Minimum Wage Hike Hasn't Worked Out Well For British Youth


Europe might hold a lesson for the United States as President Obama and Democrats continue to push for a minimum wage hike.

Via Uneconomical, a UK economics blog, it seems as though the Brits are having problems with a weak job market for young workers, despite relatively strong growth among other demographics, and some are trying to explain it away by pointing to economically active pensioners and an influx of immigrants:

The decline in the labour market position of young people has been general across the UK. The proportion of young people not in FTE aged 16–21 who were in employment fell in almost all regions between 1998 and 2007, unlike those aged 22 and over who saw their employment share increase in all areas of the UK except London. …

Given that employment in the UK has been at record levels, it is difficult to explain why young people have not done better in the labour market. Two significant developments in the labour market in recent years have been the increase in the number of people of pension age becoming economically active and the arrival of predominantly young migrant workers from the European Union accession countries.

There might be an alternate explanation. Consider this chart showing the unemployment rate for young workers, and a “mystery event” that’s an increase in the UK’s minimum wage:



We needn’t go all the way to Europe to learn this lesson. We saw a similar correlation between minimum wage hikes and youth unemployment here in the United States as this chart from Professor Mark Perry illustrates:



Of course, our friends on the left might argue that the minimum wage is just combatting “job lock,” liberating millions of young and low-skill laborers from paychecks.