abolish the minimum wage

SLUSK

The minimum wage causes unemployment and should be abolished all together. What do you guys think?

mikemac

If the kitchen porters and hotel waiting staff (oh, I've been there!) or any low paid job are now going to see their wages decreased, would it not make welfare even more attractive?

At maybe €6 per hour you'd be a fool to work at low wages when you can earn more doing nothing. I can't predict what'll it change too, it depends on each business
Of course most prefer to work then sit around but you're not making it easy

Scofflaw

I don't think we're particularly uncompetitive at minimum wage levels - the problems are probably lack of productivity in non-minimum jobs, and a high cost base.

cordially,
Scofflaw

SLUSK

mikemac wrote: »

If the kitchen porters and hotel waiting staff (oh, I've been there!) or any low paid job are now going to see their wages decreased, would it not make welfare even more attractive?

At maybe €6 per hour you'd be a fool to work at low wages when you can earn more doing nothing. I can't predict what'll it change too, it depends on each business
Of course most prefer to work then sit around but you're not making it easy

Obviously you take away all social welfare as well. There should be no such thing as a dole(that is my libertarian view).

SLUSK

Scofflaw wrote: »

I don't think we're particularly uncompetitive at minimum wage levels - the problems are probably lack of productivity in non-minimum jobs, and a high cost base.

cordially,
Scofflaw

8.65 for burger flipping jobs is a hell of a lot to be paying.

b12mearse

i think its going to be the governments next move after the thrashing we will get on the 24th.

mikemac

The budget isn't on the 24th

Scofflaw

SLUSK wrote: »

8.65 for burger flipping jobs is a hell of a lot to be paying.

Yes, I'm sure that's what makes the Irish economy uncompetitive. After all, burgers are our major export.

amused,
Scofflaw

SLUSK

Scofflaw wrote: »

Yes, I'm sure that's what makes the Irish economy uncompetitive. After all, burgers are our major export.

amused,
Scofflaw

your major export is Bono.

Scofflaw

SLUSK wrote: »

your major export is Bono.

Well, Riverdance. Bono was sort of self-exporting.

Seriously, though, if you have any research showing a strong positive correlation between minimum wage and unemployment, let's be discussing it. I'm not aware of any, and rather suspect you're stating an article of (?libertarian) faith.

cordially,
Scofflaw

SLUSK

Are you saying there is no correlation between minimum wage and unemployment. Try setting the minimum wage at €20 per hour and watch what happens...

Scofflaw

SLUSK wrote: »

Are you saying there is no correlation between minimum wage and unemployment. Try setting the minimum wage at €20 per hour and watch what happens...

OK - what does happen? Has the experiment been tried, or does this also require one to have the appropriate faith? What happens if we raise the minimum wage slightly, instead of jumping to more than double? Do different levels of minimum wage correlate with different unemployment levels - are there, in other words, equilibria established for different rates?

Of course, I'm presuming here that your assertion that the minimum wage causes unemployment is based on experimental data, or at least observed correlations with decent controls and solid theoretical explanations. Presumption is all I have for that currently, though...

amused,
Scofflaw

SLUSK

Scofflaw wrote: »

OK - what does happen? Has the experiment been tried, or does this also require one to have the appropriate faith? What happens if we raise the minimum wage slightly, instead of jumping to more than double? Do different levels of minimum wage correlate with different unemployment levels - are there, in other words, equilibria established for different rates?

Of course, I'm presuming here that your assertion that the minimum wage causes unemployment is based on experimental data, or at least observed correlations with decent controls and solid theoretical explanations. Presumption is all I have for that currently, though...

amused,
Scofflaw

If a piece of work to be done is worth €5/h no one will hire someone to do it for €10/h. If your productive capacity is below the minimum wage you will be unemployed.

Lets take an extreme example, how many people do you think would be working if the minimum wage was €200/h?

Let Peter Schiff explain it for us.
http://www.lewrockwell.com/schiff/schiff34.1.html

Scofflaw

SLUSK wrote: »

If a piece of work to be done is worth €5/h no one will hire someone to do it for €10/h. If your productive capacity is below the minimum wage you will be unemployed.

Lets take an extreme example, how many people do you think would be working if the minimum wage was €200/h?

Let Peter Schiff explain it for us.
http://www.lewrockwell.com/schiff/schiff34.1.html

I was hoping you could explain it, since you put it forward!

So your thesis relies on the unemployment being created by blocking jobs that yield less than the minimum wage in added value? Now, it seems to me - and forgive a poor ignoramus here - that you're ignoring several things, the most important of which are that the value-added of individual jobs is extremely hard to measure, that a job that is felt to be necessary but which adds less value than the minimum wage will still be made available, and that many minimum-wage jobs are held by people who still turn a profit for their employer.

Let's do a couple of little thought experiments. Take the example of contract cleaning. I offer to clean your office for, say, €150 - a job I reckon will require about 8 man-hours. At minimum wage that's, what, €69.20? Well, perhaps the value-added is higher than the minimum wage in cleaning.

OK, let's take a fast food outlet (sorry - Quick Service Restaurant Industry outlet), and the famous burger-flipping guy ("8.65 for burger flipping jobs is a hell of a lot to be paying"). How do we measure the "value-added" of the burger-flipper? The answer is that we don't - he's part of a team that gets fast-food items with obscene margins across the counter, and it's meaningless to try and value his specific value-added (the only way to do it would be to measure the difference between what the customer will pay for an uncooked burger versus a cooked one, and multiply it by the number of burgers), at least as long as customers expect to get burgers in said fast-food outlet.

Now, the average McDonalds serves about 1680 people a day (all figures from McDonalds franchise info), and generates an average 6% profit margin, or about €90,000 per year (thus a turnover of about €1.5m). What's the burger-flipper's input to that? The answer again is meaningless. Even if McDonalds lost a small amount of money on every burger, they can't stop serving burgers, because the association with their brand is too strong. Therefore, even if the value-added of the burger-flipper is actually negative, there will still be a burger-flipper position available, at the minimum that McDonalds can pay.

You can see from the above example that a set minimum wage doesn't prevent the existence of jobs whose value-added is less than the minimum wage - because the lost value on those jobs can usually be compensated for elsewhere. The only case in which your thesis would hold true is the one where the single job can be valued independently of all other concerns - which, in the real world, is virtually nowhere at all.

Even your anecdotal "cri de coeur" of "8.65 for burger flipping jobs is a hell of a lot to be paying" turns out to be meaningless - burger joints are extremely profitable, so clearly "8.65 for burger flipping jobs" is not a lot to be paying.

Perhaps you would do better to rearrange your original claim as "the minimum wage depresses corporate profits slightly and should be abolished" - although I doubt you'll get many takers for that one.

cordially,
Scofflaw

P. Breathnach

Okay, Scofflaw has given a business/economic argument that would be difficult to improve. I want to look at another dimension, the attitude people have to some kinds of work, and the implied contempt for the people who do it.

Although I do not eat burgers, I am quite happy to believe that those who buy them in McDonald's want them flipped as part of the preparation and, as Scofflaw tells us, they pay good money for an operation that includes burger-flipping as a core component. But more than that, I am pretty sure that the employee who flips burgers is multi-skilled, and can also pour coffee, sweep floors, and maybe do such advanced things as take orders and operate the till. But more than that again, the burger-flipper has another life outside work, perhaps as a student or as a mother (or both). We are discussing people here, not just inputs into a business.

I have no problem with people discussing the minimum wage (I would not favour reducing it) but I have a big problem with the argument revolving around holding certain types of work and, by implication, the people who do those jobs, in contempt.

If somebody manages to take home a bit over €300 pw so that I can find clean toilets in pubs, restaurants, shopping centres, or hotels, then I think we have got a good deal.

ntlbell

P. Breathnach wrote: »

Okay, Scofflaw has given a business/economic argument that would be difficult to improve. I want to look at another dimension, the attitude people have to some kinds of work, and the implied contempt for the people who do it.

I don't think he has, the minimum wage is a large blanket across many sector's. companies big and small, stating a company with a turnover of 1m based on x amount of staff can afford to pay minimum wage is not an economic argument to keep it.

I'd actually like to hear some argument's too keep it.

There is no real benefit to putting an artificial floor on wages. it doesn't benefit anyone.

When you take the other side of the coin a SME with 8-10 staff who are now struggling, they could maybe keep all staff on at 6-7e or let two go.

As the choice is removed from them it means they _have_ to let someone go rather than opting to reduce the wage.

If you bring in an appeal process where company's can show their books and prove they can't afford to apply for some form of exception, the employee will just go to somewhere else.

remove it and let demands of the job market set the price.

open market my arse.

jimmmy

P. Breathnach wrote: »

If somebody manages to take home a bit over €300 pw so that I can find clean toilets in pubs, restaurants, shopping centres, or hotels, then I think we have got a good deal.

True enough, 300 euro a week for hard work is not very much when you consider that the taxes paid to the government support government employees on an average of 973 per week, and retired government employees get 18 months tax free lump sum + 50% of finishing salary.

The apartheid state is alive and well.


For the record, I think not only should our public sector pay + pensions be drastically reduced, but our welfare + minimum wage needs to come down, to make us competitive with other countries .

P. Breathnach

jimmmy wrote: »

True enough, 300 euro a week for hard work is not very much when you consider that the taxes paid to the government support government employees on an average of 973 per week, and retired government employees get 18 months tax free lump sum + 50% of finishing salary.

The apartheid state is alive and well.


For the record, I think not only should our public sector pay + pensions be drastically reduced, but our welfare + minimum wage needs to come down, to make us competitive with other countries .

Jaysus, jimmmy, it's not necessary to convert every thread into a public service bashing discussion.

[Can you back up your claim that government employees are paid an average of 973 per week? No, of course you can't, but you don't care: you say it anyway.]

Tipp Man

I can only offer anecdotal evidence from a recent conversation.

We were recently building a new farm shed, and got a local firm to do it, excellent work i have to say as well, but the boss was talking to us 1 day and said that he could do with hiring 2 young fellas, 18-21 i suppose, to help them out, nothing skilled, just kinda runners for them doing a bit of this and that.

It would increase his productivity as he would spend less time messing about. However he said that he couldn't afford to fork out the guts of €20 per hour on unskilled labour and still make a profit at the end of the day as it was just too much money which was coming staight from his own pocket. That coupled with the fact that it would be so hard to let either of the 2 go if work dried up or if 1 of them was useless meant to him that hiring them was more hassle than it was worth

So from his point of view the minimum wage, and overly strict employment laws, meant that he would rather take on less work than hire extra people. And this guy has been in his line of business for over 20 years and is an excellent operator

jimmmy

P. Breathnach wrote: »

Jaysus, jimmmy, .

No need to curse ....even thiough you may be embarassed at the thought of many people struggling to get by and earning far less for working than others retired people do, for example

P. Breathnach wrote: »

it's not necessary to convert every thread into a public service bashing discussion..

I was merely putting the 300 euro a week in to context.....while it should be reduced, as I said, others who are paid double and treble that for not working at all should have a bigger percemtage cut.

P. Breathnach wrote: »

[Can you back up your claim that government employees are paid an average of 973 per week?

It was cut and pasted from the c.s.o. website, and that has been explained and shown to you before.;)

shoegirl

SLUSK wrote: »

The minimum wage causes unemployment and should be abolished all together. What do you guys think?

For a single person with no rent or mortgage expenses, the minimum wage pays about 120 a week over social welfare, not counting "value" of the medical card at present. Cutting it would reduce this to about 80 euros over welfare (unless welfare itself was also cut).

For a single person with a mortgage too high to be covered by mortgage interest relief, the same situation would occur.

However, for a singleton with rent of less than the threshold, the welfare "package" goes up to up to about 300 euros, so minimum wage "increase" is only about 20 euros a week and they lose the medical card (though probably qualify for doctor only - this would really only impact asthmatics and other long term illness sufferers, who can easily end up paying the full 85 euros a month for medication and a person at that income will get zero tax back as opposed to somebody like me on more than double that income, who gets 41% of the 85 back). So somebody without a long term illness would now only be better off to the tune of about 20 euros a week.

If you cut the minimum wage, they would immediately be worse off working, unless welfare was cut or capped.

So the idea is pretty bad as it would create a huge disincentive to work at all levels.

shoegirl

Tipp Man wrote: »

It would increase his productivity as he would spend less time messing about. However he said that he couldn't afford to fork out the guts of €20 per hour on unskilled labour and still make a profit at the end of the day as it was just too much money which was coming staight from his own pocket. That coupled with the fact that it would be so hard to let either of the 2 go if work dried up or if 1 of them was useless meant to him that hiring them was more hassle than it was worth

So from his point of view the minimum wage, and overly strict employment laws, meant that he would rather take on less work than hire extra people. And this guy has been in his line of business for over 20 years and is an excellent operator

But the minimum wage is not 20 euros an hour, its 8.75, there is a huge difference. So if he hires one guy, say on a 30 hour week, adding PRSI and overheads of about 10 percent, he's really still only talking about 16k a year - its not huge. From family members who did at one stage take apprentices, however, the problem was not the pay, it was the poor quality of employee at that level - they were lazy, didn't want to do "dirty work", and were unreliable in terms of turning up, on time, and not calling in sick (or not turning up and not turning in sick). And that was the 80s, by the way, not the so-called Tiger years, when there was high unemployment.

That said, it would depend on a lot of other business factors such as if he would have enough capacity to guarantee somebody 30 hours of work, how much he gets paid per job, if its on time, how much insurance etc would cost him. In short, if it would pay him to hire somebody at any cost. The minimum wage itself is not that high in the context of high skilled or quality operations where having an extra body means the volume and/or variety of work can increase and thus income with it.

To be honest, even at the circa 40k a year level, I see a lot of very very lazy and poor value workers (who seem to think that they have an entitlement to this level regardless of the quality of their input) - that to me is the real problem, not the actual wage level. I have a gob****e working indirectly for me who I do not have the power to sack, but I wouldn't pay the minimum wage for his "work", never mind the massive overpayment he gets for very small quantities of poor quality "work".

ntlbell

shoegirl wrote: »

If you cut the minimum wage, they would immediately be worse off working, unless welfare was cut or capped.

So the idea is pretty bad as it would create a huge disincentive to work at all levels.

I think it's pretty obvious that both would have to be looked at the same time.

ntlbell

shoegirl wrote: »

To be honest, even at the circa 40k a year level, I see a lot of very very lazy and poor value workers (who seem to think that they have an entitlement to this level regardless of the quality of their input) - that to me is the real problem, not the actual wage level. I have a gob****e working indirectly for me who I do not have the power to sack, but I wouldn't pay the minimum wage for his "work", never mind the massive overpayment he gets for very small quantities of poor quality "work".

it can be the same at 500k levels x million levels.

It's really irrelevant to the discussion.

If a company wants to pay some moron over the odds for poor output has no baring on the minimum wage or "value" of employee

P. Breathnach

jimmmy wrote: »

... It was cut and pasted from the c.s.o. website, and that has been explained and shown to you before.;)

No, it wasn't. And you have some brass neck in suggesting that it was explained to me, given that I actually explained some of it to you. If you make a claim here, you should be able to back it up.

jimmmy

P. Breathnach wrote: »

No, it wasn't.

Oh yes it was. See a number of pages on the thread " workers walk today" where it was explained to you.

http://www.boards.ie/vbulletin/showthread.php?t=2055731964&page=15

Shelflife

my problem with the min wage is this, a 20yr old whos only qualifiaction is that they can breath and walk at the same time gets €8.65ph. the problem lies in what do you pay someone who is good at stacking shelves and working in a shop when someone who is barely competent is on €8.65.

the other thing is that the retail trade is subject to the JLC rates which mean that this barely competent 20yr old now gets €9.36 phr. thats an 8% increase for being alive -no extra productivity no nothing so this makes the retailers problem worse , how much does he now pay his good workers when the barely competent worker is on nearly 20k per year.

please dont mention why dont we get rid of the 20yr old, its very hard to sack someone who just does enough in their job, in fact its hard to sack someone who is crap at their job.

the JLC awarded a 2.5% increase earlier this year, which struggling retailers had a legal obligation to pay, some staff members in retail outlets offered to forgo the raise in order that everyone kept their jobs and hours- this was not allowed under the legislation and so staff were let go.

thats why minimum wage systems dont work.

ei.sdraob

cutting the min wage (and it needs to be cut small bit) without cutting welfare is crazy

P. Breathnach

jimmmy wrote: »

Oh yes it was. See a number of pages on the thread " workers walk today" where it was explained to you.

http://www.boards.ie/vbulletin/showthread.php?t=2055731964&page=15

That's the Humpty Dumpty approach: "words mean what I say they mean". The figures were being explained to you (by me and Riskymove), and you were having great difficulty in understanding them.

jimmmy

P. Breathnach wrote: »

That's the Humpty Dumpty approach: "words mean what I say they mean". The figures were being explained to you (by me and Riskymove), and you were having great difficulty in understanding them.

lol. You asked me for the link to the CSO website, which you do every few weeks. I refused to give it to you yet again. Riskymove gave you the link and tried to explain it to you. The fact is the point about the 973.09 average pay was copied and pasted from the C.S.O. ' s own website. There was a few pages in that thread where it was explained to you. The cso link is there to help you.;)

segaBOY

Scofflaw wrote: »

Yes, I'm sure that's what makes the Irish economy uncompetitive. After all, burgers are our major export.

amused,
Scofflaw

I was on minimum wage in my late teens and was glad that it was there at the time. In my last job I earned €9.38 per hour and unless minimum was in place I am sure they would have paid me at a lower rate.

Burgers are one part of our Economy, the cost of food is higher than other EU countries in part due to wages. This adds to our previous levels of high inflation which has been part of making us so uncompetitive. Wages are effected by minimum wage in some shape or form-be it at the lower, middle or higher end.

Personally I would like to see the minimum wage reduced but not abolished. However only reduced when a flat reduction in Social Welfare and ALL wages (both high, medium and low) throughout the economy are reduced which will make our exports cheaper.

And one last point, burgers are a pretty big export, we export a lot of beef after all.

Amused,
segaBOY.