19 comments on “So, about that minimum wage then

  1. Your one Down’s lad might not lose his ‘job’ collecting supermarket trolleys with a minimum wage rise, as it was quite possible that he wasn’t worth even $8/hr and the ‘job’ was a mixture of charity and PR. He might, on the other hand, get fewer hours work in the week. For example, if he works 40 hours and gets $320, he might be worth that to an employer for reasons other than the work he contributes. If he isn’t worth $600, he might just drop to 20 hours.

    Hence i get the point, but it wasn’t a wonderful example. The really big hit is when there are lots of employees and their worth really is at the $8 level. Supporting the odd individual can presumably be argued for on not strictly economic grounds, but surely there must be industries that could founder on a too-high minimum wage.

    Your ‘tax-free amount equals the living wage’ suggestion is at first sight reasonable, but we are dealing with real humans, and there is universal suffrage. Non tax payers have no incentive to go for a low tax economy: indeed, they are net beneficiaries of whatever state largesse there is with actual tax-payers’ money, and they have a personal incentive not to vote for lower taxes for ‘the rich’ because in the common man’s limited economic vision the money has to come from somewhere, and if it isn’t income tax it will come from taxes on goods and services which he cannot avoid.

    There is politics and psychology here as well as economics.

  2. Excavator’s point is good. Having argued it for years I think it’s a bit bogus.

    There are good grounds to restricting the franchise to net tax payers, denying it to civil servants and politicians, etc.

    Switzerland only gave the vote to women in 1976, on the grounds that they didn’t do National Service.

    On balance, I would not care to have the franchise restricted to divorce lawyers, hedge fund managers and rentiers.

  3. While not much can be done currently to shelf stacking jobs, cashier jobs at supermarkets can be priced out.
    Was at Asda a few months back late one evening – all the tills closed down and had to use the self scan section to put the week’s shopping through – taking us about 5 times longer than on the tills but only needed one member of staff for 10 people to use the self service tills at the same time.
    Where staff are a significant part of the cost of running a business and most are unskilled or semi skilled at best, rise in wage bill encourages measures to reduce the wage bill – by cutting staff.
    Used to enjoy the late night visits to Asda, no longer doing late night shopping for much stuff now.

  4. Forbes is a terrible site. I couldn’t get to the end of the article because the page kept freezing.

  5. @ Martin
    It’s not just Asda – Tesco used to promise us that if there was a queue they would open extra tills, now they run a skeleton crew and want us to use their semi-functional autotills.

    A few days ago I joined the queue for one of the two staffed tills in a Tesco superstore at 9pm -ish and member of staff said to me “Have you tried the self-service tills?” so I replied “Yes, that’s why I am queueing here”.

  6. It’s years since I used self-service tills because they made demands on my eyes and my back that I couldn’t satisfy.

    I do like the method of strolling around with your own scanner – that saves effort and saves staff. How much theft goes on I don’t know.

  7. It’s not correct that the Down’s kid’s work isn’t worth X dollars an hour, it’s that collecting the shopping trolleys isn’t worth X dollars an hour WHOEVER IS DOING IT. You pay for the value of the work, not the “”value”” of the person.

    A minimum wage forces some people to be paid more than they earn – more than the work they are doing is worth, *NOT* more than that person is worth. If that Down’s kid puts in a full eight hours of collecting trolleys, stacking shelves, cleaning floors, updating stock, he should be bloody well paid exactly the same as anybody else putting in a full eight hours of collecting trolleys, stacking shelves, cleaning floors, updating stock. If he spends eight hours collecting trolleys he should be paid exactly the same as anybody else who also spends eight hours collecting trolleys.

  8. I agree, Excavator Man. If you are going to have a tax, it should be applied in equal amounts or equal rates. Exempting half the people and giving them the vote can’t work.

  9. “We don’t live in a binary world where people either work or get excluded from employment forever.”

    Yes we do. The U.S. has 95,000,000 out of the work force.

  10. ‘Indeed, so is my insistence that the correct level of the minimum wage is $0 an hour.’

    Agreed. What employers pay employees is none of the governments’ business.

  11. From Timmy’s pieces on minimum wage increases it looks like we are seeing a reduction of 1% of the minimum wage jobs for a 10% increase in minimum wage. To simplify the math we’ll start with a minimum wage of $10/hr and see if the total pie is bigger or smaller. The starting scenario involve and average business that employs 100 workers.

    Before the minimum wage increase those hundred workers are making a total of $1000/hr. Minimum wage rises to $11/hr and 1 person gets fired. The remaining 99 workers are now splitting $1089/hr. Virtually all of the workers are better off so the workers have no reason not to support an increase in minimum wage.

    The incentive is for workers to want a higher minimum wage. As long as there is a minimum wage this incentive is going to exist. In order to solve this never ending issue I would prefer to see minimum wage raise to the point that the negative effects are obvious to workers. Let’s start the fight for $150 so we can garner the support to reform our poverty reduction strategies.

  12. Gamecock

    43 million of those 95 million are retirees over 65. Some have jobs but many don’t. Another 57 million are children 13 or younger. Add in those on disability and we have a lot of people working even though our safety net is designed so we shouldn’t have to.

    95 million people not in the workforce is just about what we would expect. That is a pointless number to quote unless you want to force children and old people to work. We’re sure that the children are better off in school. We are so sure we actually forbid them from working for wages. The only way to really reduce the total is to force my 90+ year old grandmother to go to work. She could get a job as a greeter but there aren’t good options for wage labor.

    For the live of me I can’t understand why that 95 million number, or whatever it is today, gets the attention it gets.

  13. Add in those on disability

    All minus five million of them? You’ve already claimed a hundred million people for the ninety-five million who aren’t working.

    And the disability scam is working just as hard in America as it is in Britain. People who are never going to be able to get another job are put onto fake disability to take them out of the workforce, so you can claim there’s no unemployment.

    We’re sure that the children are better off in school.

    Who’s ‘we’, kimosabe?

    The only reason the US government want to keep kids in school until their mid-20s is because those kids take out huge loans which keep left-wing academics in fat jobs and throw a ton of new credit into the economy.

    That’s the nest financial disaster coming down the pipeline, as kids with $100,000+ in student debt and a job flipping coffee in Starbucks are never going to be able to afford to buy a house, get married and have kids.

    For the live of me I can’t understand why that 95 million number, or whatever it is today, gets the attention it gets.

    I keep seeing liberals claiming that everyone in America who wants a job has a job, honest. So why is it that Americans just voted in a President who promised to kick illegal Mexicans out of the country, and bring jobs back from overseas? They all have jobs, right? So why would they care?

  14. The incentive is for workers to want a higher minimum wage.

    As I understand it, a number of union agreements set wages relative to the minimum wage. So, when the minimum wage goes up, those union wages go up.

    That’s the incentive for workers to want a higher minimum wage. Phat union workers don’t care that they’re putting unskilled, non-union workers out of a job.

  15. Edward,

    You missed this sentence, “Some have jobs but many don’t.” I have two remaining uncles on Social Security. One sells real estate and is counted as employed. The other still does construction work under the table and isn’t counted as employed but is working. The point is that, before we consider disability and other moochers, we have a potential pool of 100 million that we don’t expect to be in the labor force. Add in the moochers, stay-at-home mom, truly disable, students, and everyone else that the safety net says shouldn’t be employed for wages and the potential population that could potentially not be in the workforce is on the order of 150 million. 95 million doesn’t seem so bad once we have perspective.

    Honestly how much value is the average 13 year old able to add? The answer is not enough to pay them minimum wage. That child is far better off in the long run learning basic skills like reading and writing. Yes, our system is failing at that but it is another issue entirely. I, and I believe our host agrees, thinks we in the west are rich enough we don’t have to send our children to work in the mills. College for everyone is stupid but so is thinking making prepubescent children work for wages in a developed economy. Believe it or not most of us have figured out how to get out of the fields. Most of us would rather not go back. If you have that view I’d suggest you move to Bangladesh, but they are getting rich enough soon they will want to educate the children as well.

    Americans voted for the president we have because we have a terrible educational system and far too many of our citizens are uneducated idiots. If we had wanted to have trade barriers the time to do the was 25 years ago. Since we didn’t vote for Perot we have what we have. At this point nations like China and Mexico are finally getting rich enough to afford American products. Considering erecting trade barriers after spending a quarter-century investing into other nations so they are rich enough is bad enough. Attempting to do that when our exports to China are increasing at roughly 9% per year is what makes America a nation filled with idiots. Mexican export growth is only around 7% but we have to recognize we are fighting a drug war on their soil. Mexicans are not profiting from this war, and neither are we, so they don’t have as much money to buy our tat as the Chinese.

    2nd response response:

    I was looking at those directly affected by minimum wage. Yes, we can expand the thought by looking at union contracts but I don’t see the point. The incentives for supporting minimum wages increases are the same, more money in my pocket on paper.

  16. I do like the method of strolling around with your own scanner – that saves effort and saves staff. How much theft goes on I don’t know.

    About 10 years ago, a (moderately senior) member of the John Lewis Partnership told me that he was all in favour of self-scanning by customers, because of the known extra revenue from inadvertently repeated scans…

  17. “Before the minimum wage increase those hundred workers are making a total of $1000/hr. Minimum wage rises to $11/hr and 1 person gets fired. The remaining 99 workers are now splitting $1089/hr. Virtually all of the workers are better off so the workers have no reason not to support an increase in minimum wage.”

    Then why not make the minimum wage $30 an hour? You are so cold.

  18. Liberal Yank said:
    “We’re sure that the children are better off in school”

    Hmm; depends on the school (although I get your wider points).

  19. Gamecock,

    $30 is too long. It’s high time we start the fight for $150, as I already said.

    Richard,

    You are quite right about the quality of the schools. I thought I’d made that abundantly clear on my explanation of why we have the president we do.

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