Monday, July 5, 2010

Steve Baron: Unemployed Youth the Bane of Waikato

Unemployed teenagers walk down the streets of every town in the Waikato, spray cans
hidden under their hoodies, usually looking for trouble. I sat there listening to their derogatory comments as the local Senior Sargent drove past in an unmarked car. They knew who he was and he knew who they were, as he glanced sideways with a glaring eye.

Teenagers have an unemployment rate over three times that of the entire work force. With an economic downturn fewer jobs are available, making them more vulnerable to unemployment. This is because of their lack of skills and work experience. Maori and Pacific Island youth face even higher unemployment rates and its a serious problem we need to confront.

Many years ago I found myself in a similar situation, unemployed and looking for a job to keep me out of trouble. I walked into the Department of Social Welfare. I didn't want the dole, just help to find a job. I was interviewed by this scruffy slob of a bloke who got me to fill out a form, which amongst other things asked me what jobs I preferred. I listed Prime Minister and Minister of Finance, trying to show a sense of humor and motivation. He ripped the form apart and stormed out of the room in disgust. I yelled a few obscene words at him like... Quantitative Easing, Dead Weight Loss & Fiscal Deficit. This bought a gasp from the lady behind the counter who was amazed at my comprehension of economic language!

Well our esteemed Minister of Finance has just increased GST and is now considering increasing the minimum wage. This gives me great cause for concern. Increasing the minimum wage, or even having one at all, creates what economists call a 'dead weight loss', which leads to unemployment. Such academic insights are learned in Economics 101. Raising the minimum wage is great for those who currently have a job but it adversely affects the uneducated unemployed trying to get a job. Put it this way, I'd rather see my child earning less than the current minimum wage, than being on the dole earning just over $100 a week and walking the streets looking for trouble.

There will always be those who argue everyone including teenagers are entitled to a minimum wage so they can maintain a minimum standard of living. The reality is that these demands keep our youth, particularly those uneducated youth, out of work. They roam around with too much time on their hands and usually end up creating more than their fair share of crime. The government has offered some incentive for employers, by subsidising the wage of youth workers. Youth workers are abundant though and those who need work to keep themselves out of trouble rarely find it under these schemes. Political pressure almost guarantees the government will never remove minimum wage rates. This then falls on the local community, perhaps in association with Police, to find a way around the problem of unemployed youth. One way or another it will cost us, whether we do or don't find them employment.

Steve Baron is an author, freelance journalist and Founder of Better Democracy: www.betterdemocracy.co.nz

2 comments:

Anonymous said...

When you are employed it is far easier to find a better job. You have to start somewhere and unfortunately teenagers want to start at the top. I took a job that paid less than the married mans dole, but it eventually lead to self employed contract work with the same employer.... opportunities!

Mike said...

It is so obvious that we need to abolish the Minimum Wage, but there are strong forces (such as Unions) who are opposed to this. So my proposal would be a hybrid (very topical!), with any young person unemployed for say 6 months qualifying to go on a separate register whereby they would have no minimum wage applied for a period of say 2 years, and for the following period of 2 years a minimum of say 50% of the average weekly wage would apply. If they cannot convince an employer to make them permanent within 4 years, they would not deserve any more protection from natural
selection and dole payments would cease! Cheers, Mike