David Farrar: Youth unemployment leads to rioting attitude

Police dogs and their handlers walk past a burning car during after riots broke out in central Birmingham, England. Photo / AP

Like most of the world, attention in New Zealand this week has been on the rioting and looting in England. Two questions have been top of mind, for many. The first is what caused them, and the second is could they happen here.

The catalyst for the initial unrest was the police shooting of a youth, which may or may not be found to be justified. However sadly this is not an entirely uncommon occurrence, so that is not the sole cause.

Some have said it is a political reaction to the Cameron-Clegg Government spending cuts. However a poll of Britons found only eight per cent believed the spending cuts were the reason for the rioting and looting.

Another claim is it is all about poverty and income inequality. Cynics have pointed out that the looters sere stealing flat-screen televisions, not food. Also the looters appeared to be very well dressed, and many of them seemingly had Blackberries, which they used to orchestrate their rampage.

Those on the right have pointed out that in the suburb where it initially started, the proportion of boys without a father is as high as 70 per cent. They say it is youth with no strong male role models which has created a society where this can happen.

Others put it down to human nature, and point to Lord of the Flies as a guide. They say it was just criminals exploiting a situation - ie they looted and rioted simply because they could.

One other factor, and the one I want to focus on is the high levels of youth unemployment in the affected areas. And that might well be a factor. If you have thousands of young people unable to find work, then a greater proportion of them will turn to mischief.

If youth unemployment is a factor, then possibly we should be worried in New Zealand, as our teenage unemployment rate is a massive 27%. Personally I think the chances of riots in New Zealand is quite low, but older readers will recall the Queen Street riot in 1984. Of course Dave Dobbyn was the major factor in that riot, rather than youth unemployment.

I strongly support the view that the primary reason we have such a high unemployment rate amongst under 20s is the abolition of the youth minimum wage in 2008, which was previously set at 80% of the adult minimum wage. Up until the abolition of the youth minimum wage, youth unemployment and adult unemployment rates had a linear relationship. Since 2008, youth unemployment is massively higher than the adult unemployment rate. One academic estimate is 16,000 more young people are unemployed than would otherwise be the case.

It is now illegal for an unskilled 16 year old with no work experience or qualifications to accept a job for $12/hour. Worse, some MPs advocate that that 16 year old should not be able to get a job unless he can find someone to pay him or her $15/hour. This will just push more youth into unemployment.

Critics of a separate youth minimum wage say that there have been increases in minimum wages previously, and low unemployment, so the two are not linked. What they overlook is that the minimum wage only affects job supply when it is relatively high, say over 45% of the median wage. To use two examples, no one thinks an increase in minimum wage from say $1/hour to $2/hour would affect the jobs market.

However surely no one would dispute that if you moved the minimum wage to $100/hour, there would be fewer jobs available. Hence the debate is not about whether a minimum wage affects jobs and unemployment, but at what level does it start to impact. The evidence is that for youth, a minimum wage of $13/hour is too high, and means they are unable to get entry level jobs.

Another argument against a lower youth minimum wage is that people doing the same job should get paid the same wage. First of all it is important to stress that the minimum wage is a minimum, not a maximum. The existence of it, doesn't mean that employers will only pay that rate. The second point is that a 16 year old with no skills or experience is probably not as good at a job, as someone who has been in the workforce for five years or so. If you allow them to get that first job, then over time they'll get paid more as they gain experience.

The final argument against I wish to cover, is that having a lower minimum youth wage, will lead to teenagers taking jobs off older workers. I don't actually accept that is necessarily the job, as I think it would lead to more jobs being created, but even if one accepts that trade-off, I would say it is more important as a society that teenagers get their first job and don't go from school onto the dole for months or years on end.

A 25 year old who has say six months on the dole is better placed to cope with it, than having a teenager never gain that first job. So I think our priority should be tackling youth unemployment - not so much to prevent riots as seen in England, but because it will lead to a better society.

* David Farrar is a centre-right blogger and affiliated with the National Party. A disclosure statement on his political views can be found here.