North London middle class call for more youth unemployment

That’s not how it was phrased of course, they were praising Lidl for introducing the living wage and that isn’t their intention, but, as night turns to day, that will be the consequence.

There is a discussion about whether or not a minimum wage causes unemployment, and the answer is it depends at the level at which the minimum wage is set.

Employers pay people depending on the amount of profit they can make from them. Anyone worth less to their employer than the minimum wage won’t be employed at all.

Ann employs Billy in her supermarket. Billy is young and inexperienced so only makes £10 of profit per hour for the shop, so that’s what Ann pays him. If she tried to pay him £9 an hour then Chris who owns the supermarket next door would offer him more money to come and work for her, so, his wages will always increase to £10 per hour.

If the minimum wage is set at £8 per hour, i.e below the wage he was getting anyway, it doesn’t affect anyone. Billy doesn’t get paid any more but he doesn’t lose any hours.

Now, if the minimum wage is set at £11 per hour. The middle class, North Londoners are all slapping themselves on the back at that week’s dinner party. They intend for poor people to be paid more. But what actually happens? Suddenly, Ann is losing £1 an hour for every hour she employs Billy. Billy finds that his hours start getting cut and Ann starts thinking about getting a self-serve machine in instead and getting rid of Billy. Worse, she was thinking about taking on more people. Dave would have been taken on at £10 an hour but will now remain unemployed. And he doesn’t even know he lost out.

The winners of minimum wage increases are visible, concentrated and vocal. The losers are invisible, spread out and may not even know how they were cheated.

The biggest losers are the young and inexperienced. To them, getting experience which will get them higher wages in the future is even more valuable than actual money. If they never get on the lowest rung, then how can they ever climb the ladder?

Nobody likes seeing people working hard for low wages, but, the alternative is not higher wages, it’s no wages. The main benefit to these policies seems to be so that some people can have a warm feeling in their bellies and damn the consequences.