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abolish the minimum wage
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Fair enough but I what i'm saying is that although those in favour of reducing/abolition of the minimum wage haven't produced any hard facts, I haven't seen any hard facts from the keep it brigade either (unless i have missed some posts??)
That's because no assertion has yet been made in favour of keeping it. If I were to make an assertion, it would be that the minimum wage prevents employers from paying people less than a certain amount per hour - which is logically unassailable, I'm afraid.
Neither of us are going to disagree that employers would probably pay people less than the minimum wage if they could - after all, that's part of your argument too - so your arguments against a minimum wage have to be either that being able to pay people less than a minimum wage is a good thing in itself (that is, whatever other effects it might have), or that there are negative effects of a minimum wage.
So far, the pitch has been that there are negative effects - on employment, on wage levels above the minimum wage - but nobody has shown these to be the case, or even shown how they can be the case without a hand-waving of "obviously" or "it seems logical". There's nothing valuable about something seeming logical - it either is, or it isn't. If it is, it can be shown to be - if it can't be shown to be, it isn't.
Now you could ask why preventing employers paying less than a certain amount is a good thing, and that's a good line of questioning, since it's a moral argument, rather than an economic one - but if the minimum wage is not objectionable in itself, and does no harm, then there doesn't need to be a strong case for it.
cordially,
Scofflaw0 -
The problem with the min wage in ireland is that it is set too high. i have no problem with a min wage , but it sets a standard from where the wages can only go up.
example: A B and C get jobs in a shop where labour is the main cost. A is your ave worker , B is better and C is very good. Logic and common sense would dictate that they dont get the same wages, BUT and here is the problem, if the min wage is too high then the costs involved in paying B and C a fair wage are driven up.
This creates a problem for the retailer and his costs have risen dramatically he must reduce them, he will try to keep his good workers therefore he lets A go.
Now if the min wage was lower or not there he could start them all on less, then give raises as they are earned and keep his costs down and thus employing 3 people instead of 2.0 -
The problem with the min wage in ireland is that it is set too high. i have no problem with a min wage , but it sets a standard from where the wages can only go up.
example: A B and C get jobs in a shop where labour is the main cost. A is your ave worker , B is better and C is very good. Logic and common sense would dictate that they dont get the same wages, BUT and here is the problem, if the min wage is too high then the costs involved in paying B and C a fair wage are driven up.
This creates a problem for the retailer and his costs have risen dramatically he must reduce them, he will try to keep his good workers therefore he lets A go.
Now if the min wage was lower or not there he could start them all on less, then give raises as they are earned and keep his costs down and thus employing 3 people instead of 2.
If the minimum wage really is too high, then you should be able to get all three workers for the minimum wage. If workers B and C can afford to turn down your employment because they're not being paid over the minimum wage, then the "market forces" argument must mean that the minimum wage is too low a wage to attract them.
In that case, all that's happening is that you can't hire worker A for as little as you think he's worth (presumably less than the minimum wage).
Out of interest, by the way, how do you tell in advance which worker is which?
cordially,
Scofflaw0 -
If the minimum wage really is too high, then you should be able to get all three workers for the minimum wage. If workers B and C can afford to turn down your employment because they're not being paid over the minimum wage, then the "market forces" argument must mean that the minimum wage is too low a wage to attract them.
In that case, all that's happening is that you can't hire worker A for as little as you think he's worth (presumably less than the minimum wage).
Out of interest, by the way, how do you tell in advance which worker is which?
cordially,
Scofflaw
Ok ill try again
you take on the 3 workers at the high min wage, you then find that B and C are more productive then A over a period of time.
B & C request a pay increase as they are more productive.
If you dont pay them you lose your productive staff (reduction in sales therefore you have to lay someone off)
if you do pay them (increase in costs therefore you have to lay someone off)
effectively yes you cant hire A for what they are actually worth and to compound the problem in order to pay B +C what they are worth relative to A causes the high labour costs.0 -
Ok ill try again
you take on the 3 workers at the high min wage, you then find that B and C are more productive then A over a period of time.
B & C request a pay increase as they are more productive.
If you dont pay them you lose your productive staff (reduction in sales therefore you have to lay someone off)
if you do pay them (increase in costs therefore you have to lay someone off)
effectively yes you cant hire A for what they are actually worth and to compound the problem in order to pay B +C what they are worth relative to A causes the high labour costs.
I appreciate what you're saying, but you'd have exactly the same problem without the minimum wage. Say you hire A, B, and C at €10/hour, and over time find that B and C are more productive, but you can't afford to pay them more, then you can't pay them more. Same at €5/hour.
In fact, the example is identical if I hire 3 programmers at €30K each. If €90K is all I have for salaries, then I'm not going to be able to bump up B and C's salaries to reward them for their greater productivity (and a good programmer is many many times more productive than an average one) - and I'm not going to be able to reduce A's salary, nor would it satisfy B and C if I did.
Your first example was better, because this one is just a case where someone has hired up to the limits of their payroll, and therefore can't reward extra productivity - the amounts involved don't matter, because reducing A's salary isn't a solution anyway.
If we generalise the claim, you might say that the minimum wage causes a minimum labour cost per person in businesses where it applies - that's a reasonable point, but only because it's a tautology.
cordially,
Scofflaw0 -
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Few doubt that the minimum wage has NO effect, but there are those who doubt it has enough of an effect to cause unemployment on a noticable level; economists such as Krugman, Krueger, Card and Stiglitz. Furthermore, the social misery it entails would not be worth the minimal extra employment seen.Anyone who says that it has no effect on (un)employment is living in cloud cuckoo land. There are countless example of small firms where the owner is doing more work than is healthy and at the same time letting his/her staff go because the minimum wage is more than the business can bare. I personally know business owners in this situation. They are not "raking it in" at the expense of their downtrodden staff and would like not to let staff go, but their head has to rule their heart and something has to give.
If we drop minimum wage (to say €5 an hour) then we absolutely MUST drop welfare (needs to happen anyway) to a level where it is more attractive to work for €5 an hour than to sit at home.
Ireland's economy went badly off track when we started paying ourselves too much in comparison to our near neaighbours. That needs adjusting or we won't exit recession as Ireland doesn't have anything "special" to offer the world. We failed to develop a strong indigenous knowledge based economy (like the finns did after their economy nearly collapsed) and now we must all accept that failure and move on on lower pay and hopefully learn the valuable lesson that we do actually need to develop indigenous industry or forever be at the mercy of FDI and its whims.
Doesn't Germany instead have binding sectoral collective agreements that jointly cover a high proportion of the working population?
Minimum wages have indeed been studied and there is still no universal acceptance of either side of the argument. This is just my opinion on the matter (but I don't need to preface everything I say with that, as it's obvious these are our personal opinions) but it is my personal belief that they are not a good thing as once you decide to have one, you have to constantly adjust what level it is set at and balance other factors at the same time. Germany, for example, despite being "socialist" has absolutely no statutory minimum wage. Someone in a shop can (and are in some places, rightly or wrongly) be paid €1 or €2 per hour. Germany believes the minimum wage is a barrier to employment and so doesn't have any.0 -
In fact, the example is identical if I hire 3 programmers at €30K each. If €90K is all I have for salaries, then I'm not going to be able to bump up B and C's salaries to reward them for their greater productivity (and a good programmer is many many times more productive than an average one) - and I'm not going to be able to reduce A's salary, nor would it satisfy B and C if I did.
What if due to a down turn in business the €90k you had for salaries is reduced to €60k? Now you want to keep on all 3 employees however the only way you could do this is if they agree to drop to €20k each, however lets say minimum wage is €30k, then you would have to let one go.
I do think the minimum wage is too high and should be reduced as the cost of living is reduced. However, when someone on social welfare is getting a little over €200 per week, and someone working a 40 hour week is coming out with 350, they are really only getting an extra €150 for working 40 hours, as bad as it sounds, there are a lot of people out there that don't think the extra €150 is worth the 40 hours work.0 -
spaceballs wrote: »What if due to a down turn in business the €90k you had for salaries is reduced to €60k? Now you want to keep on all 3 employees however the only way you could do this is if they agree to drop to €20k each, however lets say minimum wage is €30k, then you would have to let one go.
That's true, but, again, in my experience, tends to apply in the absence of a minimum wage anyway - getting employees to agree to pay cuts is always extremely difficult. I'll cite that Hays report again:The survey also asked employers and employees nationwide for their opinions on the best way to save staff costs in their companies in the face of the recession. Both employers and workers agree that cutting discretionary bonuses should be the first port of call in saving costs.
However, they differ widely in relation to targeting pay. Employers cite pay cuts as the second best option for reducing staff costs, while this is the second least favoured option for employees.
“This situation is reflected in the debates that we are already seeing between employee representatives and employer bodies over the best way of implementing cost cutting measures in the workplace,” commented Richard Eardley.
“There is broad agreement from both sides on less contentious issues, like cutting bonuses, benefits and even pension contributions as methods of reducing costs,” he continued. “But there is a real divide on where pay and job cuts should occur. Unsurprisingly, most employees favour the targeting of higher earners only, with employers favouring across the board reductions.”
In relation to compulsory redundancies, the groups are again divided with seven in ten employees against this method of saving staff costs compared to only 48% of employers being against it.
The Hays research also shows that the option of voluntary redundancies may be ineffective in cutting staff costs. While 87% of employees believed that offering voluntary redundancies is the best option open to management when attempting to save costs, two-thirds of employees say they would not take voluntary redundancy if offered it.
Now, you would think that the employers would favour letting people go, while employees would prefer pay cuts to being made redundant, but in fact it's the other way round.
Given that only 3.1% of the Irish workforce is actually on the minimum wage, this is, again, not going to be a major issue.spaceballs wrote: »I do think the minimum wage is too high and should be reduced as the cost of living is reduced. However, when someone on social welfare is getting a little over €200 per week, and someone working a 40 hour week is coming out with 350, they are really only getting an extra €150 for working 40 hours, as bad as it sounds, there are a lot of people out there that don't think the extra €150 is worth the 40 hours work.
Also true - and the social welfare rate represents an effective minimum wage to that extent.
cordially,
Scofflaw0 -
Is our minimum wage competitive with respect to our competitors? If it is then leave it be, if it isn't (as I suspect) then reduce it.
I think we also have to compare the real cost of living here to that of our near neighbours before we just decide to operate a slash and burn policy.
Consider, for example, that recent mortgage interest reductions will be of no benefit to many people on minimum wage, since even in the so-called "Boom", many of them were refused mortgages (Correctly!).
For a couple with, say, two children, where one partner works, at minimum wage levels, the main expenditure will be food, clothing, electricity, heat, and transport.
Rent reductions may be a positive factor for those on minimum wage, but, certainly in my household, I haven't noticed any significant reductions in the remainder of my household expenses.
Therefore, if we choose to compare minimum wage levels with those of our near neighbours, it seems only reasonable that we should also compare basic living costs.
I am aware that the two are inseparable, but I am not convinced that the higher VAT rates and minimum wage levels, can entirely justify the higher cost of goods and services here.
Noreen0 -
There are artificial floors in place in the rental sector as well Noreen. The Rent Supplement payment sets an artificial floor on rents which would vanish it Rent Supplement was not there (we'd have to use RAS exclusively or find some means of paying for private rented accommodation but but by setting maximum rates as it ends up being the default rent for a particular property type in a given area)I think we also have to compare the real cost of living here to that of our near neighbours before we just decide to operate a slash and burn policy.
Consider, for example, that recent mortgage interest reductions will be of no benefit to many people on minimum wage, since even in the so-called "Boom", many of them were refused mortgages (Correctly!).
For a couple with, say, two children, where one partner works, at minimum wage levels, the main expenditure will be food, clothing, electricity, heat, and transport.
Rent reductions may be a positive factor for those on minimum wage, but, certainly in my household, I haven't noticed any significant reductions in the remainder of my household expenses.
Therefore, if we choose to compare minimum wage levels with those of our near neighbours, it seems only reasonable that we should also compare basic living costs.
I am aware that the two are inseparable, but I am not convinced that the higher VAT rates and minimum wage levels, can entirely justify the higher cost of goods and services here.
Noreen
I understand that you personally have not seen a great fall in the cost of living but it is falling generally (apart from govt controlled areas like health and transport) and would fall faster if wages were lower.
If you're renting right now things are only going to get cheaper on that score for the foreseeable. Those who bought recently are in a bit of a pickle but what can we do? People made personal decisions to ignore the warnings of property collapse (they were there) and there are consequences.
We simply don't have the luxury to compare everything to our current cost of living to the exclusion of more meaningful comparisons with our competitors in Europe. I'm doing a bit of work for a firm that moved their HQ from London to Berlin to save costs. Nokia are intent on clsong their London operation and moving all software development to Berlin...because it's cheaper. It's cost cost cost at the moment and Ireland needs to respond at all wage levels IMO. Others are free to disagree.0 -
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There are artificial floors in place in the rental sector as well Noreen. The Rent Supplement payment sets an artificial floor on rents which would vanish it Rent Supplement was not there (we'd have to use RAS exclusively or find some means of paying for private rented accommodation but but by setting maximum rates as it ends up being the default rent for a particular property type in a given area)
I understand that you personally have not seen a great fall in the cost of living but it is falling generally (apart from govt controlled areas like health and transport) and would fall faster if wages were lower.
If you're renting right now things are only going to get cheaper on that score for the foreseeable. Those who bought recently are in a bit of a pickle but what can we do? People made personal decisions to ignore the warnings of property collapse (they were there) and there are consequences.
We simply don't have the luxury to compare everything to our current cost of living to the exclusion of more meaningful comparisons with our competitors in Europe. I'm doing a bit of work for a firm that moved their HQ from London to Berlin to save costs. Nokia are intent on clsong their London operation and moving all software development to Berlin...because it's cheaper. It's cost cost cost at the moment and Ireland needs to respond at all wage levels IMO. Others are free to disagree.
I don't have a problem with that. Lowering the minimum wage seems reasonable in the context of a general lowering of wages - its abolition for doctrinal reasons does not.
cordially,
Scofflaw0 -
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There are artificial floors in place in the rental sector as well Noreen. The Rent Supplement payment sets an artificial floor on rents which would vanish it Rent Supplement was not there (we'd have to use RAS exclusively or find some means of paying for private rented accommodation but but by setting maximum rates as it ends up being the default rent for a particular property type in a given area)
I understand that you personally have not seen a great fall in the cost of living but it is falling generally (apart from govt controlled areas like health and transport) and would fall faster if wages were lower.
If you're renting right now things are only going to get cheaper on that score for the foreseeable. Those who bought recently are in a bit of a pickle but what can we do? People made personal decisions to ignore the warnings of property collapse (they were there) and there are consequences.
We simply don't have the luxury to compare everything to our current cost of living to the exclusion of more meaningful comparisons with our competitors in Europe. I'm doing a bit of work for a firm that moved their HQ from London to Berlin to save costs. Nokia are intent on clsong their London operation and moving all software development to Berlin...because it's cheaper. It's cost cost cost at the moment and Ireland needs to respond at all wage levels IMO. Others are free to disagree.
The whole rent supplement issue is a disgrace. This payment needs to be phased out totally over the next few years. It only serves to further line the pockets of the landlords and developers who have helped cause the mess in this country.
While I agree in theory about the artificial floor it creates in the rental market, I think that is changing due to the sheer volume of rental properties on the market. Most landlords cant afford not to have someone in the property.
If we are to look seriously at our competitors in Europe for price comparison, then the Govt needs to be the first to act. Change the tax system. We need higher direct taxes, lower VAT, Excise duty, VRT etc. The cost base might need to be lower but prices have to get their before wages or the poverty levels shoot up in the intervening period.
We have ridiculous systems in this country that have nothing to do with wages. The ESB cant lower prices at the moment to create real competition. How many leases still have Upward only rent reviews, these need to be terminated. Items like these result in higher costs for business and have little or nothing to do with a minimum wage. Sort out the rest first and then come looking for a wage decrease if that doesnt work.0 -
I currently work for the minimum wage 5 days a week and only earn around 50 or 60 euro more than the moochers (whom I work with) who work two days while receiving job seekers allowance for the rest of the week. I don't see how a reduction in minimum wage could possibly work without a proportionately bigger reduction in welfare.0
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Valmont: I currently work for the minimum wage 5 days a week and only earn around 50 or 60 euro more than the moochers (whom I work with) who work two days while receiving job seekers allowance for the rest of the week. I don't see how a reduction in minimum wage could possibly work without a proportionately bigger reduction in welfare.
As tends to be the case in may things,the answers to the most complex questions are quite often very simple
Well said Valmont,the type of observation which tends only to come from somebody inside looking out....:)Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one.
Charles Mackay (1812-1889)
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Like many students I depend on a part time job to kep me in college,and of course this job is a minimum wage job.so if the minimum wage was decreased by a large amount then I would be unable to afford to pay for my living costs while in college and would more than likely drop out.now if this were to happen to a lot of peoplle then we would be in an even worse situation than we are at the minute as we would have less graduates and probably more youth unemployment leading to a greater number of long term unemployed.0
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