As I say above, the effect might be small but it just isn’t non-existent.

The LPC’s most recent report states that:

“Our most recent research found little evidence to suggest that increases in the minimum wage had led to reductions in employment or hours worked.”

And the proposal that I was referring to (in which Gregg and Layard promote the creation of jobs paid at NMW to tackle long-term youth unemployment) can be downloaded here:

http://cep.lse.ac.uk/textonly/_new/staff/layard/pdf/001JGProposal-16-03-09.pdf

Best wishes

Nicola

It’s not even what the Low Pay Commission found when it reviewed the effect of the minimum wage legislation.

Of course raising the price of something above its market clearing rate will lead to there being a surplus of that thing being on offer. It might be small, it might be mild, it might be difficult to detect, but it will be there.

But that effect will of course be greatest for those items whose price has risen furthest above that market clearing rate. And so with a minimum wage it will be the untrained and inexperienced who see the greatest rise in unemployment.

You noted it above in your statistics (although resolutely refused to note the cause) and we’ve seen exactly the same happen to the teenage unemployment rate in the US as a result of their recent minimum wage rise.

We might even think that it’s all worth it, that a few tens of thousands more unemployed is just fine and dandy if millions get better wages. But to deny that demand curves slope downwards and supply ones up is, well, pull the other one, there’s bells on it.

Thanks for your comment. Unsurprisingly, I don’t agree with your analysis. Successive research studies (including comprehensive meta-analyses) have shown that minimum wages do not have negative employment effects. In fact in the 80s (when, as you know, the minimum wage did not exist) youth unemployment rates rose far faster than they have this time around. And during this recession youth unemployment is not a problem confined to the UK – unemployment rates for young people are higher than those for adults aged 25+ across Europe and the OECD (and the UK’s youth unemployment rate is lower than the eurozone and the EU27 average).

The reasons young people are more likely to be affected by recessions include:

- recruitment freezes have a disproportionate impact on new labour market entrants (who are more likely to be younger workers) who find it harder to find work;
- young workers are often laid off before older workers, as they are more likely to have less experience, lower skills and to be cheaper to let go (for example being less likely to qualify for statutory redundancy pay as a result of reduced service)
- young people are more likely to work in sectors that have seen large increases in unemployment and where work is more likely to be temporary (e.g. large parts of the service sector).

Rising youth unemployment should absolutely continue to be a key policy issue, but, as eminent labour market economists Richard Layard and Paul Gregg have acknowledged, it will be resolved through Government investment in initiatives including the Future Jobs Fund, not through cutting wages.

Thank you for your comment. We are very clear in our recession report that the numbers of people out of work are still rising. However, I think it is also important to recognise that the speed at which unemployment is going up is starting to slow, which gives us hope that levels may start to fall earlier than we initially thought.

This does not mean that anyone, including the TUC, is or should be complacent about unemployment. Since January 2008 unemployment has risen by 842,000, and both levels and rates of long term unemployment are still rising very quickly.

Quite. We all said before the minimum wage came in that it would be the young and un trained who would bear the brunt of the uinemployment effects. It was brought in and the young and untrained are bearing the brunt of the unemployment effects.

You are surprised why?

Your article is as convoluted as the govt and IPPR press releases, which pretend that reduced rates of increase in unemployment represent a drop in umemployment when, instead, they clearly represent a cumulative increase.

People are not so stupid. And they pay the wages of TUC staff.