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Why the National Living Wage is bad news for young people

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Increasing the minimum wage is seen in many quarters as a positive move which will have a positive impact upon the lives of young people in the UK. As a result, the announcement in yesterday's budget of a National Living Wage was greeted positively by most commentators, with the only criticism levelled against it that it did not go far enough.

However, far from being good news, the National Living Wage is likely to spell disaster for tens of thousands of people, condemning them to a life of long term unemployment with young people and ethnic minorities being the most likely to suffer as a result. The minimum wage is constantly sold as good for workers, or minorities or women. In reality, however, it hurts the most vulnerable in society, especially young people and ethnic minorities.

A study by American economists Jonathan Meer and Jeremy West found that '...the minimum wage reduces net job growth, primarily through its effect on job creation by expanding establishments.'

In other words, this means that companies are more likely to fire current employees than they are to hire new ones. Companies are driven by profit - more money spent on wages means lower profits. They are going to have to balance the books somehow. It will mean that companies will hire far fewer low skilled workers and are very likely to fire many of their current employees. This will have a disastrous impact upon the most vulnerable in society.

It's also bad news for students. Planning on getting a summer job or working whilst studying? I wouldn't bank on it. Thinking of getting a job after graduating? Then you will be facing even more competition as top firms cut the number of graduate level jobs in order to compensate for the increased wages they will have to pay their workers on the National Living Wage. You should also be prepared to work longer hours for less pay.

Furthermore, the National Living Wage is going to mean that any money you do earn (if you can get or keep a job), is not going to stretch as far as previously. Remember, companies are all about profit - all that extra money being spent on wages is going to be balanced out by higher prices. Again, this is going to adversely affect the most vulnerable in society - the people who are already struggling to make ends meet are going to be faced with much higher prices.

We should want to see work pay, the vulnerable protected, students being able to survive and greater prosperity for all - this is what the supporters of the National Living Wage hope to achieve. However, there is no such thing as a free lunch. The National Living Wage is only going to end up hurting the most vulnerable in society.




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