Australian Minimum Wage Rates and Their Affects on Youth Stakeholder: Fair Work Comission
The national minimum wage is the minimum amount an employee can make that is not covered by an award or an agreement. Different countries set their minimum wage rates to be the minimum amount a person can make in order to survive in however that country’s economy allows. This paper will analyse the ways in which the minimum wage rates in Australia do not benefit today’s youth. It will show how the minimum wage rates contribute to older people missing out on jobs, less of a skill set among young people, and youth homelessness. It will be argued that minimum wage rates should be set at the same rate for people once they have reached the age of adulthood. Young people between the ages of 14 to 17 should also receive an increase in minimum wage rates, so that they may become more financially stable.
In the country of Australia there is a system called “Junior Rates”, which is defined as a proportion of adult minimum wage, that increases every year until the “junior worker” is considered an adult at age 21. (Lewis et al. 1999) The current minimum wage rate starts at $6.03 per hour if you are under the age of 16. It increases every year from $7.74, $9.46, $11.18, $13.51, and $16.00, through ages 16 to 20 respectively. You don’t receive the full minimum wage of $16.37 per hour or $622.20 per week until you are 21 years old.
By setting the minimum wage rates according to age the government is basically saying that young people are not adults, so they don’t deserve adults wages. However, there are many young people that are living adult lifestyles, whether by force or by choice. In the past there has been some concern that raising the minimum wage rates would reduce the amount of young people that are completing high school. (Warren et al. 2008) However, studies have shown that high school completion rates have only been reduced by minimum wage increases if there is a large increase in minimum wage rates. The changes in the high school completion rates have been very modest, and found to only be in states where young people are allowed to drop out of school at 17 years old. (Warren et al. 2008)
There have been discussions in the past of paying young people adult wages once they turn 18 because they are no longer ‘juniors’, but instead young adults. (Lewis et al. 1999) This point was then argued with the point that if young people were paid adult wages once they turned 18, there would be no discrimination between the youth and adult labour markets. In other aspects of the law young people are considered adults once they turn 18, the drinking age, renting a property, taking out a loan, or moving from home (Grant 2009), so why are they not considered adults when it comes time for payment?
There have been some studies on how changing the minimum wage rates would affect the youth labor market. Some people are concerned that if we were to change the minimum wage rates for young people, it would cause less young people to be hired, and not allowing them to gain any work experience. It has been concluded that raising the minimum wage does in fact reduce youth employment rates, but does not affect labor force participation. (Ragan 1977) Businesses do not want to hire young people for higher rates because they are used to paying them for low wages, but that can also contribute to the fact that adults are losing out on jobs to young people. In order to solve this problem, last year in the UK minimum wage rates for young people were frozen, thinking that this would help create more jobs for young people. When asking the vice chair of the British Youth Council how he feels about the wage freeze, he said that it does nothing to benefit young people, we might as well be asking them to work for free. (Children & Young People Now 2012)
The minimum wage rates can also contribute to the amount of homeless young people found in...
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National Minimum Wage- http://www.fairwork.gov.au/pay/national-minimum-wage/Pages/default.aspx
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Wilks, N, Hiscock, E, Joseph, M, Lemin, R, & Stafford, M 2008, 'Exit this way - young people transitioning out of homelessness ', Social Alternatives, 27, 1, pp. 65-70
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