The argument is simple. If you increase the price of something then people will buy less of it. It’s a reflection of the basic supply and demand curve. By imposing a National Minimum Wage (NMW)in 1999, the government essentially paved the unemployment path for many millennials. After all, if the price of labour (skilled or unskilled) is raised, employers would not be able to hire as many people as they previously would have. This cogent argument was pointed out in the NMW pre-1999 debates but sadly, it was not heeded.

There have been several international panel studies on the effects of imposing a minimum wage on youth unemployment. Neumark and Wascher’s analysis of 17 OECD countries for the period 1975-2000 finds that a 10 per cent increase in the minimum wage leads to a 2 per cent reduction in the employment rate for younger people(aged 15-24). More recent work by Dolton and Bondiabene in 2012 confirms these estimates and also suggests that the impact of minimum wages tends to double during a recession.

Currently, the NMW for youths (aged 18 and over) ranges from £5.03 to £6.31. This means, despite having a degree under your belt,the chances of you getting paid NMW at your first job is high because the NMW is already considered a high rate of pay by employers. You may think you could live with earning NMW for your first job, but consider this: the lady who vacuums your office earns the same as you do. You’re considered skilled labour but she isn’t, yet your paycheck reflects the same pay per hour. How is that normal?

The answer is: it’s not. By introducing the NMW system, the government has tampered with the natural supply and demand curve of unemployment. Instituting the NMW has:

1) Caused a rise in labour prices, resulting in cutbacks in firms

2) Made working more attractive than further education, leading to a rise in supply of low-skilled workers

When we, as millennials, enter the workforce, we become the victims of these consequences. We know little of the NMW battle but are privy to the effects of it. The Low Pay Commission, the people who actually set the minimum wage in the UK, have stated that they’re worried that the current level of NMW is damaging youth employment.

“Firms may be reluctant to create jobs by recruiting inexperienced staff because they are put off by the increased wage bill”, the Low Pay Commission has suggested.

Moreover:

“Official figures last month showed that almost 1 million of the 2.5 million people officially counted as unemployed in Britain are aged between 16 and 24.”

The bottom line is, although the NMW is £6.13, some workers simply aren’t worth that. If an employer can’t make that money back by hiring these workers – it’s not a job, it’s charity.

In a way, the NMW has cushioned the transition from student to working people for many of us. We don’t face the anxiety of a low paycheck because of the lack of skills. But it’s simply not the natural order. We have to start at the bottom and work our way to the top – not start at the middle and expect a good paycheck. Marxists have a saying: from each according to his abilities, to each according to his needs. In short, if you want more, work for it. For motivation, think about how affected you’d be if the NMW were taken away tomorrow.

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Millennials Unemployment