Youth Unemployment: Causes and Minimum Wage Impact
Causes of Youth Unemployment
Introduction
Youth unemployment refers to individuals aged 16-19 who are not in school or tertiary education and lack paid employment. This growing issue has several contributing factors. Fortunately, many “youth-friendly industries” offer opportunities.
As production and sales increase, employers often prioritize experienced workers. This limits young people to a smaller portion of jobs. Due to their inexperience, employers may be hesitant to invest time and money in training. In cases where firms do hire inexperienced workers, the pay is often low, which can be a deterrent. Conversely, some companies employ a significant portion of the youth population to reduce overall wage costs and increase profits.
Certain firms, often called “youth-friendly industries,” are known for employing young and inexperienced workers. Leading retail and takeaway outlets like McDonald’s, Coles/Myer, Safeway/Woolworths, and KFC provide employment and training opportunities. However, some young people view work as an obstacle to their education, while others are discouraged by low wages.
In response to high youth unemployment, the government has introduced initiatives to encourage young people to stay in school and out of the workforce. As the number of school leavers increases, government intervention may gradually reduce youth unemployment rates.
Conclusions
Youth unemployment is a significant challenge. However, “youth-friendly industries” can enhance young people’s efficiency, keep them in school, and reduce future unemployment.
Effects of Minimum Wages on Employment
Introduction
The implementation of a minimum wage in developed countries is a contentious issue. This essay will explore the advantages and disadvantages of setting minimum wages.
A minimum wage could potentially increase the number of people working in the black market. It may not raise the incomes of the lowest income groups, as the poorest individuals often rely on benefits and are thus unaffected by minimum wage changes. Many beneficiaries of the minimum wage are secondary income earners, meaning their households are unlikely to be below the poverty line. A household with a single income earner just above the minimum wage is likely to be relatively poorer.
The impact of a minimum wage on unemployment is uncertain and heavily depends on the labor market’s structure. Empirical evidence suggests that a moderate increase in the minimum wage does not necessarily lead to a fall in employment. The crucial question is how much the minimum wage can rise before causing unemployment.
Wage differentials are also important. For instance, skilled workers earning just above the minimum wage may feel they deserve more. However, there is little evidence of a significant knock-on effect.
The minimum wage raises the earnings of the lowest-paid workers, increasing their income and potentially reducing poverty. The efficiency wage theory posits that higher wages can incentivize the unemployed to accept jobs, as the difference between benefits and employment income becomes more significant. A minimum wage could increase participation rates as the benefits of working become greater. Firms may also have a greater incentive to invest in and increase labor productivity because labor becomes more costly.
Conclusions
In conclusion, while a minimum wage could lead to an increase in black market labor, it also has numerous positive effects, such as increased productivity and a greater incentive for people, including the unemployed, to work.