Australian Minimum Wage Rates

The national minimum wage is the minimum amount an employee can make that is not covered by an award or an agreement. Different countries set their minimum wage rates to be the minimum amount a person can make in order to survive in however that country’s economy allows. This paper will analyse the ways in which the minimum wage rates in Australia do not benefit today’s youth. It will show how the minimum wage rates contribute to older people missing out on jobs, less of a skill set among young people, and youth homelessness.

It will be argued that minimum wage rates should be set at the same rate for people once they have reached the age of adulthood. Young people between the ages of 14 to 17 should also receive an increase in minimum wage rates, so that they may become more financially stable. In the country of Australia there is a system called “Junior Rates”, which is defined as a proportion of adult minimum wage, that increases every year until the “junior worker” is considered an adult at age 21. (Lewis et al. 1999) The current minimum wage rate starts at $6. 03 per hour if you are under the age of 16. It increases every year from $7.

74, $9. 46, $11. 18, $13. 51, and $16. 00, through ages 16 to 20 respectively. You don’t receive the full minimum wage of $16. 37 per hour or $622. 20 per week until you are 21 years old. By setting the minimum wage rates according to age the government is basically saying that young people are not adults, so they don’t deserve adults wages. However, there are many young people that are living adult lifestyles, whether by force or by choice. In the past there has been some concern that raising the minimum wage rates would reduce the amount of young people that are completing high school.

(Warren et al. 2008) However, studies have shown that high school completion rates have only been reduced by minimum wage increases if there is a large increase in minimum wage rates. The changes in the high school completion rates have been very modest, and found to only be in states where young people are allowed to drop out of school at 17 years old. (Warren et al. 2008) There have been discussions in the past of paying young people adult wages once they turn 18 because they are no longer ‘juniors’, but instead young adults. (Lewis et al.1999).

This point was then argued with the point that if young people were paid adult wages once they turned 18, there would be no discrimination between the youth and adult labour markets. In other aspects of the law young people are considered adults once they turn 18, the drinking age, renting a property, taking out a loan, or moving from home (Grant 2009), so why are they not considered adults when it comes time for payment? There have been some studies on how changing the minimum wage rates would affect the youth labor market.

Some people are concerned that if we were to change the minimum wage rates for young people, it would cause less young people to be hired, and not allowing them to gain any work experience. It has been concluded that raising the minimum wage does in fact reduce youth employment rates, but does not affect labor force participation. (Ragan 1977) Businesses do not want to hire young people for higher rates because they are used to paying them for low wages, but that can also contribute to the fact that adults are losing out on jobs to young people.

In order to solve this problem, last year in the UK minimum wage rates for young people were frozen, thinking that this would help create more jobs for young people. When asking the vice chair of the British Youth Council how he feels about the wage freeze, he said that it does nothing to benefit young people, we might as well be asking them to work for free. (Children & Young People Now 2012) The minimum wage rates can also contribute to the amount of homeless young people found in Australia. It is already known that there are three different stages of homelessness; primary, secondary and tertiary.

When watching documentaries on homeless youth such as The Oasis it can be assumed that the most common stage of homelessness among Australian youth would be the tertiary phase, meaning they usually live in some type of shelter, group home, or boarding house. While in these housing facilities, these youth do need money in order to buy food, clothing and other necessities in order to survive. In a survey done in 1993 it was shown that the majority of young people (ages 16-24) needed state support in housing and money management, 62% of them being 16 and 17 years old, and 30% being 18 to 24.

In Brisbane there is a lack in housing that is considered both appropriate and affordable for a young person. (Wilks et al. 2008) When talking to young homeless people about why they are homeless and how they are trying to transition into a more stable lifestyle, one of the biggest issues mentioned was with finances. Many have said that it is cheaper for them to live on the streets than to worry about being able to afford rent and bills. (Wilks et al. 2008) If young people were paid the full minimum wage rates once they’ve turned 18, it could lessen the stress that young homeless people feel about being able to afford a stable lifestyle.

This could in turn lead to a decrease in the amount of young homelessness in the long run. When speaking with different groups of young people on how they became homeless and what it was like being homeless now, the fifth most common reason that a young person ended up being homeless was because they could not afford the place they were living. (Heinze et al. 2012) One of the other big concerns that kept coming up was the lack of support they felt in their home life. They weren’t given money for food and clothing, so they spent many nights without eating.

In a situation such as this, young people would be forced to take care of themselves if they continued to live at home, instead of moving into a youth center. Living in a home such as this, a young person would need a job that is paying them a substantial amount so that they may afford to support themselves. In Melbourne, Victoria, the average rate of rent for a one-bedroom apartment outside of the city centre is about $1,450 per month. When you include basic utilities (electricity, heat, water) it adds about an extra $200 per month to that rent, equaling to be about $1,650 per month just to live outside of the city center.

At the age of 18, a young person is only making $11. 18 per hour, and if they are working 40 hours a week for 4 weeks per month they are only making about $1,788 per month. Once they have paid their rent and utilities for that month they are only left with about $135 per month for food and groceries. When deciding minimum wage rates you have to ask yourself whether or not you are thinking about the life of a typical young person. By deciding these wages young people are losing their voice and power over what happens in their lives.

There have been debates about changing the minimum wage rates for years, but are young people ever given the chance to speak in these debates? Young people are the majority of people that actually are working for minimum wage, (Partridge 1998) so they should be included in the decisions on minimum wage rates. Young people should receive the adult payment rate when they have reached the age of 18, because they are then considered an adult. As for young people between the ages of 15-17, the minimum wage rate should be increased to a reasonable amount.

Young people are not receiving discounts on their groceries, rent, clothes or other living expenses (Grant 1999), so it is only fair that their payment rates should not be discounted either. When we are at a time that there are more young people than ever living off of minimum wage and the cost of living is on the rise, wage rates for young people should be increased. References: Belchamber, G n. d. , 'Minimum Award Wages for Young Workers Must Be Reformed (English)', Australian Economic Review, 32, 4, p. 390.

Heinze, H, Hernandez Jozefowicz, D, Toro, P, & Blue, L 2012, 'Reasons for homelessness: An empirical typology', Vulnerable Children & Youth Studies, 7, 1, pp. 88-101 Lewis, P, & Mclean, B n. d. , 1999 'The Junior Rates Inquiry: An Overview', Australian Economic Review, 32, 4, p. 386 National Minimum Wage- http://www. fairwork. gov. au/pay/national-minimum-wage/Pages/default. aspx PARTRIDGE, M, & PARTRIDGE, J n. d. , 1998 'Are teen unemployment rates influenced by state minimum wage laws? ', Growth & Change, 29, 4, p.

359 Ragan Jr., JF n. d. , 1977 'MINIMUM WAGES AND THE YOUTH LABOR MARKET', Review Of Economics & Statistics, 59, 2, p. 129 'Should the minimum wage be frozen for young people' 2012, Children & Young People Now, p. 20 Warren, J, & Hamrock, C 2008, 'The Effect of Minimum Wage Rates on States' High School Completion Rates', Conference Papers -- American Sociological Association, p. 1 Wilks, N, Hiscock, E, Joseph, M, Lemin, R, & Stafford, M 2008, 'Exit this way - young people transitioning out of homelessness', Social Alternatives, 27, 1, pp. 65-70.