Ideas@TheCentre
Employee risk and youth wages
Are lower youth wages a form of ‘age discrimination’ in the workplace? Yes, according to three panellists at the NSW Young Labor conference on Sunday.
The ALP is considering abolishing youth wages so that workers between 18 and 21 years would receive the same minimum wage as adults. The argument that most resonated with the predominantly young audience was equal pay for equal work – the premise being that a young employee doing the same work as an adult should be paid the same wage as the adult. The fact that youth are paid less is age discrimination.
This argument does make sense at an intuitive level. Why should people doing the same work be paid different wages?
First, although young workers do the same work as adults, their productivity and competency levels differ. Adult employees are on average more productive and ought to command a higher wage. If young workers really were as productive as adults, then their wage would have risen to the adult wage. The fact that this hasn’t happened is telling.
The second reason – risk – is far more important but most often overlooked. Although there are exceptions, young workers are on average less experienced, less mature, and less responsible than their adult counterparts. They are also less accustomed to the demands and responsibilities of working life. I was a young worker until not too long ago and know this from my own experience.
Young workers represent a higher risk to employers. If employers had to pay young and adult workers the same wage without receiving adequate compensation for taking the higher risk, they would have no incentive to hire a young worker.
Young workers should be careful what they wish for. Abolishing youth wages effectively denies young workers the most effective weapon they have – lower wages – to compete against adults. Denying themselves this weapon means denying themselves a job.
Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.
