Young workers across many countries face a stark reality - they often earn less than their older counterparts for similar work. This wage disparity stems from structured minimum wage policies designed to protect youth employment opportunities.
The primary reason behind lower youth minimum wages is to safeguard job prospects for younger workers. Research shows that younger employees face higher risks of being priced out of the job market compared to older workers when wages increase too rapidly.
Being unemployed early in one's career can have lasting negative impacts. Studies indicate that youth unemployment can lead to "scarring effects" - resulting in reduced wages that may persist for several decades.
The current minimum wage structure reflects these employment protection goals. For instance, in the UK, workers aged 25 and over receive the National Living Wage of £8.72 per hour, while those aged 21-24 earn £8.20, and 18-20 year olds receive £6.45.
Not all employers utilize these youth rates, however. Research across hospitality, retail, cleaning and childcare sectors reveals that many businesses set wages based on market competition and affordability rather than age. Some companies opt to pay equal rates regardless of age to appear fair and attract young talent.
Recent policy changes suggest a gradual shift toward age equity in minimum wages. The UK government plans to lower the age threshold for the National Living Wage from 25 to 21 in stages, starting with reducing it to 23 in 2021. This change recognizes that workers aged 21-24 share similar employment patterns and educational participation rates with their slightly older peers.
The balancing act continues between protecting youth employment opportunities and ensuring fair compensation. While the gap persists, ongoing policy adjustments aim to narrow wage disparities while maintaining job accessibility for young workers entering the workforce.