimum wage.

      Given that (1) can be addressed with other policy to a certain point, lowering the minimum wage to increase demand for cheap labour is usually a pretty bad idea. While I’m fine with the idea of limited exceptions to the minimum wage with sanity checks in place, measures like youth rates are trying to hit a very intricate problem with a very large hammer.

      If certain sectors have something valuable to offer to youth at rates under the minimum wage, we can consider setting up apprenticeship or internship programs, where youth can be paid less under the assumption that they are undergoing training for the duration of their employment. What we should not do, however, is excuse paying youth less than the minimum wage in cases where they do not undergo significant training during their employment- like fast food or low-level retail jobs.

      If you’re serious about youth unemployment, there are narrower and better ways to address it than lowering the minimum wage for youth workers.

  7. “Leftie: And if it’s right to lower the youth minimum wage because you think it is making them unemployable, why not apply that logic to other groups? Maori minimum wage? The logic is exactly the same.”

    Excellent idea! Better still why not do away with the minimum wage full stop. The empirical evidence shows that it causes unemployment for the affected groups, see David Neumark and William Wascher, “Minimum Wages”, MIT Press, 2008, chapter 3 for a discussion of the evidence of the minimum wage on employment, so doing away with it would be a good idea.

  8. SPC 8

    Look up wikipedia – minimum wage and see how convinced you are about the empirical evidence argument.

  9. “Look up wikipedia minimum wage and see how convinced you are about the empirical evidence argument.”

    Wikipedia???? Surely you can do better than that.

    • Marty G 9.1

      get over it Paul.

      All you want is lower wages for the lower skilled.

      have the courage to admit your own motivations.

      Repugnant as they are.

      • Paul Walker 9.1.1

        What I want is less unemployment among the lower skilled. Funny that you would think that repugnant.

      • Paul Walker 9.1.2

        What I want is less unemployment among the lower skilled. Funny you find that repugnant.

        • Marty G 9.1.2.1

          I don’t find that repugnant. I find your calls for lower wages for workers repugnant.

          Lower unemployment is only a possible side effect of the action that you call for, it’s not one that I believe would happen, and it’s not one that will always be optimal (lowering the wages of all youths to create a handful of jobs, even if it would happen, which it wouldn’t, would not be worth the combined loss)

          • Paul Walker 9.1.2.1.1

            “I don’t find that repugnant. I find your calls for lower wages for workers repugnant.”

            Demand curves slope downwards. There is a trade off, higher minimum wages with higher unemployment for the affected groups or higher employment at a lower minimum wage. Given the positives following on from getting low skill workers in to work, mainly increased experience and skills, greater employment for these groups should not be rejected out of hand.

            • SPC 9.1.2.1.1.1

              Wikipedia cites all the arguments for and against – and covers the debate between economists. Across decades to compare changing attitudes.

              You cite one work as empirical evidence and then have the gall to imply something superior to your citing one work. You should read their article – and then maybe you would sound less like a first year student.

            • Pascal's bookie 9.1.2.1.1.2

              No one is suggesting ‘rejecting it out of hand’. Your own oft repeated sources say that the effects are small, and not alwys present. Therefore it’s not a huge factor and the effects that do exist can be mitigated against by other policies.

  10. Camlon 10

    This was kind of silly of a news outlet like “The Standard”. I would certinally not start the debate that youth unemployment rates are out of control, because it isn’t. And the responses assummed right-wing people have an IQ of 50.

    However, youth minimum wage will be beneficial for youths, because it will be easier for them to get a job. It will be easier for employers to hire them for other jobs than flipping burgers. People who are 16 live at home anyway, and they could have no job and still be fine. However, by having a youth rate then that wll give employers incentives to hire youth and it will be easier for them to get some work experience.

    • Marty G 10.1

      you’ve just made half the arguments that you say Righties aren’t dumb enough to make. Check out the responses above

      • Camlon 10.1.1

        Some of the responses above is really good, so I don’t feel bad using some of the same arguments. I said that “The Standard” labal stupid opinions on right wing people. From what I saw in the article, it seems like they assume right-wing people have an IQ of 50. I feel that you can respect your opponent so much, that you can actually assumme that they have proper arguments to back up their positions.

        I mean, just look at how unserious it is.
        “Youth unemployment is out of control! It’s all due to the abolition of youth rates!”

        “I stopped listening at ‘OK’, all that maths stuff is phooey. Statistics can be made to mean anything, 68% of people know that.”

        “Shut up. This conversation is boring.”

        Politically, this is not helping either. The ones who agree are allready left wing, most of them extreme left. It’s the independents you want to convince, but then label right wing people as stupid won’t help, because then you label them stupid because they may consider voting national.

        BTW: This won’t help you in debates either, because you will soon realize that right wing people have much better arguments than what was presented in the article.

        • lprent 10.1.1.1

          You’re misinterpreting the purpose of the site.

          I suggest that you read the About. The site isn’t really about persuading people to do anything. It is primarily a forum for the left, frequently the centre, and some of the right who can tolerate dissenting opinion (plus the many other angles of the political opinions as well) to argue.

          It runs pretty much on an “agree to disagree” basis, but where people are willing to debate, listen to contrary opinions, and then attempt to refute them. This is pretty clear in the policy. One of the things that I moderate severely against is when people start claiming ‘victory’, because in politics there is usually no such thing.

          Posts are generally written by authors to be opinionated. That is what starts debate, and we like the debate to be robust within some behavioural limits. The only people that really exhibit bad behaviour here for any length of time are some of the moderators – that is what our role is…

          You should view the site as being a argument in progress…

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  • NZ economy in good shape
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    7 days ago
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  • Joint Cooperation Statement on Climate Change between the Netherlands and New Zealand
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  • Government putting right Holidays Act underpayment in Health
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  • Government accounts show strong economy
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  • Ministers approve application to expand Waihi mine
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  • Tuia 250 Voyage flotilla launches with tribute to tangata whenua
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  • Visit to advance trade agenda with Europe and the Commonwealth
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  • Boost for women in high performance sport
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  • Parent support to help retain skilled migrants
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  • Nurses star as Govt rebuilds health workforces
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  • New agricultural trade envoy appointed
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  • Pacific and Māori voyaging heritage celebrated for Tuia 250
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