We are developing the social individualist meta-context for the future. From the very serious to the extremely frivolous... lets see what is on the mind of the Samizdata people.
Samizdata, derived from Samizdat /n. - a system of clandestine publication of banned literature in the USSR [Russ.,= self-publishing house]
|
Minimum wages reduce welfare bills, apparently It impresses me in a grim sort of way how people who like to think of themselves as free market can justify some pretty big infringements of freedom of contract. Here is an argument I came across the other day (I won’t mention the author, as it was in private conversation): Minimum wage laws where the minimum is set at a high level are economically sensible because people earn enough to live on which means they don’t have to claim welfare and hence this keeps taxes down.
Feel free to debunk.
|
Who Are We? The Samizdata people are a bunch of sinister and heavily armed globalist illuminati who seek to infect the entire world with the values of personal liberty and several property. Amongst our many crimes is a sense of humour and the intermittent use of British spelling.
We are also a varied group made up of social individualists, classical liberals, whigs, libertarians, extropians, futurists, ‘Porcupines’, Karl Popper fetishists, recovering neo-conservatives, crazed Ayn Rand worshipers, over-caffeinated Virginia Postrel devotees, witty Frédéric Bastiat wannabes, cypherpunks, minarchists, kritarchists and wild-eyed anarcho-capitalists from Britain, North America, Australia and Europe.
|
Looking back over the last Labour government, I can’t help notice that in practice, what emerged was a National Minimum Wage in 1998 (there were minimum wage rates in agriculture and a range of industries before then, some were scrapped in the 1980s) AND also the ‘Working Tax Credit etc.’ scam of ‘negative income taxes’, i.e. payment from the State to go to work. I recall that in one corner of the UK (noted for being rainy and having a border with a Eurozone country) it was remarkably common for women to sign up for part-time work 16 hours a week so as to qualify for the working tax credit, get the documentation needed for a tax credit claim (valid for the next 6 months) and then never attend work until approaching another employer in 6 months time to renew the tax credit claim. Put up a sign that says ‘Free Money’ and you will get noticed.
Look at this Parliamentary debate when some of the UK”s Wages Councils were abolished in the 1980s, an MP said.
Supplementary Benefit was a form of guaranteed income unrelated to the payment of contributions to the welfare state. All that we have now is both a minimum wage and, it seems, benefits on demand.
Well it could be true. If you pay welfare to the working poor as well as the unemployed, it’s possible that the welfare payments saved on having to pay less to top up the income of the working poor (cos they now have higher wages) exceed the extra welfare payments you have to pay to the people who don’t have a job because of the higher minimum wage.
Of course the money has to come from somewhere and that somewhere is a disguised tax on employers, and/or consumers, if employers are able to pass the cost on. So if there is a welfare saving in the government accounts – which depends on the detailed numbers – it’s only because of an accounting trick whereby the welfare is laundered into the form of higher wages paid by a disguised tax on employers / consumers, and so kept out of the accounts.
Myself, I don’t think the minimum wage battle is worth fighting, except in the conservative sense of drag and delay. It’s just too successful as a populist war cry and too difficult to explain the economic lunacy involved to the ordinary voter without being painted as a cross between Ebenezer Scrooge and Montgomery Burns. Y’all will have noticed that several Republican states voted to increase the minimum wage in the recent elections. In the current climate opposing the minimum wage is a direct charge into massed ranks of cannon. Glorious but mad. It would be wiser to think up ways of mitigating the bad effects – eg business tax credits for employing low wage workers.
Standard Samizdata-type answer (which I agree with):
Standard economic theory says that minimum wage legislation increases unemployment, therefore the welfare bill is increased, not decreased.
In other words, many people who would otherwise have a job don’t get one because they cost too much to employ (relative to what they bring in). And they have to be supported out of taxes.
So your friend gets things the wrong way around.
Through my work I know quite a few minimum wage staff at shops.
Their employers often use them for only a few hours per week to keep all costs down, such as NI and pension rights. Some of them work for pin money or even to relieve the tedium of retirement, but there is real poverty. It is not uncommon to hear of people walking 3 or 4 miles to work as bus fares are regarded as a luxury.
Many of them, even the rare full time staff, get benefits to help them live and to pay their rents.
I often wonder what the prices in the shops would be if these people were paid a decent wage by their employer which allowed them to live on their pay.
These people work for private companies but the taxpayer funds part of their wages. The shareholders of these shops benefit from the labour of these people, but they wouldn’t be fit for work if they weren’t housed and fed by the taxpayer.
I’m a Conservative voter, but I’m beginning to think the UK is on the way to becoming a third world country when I see how poorly an increasingly large number of workers are paid and treated.
The minimum wage also works as a kind of low pay cartel. Companies that used to have to pay a certain amount in order to retain staff can now just pay the minimum wage or just a tiny bit more than minimum wage. They can do this and retain staff because all the other firms are doing it too.
>The minimum wage also works as a kind of low pay cartel. Companies that used to have to pay a certain amount in order to retain staff can now just pay the minimum wage or just a tiny bit more than minimum wage. They can do this and retain staff because all the other firms are doing it too.
Don’t see how the minimum wage is relevant to what you’re claiming here. (In fact, it’s not very clear what you are claiming, and why you think that whatever you are saying is true).
In my corner of the world, a no-doubt well-meaning politician has recently suggested to highschool students who cannot find paid work, to find a place to work for free – ‘to gain experience for their future resume’ or some such. The mind boggles.
Presumably, as well as all the other issues, the minimum wage helps low-paid workers to pay VAT at 20%. 🙂
Best regards
Which sounds like economic perpetual motion. Something about taking in each others washing springs to mind. Swift, was it?
A related fallacy is that employment regulations help to save on social insurance.
Pete
I can’t disagree that there is a lot of obvious poverty in the UK, more evident in most towns north of Daventry in Northamptonshire (the English Midlands), but the reasons why the UK is poor, why many people are dressed in shabby clothes, and many towns look run-down are many and complex, here are some, for my ha’penneth worth.
1. Tax: e.g. VAT drains £1 in every £6 spent on Standard-Rated goods, at 20%. Abolish VAT, prices will fall, real incomes rise, people have more to spend and save.
2. Business rates drain away money that could be invested in businesses.
3. Wage rates are ultimately fixed by supply and demand. In the instant case, retail work is low paid because the main skills are (i) honesty (not yet a premium trait but will be soon), (ii) presentability (iii) inter-personal skills. If around 10% of the population is employed in retail (so I’ve heard claimed), then their salaries go on the costs of the shops. That’s nine working people paying for the cost of the shops (plus all the other costs).
4. The distortions of the monetary system caused by fractional reserve banking and fiat money make London and the financial sector the net gainers, as the ‘spigot’ of money welling up from the Bank of England floods out into the economy, distorting the economy in the entire UK. Artificially set interest rates and QE wholly distort the economy, preventing the ‘true’ reality of the state of the UK’s economy from becoming evident.
5. High housing costs – planning laws and fiat money combine to limit supply, we do not get richer paying more for our housing, we face reduced disposable income and investment/saving potential.
6. Capital and income taxes reduce the scope for saving and thereby developing capital.
7. The welfare state appears to permit a basic, unproductive lifestyle to be sustained by many people who might otherwise produce, imposing costs on others (i.e. making others poorer) and reducing scope for output.
8. Regulatory costs remove opportunities for investment.
9. Energy costs inflated by Climate Fantasy.
There are many more reasons why people are not well-off. Despite the enormous productivity of capitalism, it is continually sabotaged by the State and its friends.
The grave, real problem would be how to get from the mess that we are in to a more productive economy without massive dislocations and terrible difficulty for many.
Here’s a top-of the-head plan to remove costs and get the economy moving again:
1. Scrap VAT and fuel duty, petrol 70p a litre?
2. Flat 20% income tax capped at £60,000. One cheque to HMRC for £10,000 (personal allowance) ends your tax liability.
3. All public sector pay capped at £70,000 p.a. and a recruitment freeze.
4. Sack 2 million civil servants and quangocrats, scrap their functions, pay only notice pay.
5. Sell off State land holdings and pay off some of the National Debt.
6. Stop paying interest on the National Debt (if someone’s pension is paid in part out of return on Treasury bonds, then they are tax farming their fellow citizens, not investing in factories or something productive (or which might be productive, who knows?).
7. Scrap planning laws.
8. Scrap almost all local government.
9. Freeze the money supply, drop a Tallboy on the Bank of England (on a Sunday, evacuate it first) and put money issuing in the hands of the Royal Mint.
10. Liquidate unsound banks.
11. Judges appointed by the parties to civil cases and fee paid.
12. Abolish farm subsidies.
13. Stop funding anything at University bar science, medicine and engineering (I am a moderate) and abolish teaching entry barriers.
14. Abolish the TV licence.
Cal said:
Stonyground is saying the minimum wage eliminates wage competition between companies at the bottom end of the employment market.
I am unsure who ultimately benefits from this.
Some employers benefit in not having to compete with each other for employees. Some employers will go out of business if they are not profitable enough to pay the required minimum.
Some employees will benefit in being able to chop and change employment knowing they will be earning the same as before. Some employees will not find employment if the value of their output is too low.
The original claim cannot be true. The minimum wage does not, in general, raise wages. What it does is prohibit anyone whose labor is worth less to an employer than the minimum wage from having a job.
An excellent video on the topic may be found here: Edgar the Exploiter.
As an aside: the creator of that video has done others, including the wonderful George Ought to Help, and is seeking funding to do more at this Patreon campaign.
Gareth:
This is actually the weak point in Stonyground’s reasoning: if companies truly compete for workers, then the minimum wage cannot allow them to LOWER wages.
I can see, however, one way for it can reduce competition: driving out of the market all the companies that are unable to make efficient use of workers, ie companies with lousy managers. Some unintended consequences are good.
Though in the case of the minimum wage, i still think that the balance of consequences (intended or unintended) is bad.
Perhaps not that bad, compared to other policies; so, Lee Moore might be right that, on the balance, this is not a cause worth fighting on its own merits. Still, i think it’s worth pointing out to people that they have got it all wrong; and if they won’t listen, just sneer and change subject, or walk away.
This sounds like the economic equivalent of trying to propel a sailing boat forwards by blowing a giant fan into the sails.
Manufacturers are moving to China and India.
There must be some form of cognitive dissonance on declaring a minimum wage and then taxing it, in essence there is a kind of reluctance to admit that the libertarian policy on flat tax and high allowance has some merit.
@Mr Ed, after reading Mr Frisby’s excellent work I am partial to the idea of a Land Value Tax rather than income/VAT, but moving from the current system to where it needs to be is a discussion in itself.
@Regional, Chinese wages have increasing, the rupee has fallen against the dollar whilst the yuan has strengthened, so in fact manufacturers (of western goods) are moving from China to India (as well as ASEAN, Brazil and Mexico).
Paying and treating workers poorly is a symptom, not a cause. Raising the minimum wage won’t bring about good pay and treatment for workers, any more than handing out driver’s licenses to the blind will make the roads so safe that even the blind can drive on them without accidents.
In fact, requiring or raising a minimum wage would be expected to make working conditions worse for the workers it was intended to help, even if it doesn’t cause increased unemployment. Employers and employees might agree that “pay more but require harder work” is a less-desirable policy than “pay less but have easier working conditions,” but that’s the policy a higher minimum wage pushes them into.
“I am partial to the idea of a Land Value Tax ”
Problem with that one is; what’s the value of land?
You could say; what it’s selling for. But that was before an LVT.
And, apart from agricultural etc, land prices have long departed from any notion of utility value. Land for housing is valued at it’s “investment” value. Based on the assumption there’s always someone who’ll pay more for the land than its currently valued.
Stick on an LVT, so owning land entails a high cost & you just might collapse the paradigm. So either you don’t get the revenue you expect or you collect the same revenue on a dwindling capital base. End up with land selling at utility value discounted by the amount of tax due.
Given the amount of debt secured on housing, you’ve busted the economy altogether.
As for the minimum wage issue, the crucial thing is where the MR is set.
So far the UK level has been modest enough there’s not been much effect. But, for various reasons, the effect of raising an MR is disproportionate to the amount it’s raised. It’s a very sensitive figure.
A very good point: where it would be exceptionable for employers to collude in paying workers less than a market rate, here the government does it for them (at least if the MW is set low enough).
We are invited in the opening post to “debunk” an economic theory about the minimum wage as allegedly espoused by someone else. The wording of the statement preceding the theory indicates that it is considered to be “wrong”.
Discussions about opinions or pet theories tend to be tedious and generally get nowhere particularly useful, and engaging in a public stoning of a hated established point of view, or one that is different to one’s own, would seem to be a limbic response unworthy of the investment of one’s cognitive surplus.
Therefore, to address the issue and uphold the apparent required standards of discussion here, I would suggest that @Snorri Godhi might have it about right and that maybe:
“…it’s worth pointing out to people that they have got it all wrong; and if they won’t listen, [then] just sneer and change subject, or walk away.”
So, the theory is wrong and the person espousing it is an idiot. Looks like rain today.
When poverty is defined as a certain percentage of the mean, it never changes. The number of people below the “poverty line” therefore is stable over time, as it has been. It is mathematically impossible to eliminate the bottom 20%.
What markets do is raise the objective standard of living for that bottom 20% over time by cheapening technology. Yes, the rich may be pulling away, but would you rather be poor in 1970 or now? That is what really matters, that “poverty” means two TVs instead of four, one car instead of two, cell phones, appliances and enough calories to make obesity and diabetes the signature health problems of the underclass. In most of the world, and over most of history, the poor just starve to death. This is the triumph of western civilization and the market economy.
@Hector: Actually, it’s possible – at least it’s been televised by MythBusters – to blow your own sail. Inefficient, but possible. Which may have been your point, but I thought I should have that clarified.
The minimum wage, ah. The problem is not necessarily minimum wage per se. It is the combination of minimum wage and welfare. You can’t dismantle one without dismantling the other – take away minimum wage and people are incentivised to not work at all. Take away welfare and many people will be unable to find a job. Take both away, and maybe the job market will return to some level of sanity in a reasonable period of time without causing too much misery and grief in the medium term.
You will also have to deal with the immigration (or importation, to be more accurate, I suppose) of mass cheap labour. A coherent public policy (if such is desirable) has to take these various factors into consideration.
A lot of theory here, but I see the reality of low pay and the new era of austerity.
I’m anti-big state, but whenever the state shrinks it always seems to withdraw its largesse from the poorest first.
I don’t think it makes economic sense to create a large underclass which can never really take part in normal life because of their relative poverty. We’ll just end up spending more and more on coping with the problems of an abandoned section of the population which has no realistic hope of ever bettering itself via the mechanisms of the free market for labour.
As computerisation, automation and globalism continue to kill good jobs and decent wages I think we’ll see many more people realise just how little their labour is worth to employers.
The minority who can weather these economic pressures and continue to prosper will need to think carefully about the kind of society they want to live in.
Austerity is another ways of saying “people being given less of other people’s money”. And pretty much everything is theory, including what both you and I are writing.
Really? You know this how? The alternative is paying people to be be poor and here is a theory for you: you get less of what you tax and more of what you subsidise. Why do you want to tax prosperity and subsidise poverty, because that is indeed the current situation.
I do not want to live in a state in which people are paid to be indolent because nothing is more corrosive to society. Computerisation and automation will indeed eliminate many more drudge jobs and change the nature of the economy (as technology always does) but if you think globalised markets reduce opportunities rather than increasing them, I can only say you could not be more wrong.
Well, we’ll wait and see Perry.
30 odd years ago we were all told we’d be living lives of leisure – 15 hour working weeks, retirement at 35.
All because machines would be doing everything.
So what went wrong? We’ve got the machines.
Indolence is not a crime, nor is hard work a virtue.
We need to move forward and realise that work and prosperity need not be linked so closely as they were in more primitive times.
Simply demanding that the majority study more or try harder to be more creative so they can earn a good living is not going to give us a healthy, socially well-adjusted society. It is a recipe for a more divided one.
We are already seeing the lunacy of that approach, as we have encouraged lots of hard working youngsters to go to new universities only for them to find out there are not enough jobs available for skilled people. And its just as cynical and cruel to tell poor people that if they only got their act together they’d get a better job.
Those jobs don’t exist, and never will.
What austerity? Is any government actually spending less than last year?
Huh? Where do you think prosperity comes from? Last I checked, it wasn’t growing on trees – and even then, the trees need tending to. Seriously, is this for real?
The fact that many people channel their talents and honest efforts towards towards useless university degrees and such is well beside the point, and is in no way proof that the idea of making an effort is in and of itself obsolete.
we have encouraged lots of hard working youngsters to go to new universities only for them to find out there are not enough jobs available for skilled people.
Fuck the state for inflating the education bubble (and in many ways for taking jobs that could have been done with a high school diploma a generation ago and making them now more or less require a bachelor’s degree).
25 years ago when I went off to college here in the States, our family had to fill out a financial aid form, from which the college would divine how much the family could afford to pay toward tuition, room and board, and all the other fees, with the rest of the total being made up from scholarships, loans, work study and the like. It immediately dawned on me that the government could inject billions of dollars into such a system, and the amount our familiy would be able to afford would not go down. The college would be able to rake in that money in the form of higher tuition and fees. Which is precisely what’s happened.
Indeed, Ted. Personally, I make the point of actively discouraging young people from acquiring higher “education”, unless they aim towards some sort of practical area, such as medicine or engineering.
And we were also told there would be a global Malthusian apocalypse, the data was irrefutable and the science was settled. “They” tell us a lot of things based on looking at the numbers, grinding a political axe on the axis, and then drawing the line until it runs off the top of the chart. This happens over and over and over again. The whole global warming thing is a case in point.
It is if I am being forced to subsidise someone else’s indolence or be thrown in jail for declining to do so. I am being robbed by proxy in return for nothing whatsoever.
I disagree, it is just not always a necessity.
Depends what you mean by ‘we’… and ‘forward’… and ‘realise’… and ‘closely’. That whole phrase is redolent with interpretive wiggle room to make it imply a great many things. My take? Yes it is directly linked, all that is changing is the gearing ratio between the work and the prosperity, a process that started when cave men replaced clubs with spears with fire hardened points. More killie deathness per unit of work expended, producing more dead animals and thus more happy prosperous cave people plus a fancy antlered hat for the wife. Improving the ratio also frees up time for jobs less directly linked to mere survival, such as cave wall painters, strippers, musicians, shamens and next thing you know, people can make a living serving over priced coffee in Starbucks.
Oh on the contrary, that is exactly what it would do: restoring the notion of consequence and TANSTAAFL would do an extraordinary power of good for society and economy both.
The value of unity is vastly overrated.
The problem there is that education in the internet age is no longer fit for purpose. Indeed it is actually irrational to continue the industrial age model of ponderous centralised educational factories.
Another deeply ambiguous statement. Maybe the job making buggy whips they rather unfortunately trained for no longer exists and never will, but other jobs do exist and always will. Indeed there will be jobs doing things we (quite literally) cannot imagine right now. The problem is a completely different approach to learning is needed.
………and is in no way proof that the idea of making an effort is in and of itself obsolete.
True, but plenty of effort, both mental and physical, is indeed obsolete.
Automation has made it so.
For example, our factories, warehouses, farms and offices now need far fewer people to do manual or clerical tasks because of machines.
And we are told that in the near future even the work of lawyers and doctors is likely to be computerised to a certain degree.
All the evidence we have points to human labour becoming less and less necessary for the production of wealth. That’s how its been for 200 plus years, and there’s no indication the process is slowing down.
Unemployment rates are now at a level which would have caused outrage a few decades ago.
The link between labour/effort/ability and prosperity is weakening, and we now need to work out how to make sure that prosperity is shared reasonably fairly now that technological progress is reducing the value of many peoples labour to a very low level or even zero.
I’m not sure cutting benefits and keeping an increasing proportion of the population on poverty wages is the way forward. That’s a old fashioned way of looking at things, based on the fallacy that good jobs are always available to those who try to better themselves.
Unfortunately this fallacy also serves as a cause for self-congratulation for some people who have so far avoided any misfortune caused by technological changes or who are fortunate enough to be born smart enough or late enough to ever to be affected by them.
Pete, I’m afraid that you may be confusing labor with effort, and then also possibly visible effort with invisible one. You are right of course that automation makes much of the old-style physical labor obsolete, but someone has to think up and plan and build that automation, and it has to be maintained and managed, etc. This will always be so.
And even when (or if) we are going to have something approaching AI, that still would need supervision, planning, direction and all that (unless these machines will become “human” themselves, which is all the same, really). What I’m driving at is that not all effort is physical, and mental effort is no more, er, effortless than the old-fashioned manual labor. It takes time, energy, it has its health costs in stress and fatigue. In short, it takes energy to produce stuff, and that energy needs to be applied intelligently – which is what humans do, and have always been doing, and likely will be doing in the future.
@pete: What you’re talking about are low-lying fruit; jobs that can be automated and hence (assuming that the upfront and ongoing costs of automation are lower than the cost of human labour per unit of output) essentially be lost to humans.
Well, and so what? At a time, there were jobs for dunny carters (Aussie nightsoil collectors); now, that job is limited if not utterly extinguished. I don’t think we’re worse off for it. At some point in time, no doubt QSR waiters and waitresses will go the way of carriage drivers. I don’t think we’ll be substantially worse off then either.
There will always be jobs that cannot be automated. For example, bricklaying. Plumbing. Electrical wiring. Insulation installing. Hairdressing (or would you trust a machine wielding blades about 2cm away from your head?) and barbering (not the same thing). Even farming, as long as you don’t let the big combines take over the whole thing. As a matter of fact, there are gazillions of Poles in the UK – proof that there are plenty of jobs – just not jobs Brits want to take on, because they’re perceived to be low-class, or pay too lowly. If, that is, we’re only talking about jobs that would supposedly benefit from increased minimum wages.
Hell, what about customer service or technical support? How many times have you waited for what seems like years for someone to respond to your complaints? Isn’t that proof positive that there are inefficiencies in the system that have not yet been addressed?
And yeah, those on welfare (i.e. the ‘poor’) do live lives of leisure. That’s precisely why we aren’t too happy about the situation.
@Mr Ed, others
At the debate I ran recently, Ian Dunt (someone with surprising views, but who favours social justice etc) kept saying “I would not start with X”, in (at least) one case he had just talked about how outrageous something was but would still “not start there”. He was fixed on wages as the cure for the cost of living crisis.
http://libertarianhome.co.uk/2014/11/vice-and-taxation-with-christopher-snowdon/
“Feel free to debunk.”
No need to debunk – just point out that, at best, the welfare hasn’t *gone away*, we’ve only shifted who’s writing the check.
And instead of the *taxpayer* paying, now its the *consumer* paying (through higher prices, and reduced competition among producers) – and the taxpayer and consumer *are the same damn people*.
All minimum wage does is change welfare from a ‘left-wing socialist’ program to a ‘right-wing national socialist program’ – ie fascism, where industry is nominally privately owned but actually taking direction from state-planners.
Socialism in any but the smallest doses is bad, but the only thing worse than fascism is outright state control (IOW communism).
No serious person disputes that a higher minimum wage increases unemployment. (Anyone who asserts otherwise is either grossly ignorant or pursuing an agenda which has nothing to do with either economics or employment.) The principal argument for raising the minimum wage is to give people a “living wage”. It is only a side effect that this would also remove them from the welfare rolls. With respect to those particular lucky individuals the increase would indeed reduce the state’s welfare cost. However, the “and thus keep taxes down” part of the statement is risible, because it completely ignores those other unfortunate individuals who are thus priced out of the market and are forced to go on welfare. If that is really intended as a serious argument it fails the Bastiat “seen and not seen” test.
The argument for raising the statutory minimum wage is that no one working at the current amount can support a family on it. Leaving aside the obvious point that most minimum wage jobs are entry-level or part-time positions held by the very young and retirees, neither of whom is attempting to “raise a family” on that wage, and accepting for the moment the proposition that society somehow “owes” to such people the ability to earn enough to support themselves, the philosophical objection to minimum wage laws is that they impose the entire cost of supporting the marginally-employable onto private businesses rather than onto society as a whole. If a democratic society chooses to accept that burden it is incumbent upon it to pay the cost (out of general tax revenues), not push the whole of it onto some unfavored group (here, certain businesses which have some need for unskilled labor).
Minimum wages are merely an institutionalized form of theft. You believe that someone having negligible skills needs a “living wage” to survive, but rather than increasing your taxes to cover the cost you empower the government to pick someone else’s pocket to pay for it. And then you try to claim the moral high ground. A statutory (i.e., not market-driven) minimum wage is simply a form of socialism, and all socialism is premised upon a philosophy of theft.
One curious State-generated form of self-employment I have seen was in Munich during Oktoberfest, when hordes of drinkers descent on the city and in a fortnight, reputedly drink between 6 and 7 million litres of beer. In Germany plastic bottles have an environmental deposit on them, the Pfand, it is around 15cents (Euro), higher for plastic bottles. The bottles can be returned to reverse-vending machines that pay out the deposit. Few bother, it seems, but on a Saturday afternoon on the U-bahn (subway system) I saw the occasional person, poor looking, usually of pension age, carrying crates, obviously not a U-bahn employee, and getting on and off trains and picking up every abandoned bottle, and then taking a crate of empty bottles (sometimes carrier bags) off the train. This was a way to make some proper money, once the Pfand was reclaimed. It struck me as a very niche way to obtain a precarious income (or else a way for an obsessive Womble to pass a Saturday afternoon).
Now what would the Left say if these Pfand-Wombles were not to earn the minimum ‘wage’* by their efforts? Ban the work or raise the Pfand?
* It would not apply to self-employment, but why? Once the law abandons reason, what stops it?
Minimum-wage laws were originally pushed by various trade-unions to keep non-unionized workers out of competition. Quite often the motives were based in racism, having the intent to keep non-whites out of “our” jobs. The “living-wage” excuse was used as lipstick on the closed-shop, often racist pig. The fact that over the years so many dupes came to believe that excuse does not change the fact that these laws are still largely being pushed and lobbied for by the unions, and that they, their members and their leadership are the only ones who gain anything from them.
Here in Australia, minimum wages (and conditions- the 8-hour working day, etc.) were set by a Federal judge, being based on sentiment, not economics. (The Harvester case)
I have heard that in Italy, firms have the right to not pay an employee anything for a year, until you know the job well enough to be of value! Is that true? Can anyone confirm or deny it?
It’s funny you should mention the 8-hour working day Nick, as it now dawns on me that it may well be part of a similar scheme – worth checking for info on that as well.
Alisa, Australia is a special case. We face killer competition from New Zealand, so we need protectionism to keep them away.
And hours limits can work the other way. A few years ago, some school kids lost their part-time jobs because they weren’t working enough hours, according to union rules. The shops couldn’t afford to hire them for as long as the union demanded, so everyone lost- except for the Federal Minister involved, a certain Julia Gillard. She went on to become PM, an inspiring success story for women everywhere!
Those who claim that “empirical studies” show that minimum wage edicts do not increase unemployment (over what it otherwise would have been) are saying that “empirical studies” show that increasing the price for something (in this case labour) does not tend to reduce the demand for it – and that prices (for wages are prices) should be set by government edicts (not supply and demand – marginal productivity and so on).
As for higher unemployment meaning “lower welfare bills” – I am not sure how that is supposed to work.
Those empirical studies have been debunked. It is interesting though, that people go to such lengths to prove a theory which is obviously false in the strong logical sense. And no empirical study can quantify those jobs which could have been but never came into being because of the minimum wage.