Minimum Wage?

Sleepy

Can someone clarify for me what the arguments for maintaining a minimum wage level is in a country where a welfare system exists?

As far as I can see having social welfare available autmatically creates a minimum wage level at which an organisation must offer prospective employees in order to make it worth their while to accept the offer of employment.

I've asked this question in a few threads about removing / reducing the minimum wage recently and I've not received a single response, nevermind an actual argument for maintaining it.

Japer

I remember hearing it on the news when the government kept increasing the minimum wage, and throwing big money at everyone it employed + gave handouts to, during the celtic tiger , and I said at the time that it would end in big problems. When the minimumm wage went up, the cost of services like hairdressing + restaurants and hotels etc all went up, and the country started to become seriously uncompetitive. The minimum wage in the north is what 40% less, so people are shopping there. The old age pension is less than half ours, up there. And so on.

Permabear

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givyjoe

donegalfella wrote: »

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With all due respect sir... That is absolute bullplop.. bullplop i say. Have you ever worked for the mininimum wage? It's extremely hard to survive, on as was excellently demonstrated not so long ago by Des Bishop. Before the minimum wage existed back in 1998 i think it was I worked in Quinnsworth for less than 2 pounds an hour!! Then my 'first' job after i decided to knock that on the head paid a max of 3.50 per hour where i worked two years both full and part time before i left for college. Throughout college, i worked in jobs that paid the minimum wage, which i know for a fact would have paid less were they allowed! I would argue it is far from beneficial to have anyone on such wages, the only thing is it motivated me to get off my ass and go to college for 7 years only to land on 10 yo yo's an hour :eek:.

Seriusly, if you think that abololishing the minimum wage, or lowering it wouldnt lead to a race to the bottom you are seriously, seriously naieve. Also any employer, and i mean any employer that cant afford to pay their staff the minimum wage doesn't have a viable business in the first place.

Oh and to highlight the error in your original point, people were slaving away in the 90's for pennies.. and i was one of them. Drop it now and there will be many unscrupulous employers who will slash wages back to the levels i highlighted.

ei.sdraob

givyjoe wrote: »

With all due respect sir... That is absolute bullplop.. bullplop i say. Have you ever worked for the mininimum wage? It's extremely hard to survive, on as was excellently demonstrated not so long ago by Des Bishop. Before the minimum wage existed back in 1998 i think it was I worked in Quinnsworth for less than 2 pounds an hour!! Then my 'first' job after i decided to knock that on the head paid a max of 3.50 per hour where i worked two years both full and part time before i left for college. Throughout college, i worked in jobs that paid the minimum wage, which i know for a fact would have paid less were they allowed! I would argue it is far from beneficial to have anyone on such wages, the only thing is it motivated me to get off my ass and go to college for 7 years only to land on 10 yo yo's an hour :eek:.

Seriusly, if you think that abololishing the minimum wage, or lowering it wouldnt lead to a race to the bottom you are seriously, seriously naieve. Also any employer, and i mean any employer that cant afford to pay their staff the minimum wage doesn't have a viable business in the first place.

Oh and to highlight the error in your original point, people were slaving away in the 90's for pennies.. and i was one of them. Drop it now and there will be many unscrupulous employers who will slash wages back to the levels i highlighted.

you missed the OPs post

let me reiterate

why the need for a min wage when a welfare net exists?

at some point it becomes impractical to work on a low wage and opt to chose dole instead

givyjoe

ei.sdraob wrote: »

you missed the OPs post

let me reiterate

why the need for a min wage when a welfare net exists?

at some point it becomes impractical to work on a low wage and opt to chose dole instead

I wasnt replying to the OP's post though!

I was thinking of that point though as i was writing it, if they do cut it and does have a knock on effect on me to that point where im better off, id have to consider my position. Literally only about 50 quid better off after costs per week.

I would also say that the welfare net is an anomoly, the fact that it's so high makes it almost not worthwhile for many to work, a completely unintended outcome resulting in many making sound financial (personal) choice to get the dole instead of working.

Permabear

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ei.sdraob

givyjoe wrote: »

Also any employer, and i mean any employer that cant afford to pay their staff the minimum wage doesn't have a viable business in the first place.

you are very wrong

its not viable because one of the costs is high here in Ireland, some jobs are just hard to automate and require people

people on this forum keep asking "where are the jobs gone?" or "why are no jobs being created?" but are afraid to face up to the "inconvenient truth" that high employee costs are one of the reasons for jobs draining out of the country

some how the socialistas think that everyone in this country can be a manager or researcher > basically hold a white collar job
well during the boom we had to import people here because alot of the locals seen jobs like working in a supermarket or a restaurant as "below" them (and before yee moan yes i had to work at below min wage before, and min wage itself, in restaurants and supermarkets before)

anyways arguing about min wage is rather pointless on this forum, since some people would try to paint you as some sort of monster for daring to point out the obvious holes in the system thats rotten to the core

i touched on that in another thread, the job of businesses is to make profit, its the job of the government to take care of welfare,infrastructure + education

givyjoe

donegalfella wrote: »

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Ok, so you seriously think that our minimum wage is the reason behind our inflation? I think it started off at 6.50 or was it 7 something i cant remember, and it now sits at circa 8.65?

No one can credibly argue that this increase is the reason behind our lack of competitivness, its the wages at the higher end of the scale contributing to this, the cost of electricity for example? How many minimum wage workers are involved in its production? The supply of public services.. again what proportion, insurance etc?

Yes prices went up, because people got greedy based on wanting a piece of pie that was growing exponentially.. not happening any more, and such people are now scrambling to maintain unsustainable businessess. Any small business owner that claims they cant (il correct that, most) are lying if they say they cant afford it (albeit id accept a slight decreased one in line with deflation but not abolition), what cripples them is the extra PRSI payments etc they have to make on top of other costs associated with hiring, but not paid into the staff members pocket.

We could never compete long term on low end manufacturing and to do it we would have to be paying less than €1 per hour and the like, if we allow minimum wage to go, it will hugely increase the divide between rich and poor, again i suggest try working and surviving on such wages and still maintaining that opinion.

ei.sdraob

givyjoe wrote: »

Ok, so you seriously think that our minimum wage is the reason behind our inflation? I think it started off at 6.50 or was it 7 something i cant remember, and it now sits at circa 8.65?

its one of the factors (rising welfare and benchmarking for no extra productivity are some of the other factors)

lookup Cost-push inflation and price/wage spiral

Rising inflation can prompt employees to demand higher wages, to keep up with consumer prices. Rising wages in turn can help fuel inflation. In the case of collective bargaining, wages will be set as a factor of price expectations, which will be higher when inflation has an upward trend. This can cause a wage spiral. In a sense, inflation begets further inflationary expectations.

the above is exactly what happened in Ireland

do you disagree? have you lived in some alternate ireland for last decade where the above didnot occur??

givyjoe

ei.sdraob wrote: »

you are very wrong

its not viable because one of the costs is high here in Ireland, some jobs are just hard to automate and require people

people on this forum keep asking "where are the jobs gone?" or "why are no jobs being created?" but are afraid to face up to the "inconvenient truth" that high employee costs are one of the reasons for jobs draining out of the country

some how the socialistas think that everyone in this country can be a manager or researcher > basically hold a white collar job
well during the boom we had to import people here because alot of the locals seen jobs like working in a supermarket or a restaurant as "below" them (and before yee moan yes i had to work at below min wage before, and min wage itself, in restaurants and supermarkets before)

anyways arguing about min wage is rather pointless on this forum, since some people would try to paint you as some sort of monster for daring to point out the obvious holes in the system thats rotten to the core

i touched on that in another thread, the job of businesses is to make profit, its the job of the government to take care of welfare,infrastructure + education

Of course thats a business's most nb objective as it should be, the problem is, if you permit it, the company will exploit people any way it can, albeit it legally, there is a super article by Milton Freedman on exactly this.

You are going to see more and more businesses who are/no longer/never were viable going to the wall shortly.. keep an eye video/dvd shops for example. Even another one of my old employers is starting to struggle having always paid the minimum, not because of staffing costs, but for not providing what their customers want, and simply being inferior to a now much abundant and superior competition.

ei.sdraob

givyjoe wrote: »

Of course thats a business's most nb objective as it should be, the problem is, if you permit it, the company will exploit people any way it can, albeit it legally, there is a super article by Milton Freedman on exactly this.

You are going to see more and more businesses who are/no longer/never were viable going to the wall shortly.. keep an eye video/dvd shops for example. Even another one of my old employers is starting to struggle having always paid the minimum, not because of staffing costs, but for not providing what their customers want, and simply being inferior to a now much abundant and superior competition.

i wrote on this in another thread

lowering the min wage (and welfare) even to UK levels would create jobs

are people on min wage in UK being "exploited"? do they work in sweatshops too?

RTÉ Prime Time: David

I'm a producer for RTE's Prime Time and I'm looking to get in contact with people who are currently on the minimum wage who might be interested in contributing to a programme on the subject.

I'm looking for people who have perhaps lost a job in another industry and who are now having to work for minimum wage and couples where one of whom is on minimum wage.

However I'm interested to hear from anyone who is on minimum wage and feels they have a story to tell.

David

david.lawless@rte.ie

givyjoe

ei.sdraob wrote: »

its one of the factors (rising welfare and benchmarking for no extra productivity are some of the other factors)

lookup Cost-push inflation and price/wage spiral



the above is exactly what happened in Ireland

do you disagree? have you lived in some alternate ireland for last decade where the above didnot occur??

Were minimum wage employees part of benchmarking??! If they were, they certainly didnt get a fair piece of the pie, as you well know they beneficiaries of benchmarking was the public service. As you should know, having an overpaid PS deters people from working in the private sector were they could be taking risks, creating jobs/exports etc but instead working in a PS job. The cost of housing etc also having a massive influence on inflation, how in god's name did the minimum wage influence that?!

Again, i repeat, it is quite obvious that the paltry increase in minimum wage is a minimal factor in inflation over the nubmer of years. The wages that have helped to cause it, are far, far from minimum.

givyjoe

ei.sdraob wrote: »

i wrote on this in another thread

lowering the min wage (and welfare) even to UK levels would create jobs

are people on min wage in UK being "exploited"? do they work in sweatshops too?

It would only create jobs that people couldnt survive on! Could you survive on such wages? Have you even worked for such wages? Sure if you pay two people four euro an hour instead of 8, thats two jobs instead of one, but how on earth would you expect either to be able to survive?

ei.sdraob

givyjoe wrote: »

Were minimum wage employees part of benchmarking??! If they were, they certainly didnt get a fair piece of the pie, as you well know they beneficiaries of benchmarking was the public service. As you should know, having an overpaid PS deters people from working in the private sector were they could be taking risks, creating jobs/exports etc but instead working in a PS job. The cost of housing etc also having a massive influence on inflation, how in god's name did the minimum wage influence that?!

Again, i repeat, it is quite obvious that the paltry increase in minimum wage is a minimal factor in inflation over the nubmer of years. The wages that have helped to cause it, are far, far from minimum.

as i said min wage was one of the factors alongside welfare and PS

to put it frankly minimum wage workers got shafted by, not by employers, but by trade unions and government who hugely increased welfare and PS wages
the irony of people being worse of due to socialistic misalocation of capital is rather amusing



welfare spend went from 6.2 billion in 1999 to 21.1 billion and rising in a decade (graphically illustrated here)

minimum wage at all times have kept growing above welfare

(lets remember OPs questions which still hasnt been answered)

Permabear

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ei.sdraob

givyjoe wrote: »

It would only create jobs that people couldnt survive on! Could you survive on such wages? Have you even worked for such wages? Sure if you pay two people four euro an hour instead of 8, thats two jobs instead of one, but how on earth would you expect either to be able to survive?

how do they survive in UK?


rising wages pushup inflation, falling wages help deflation

we already had a reduction in the cost of living last year, most of that due to people (sadly) completely loosing their jobs (some of these jobs could have continued to exist have wages been renegotiated, see Dell)

you prefer people completely loose jobs and do nothing while the government continues to borrow at high interest to pay these people to do nothing? or do you want new jobs to be created?

Permabear

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PeakOutput

minimum wage should be cut by at least 1euro if not 2 and yes im on the minimum wage and yes it would completely destroy my plans for the next 3/4 months but its what is necessary for the country and arguing otherwise is ridicolous

welfare should be the absolute minimum required to survive for people who refuse to work. it should be better for people who really want to work but cant find a job and for people who cant work. the minimum wage should then be a little bit above this rate

it is most certainly not the wages at the top end of the industry that is causing our uncompetitiveness(sp??) the idea is ridicolous.companies pay for education and expertise and they dont mind doing it i hence why companies like intel / google / apple etc have not left. and has been pointed out even if it was the case that it was the upper end the reduction of the minimum wage also reduces wages across the economy

Western_sean

I think a point worth noting here is that for someone earning the minimum wage. One of the key drivers of the purchasing power of their potential discretionary spending is the minimum wage level.

For those on the minimum wage food, clothing etc make up a large part of the cost of living expenditure. Discretionary is probably largely covered by eating drinking cinema gigs etc. (We will ignore phone light and heat etc for now.)

I think it is important to note that debt and accommodation costs are not relevant to my mind. In any case accommodation cost is failing and debt just represents a decision about the timing of consumption.

For all the relevant categories of expenditure the minimum wage is the key driver of cost since for Irish business wages are a high portion of the overall cost base. Interestingly it is also a key influencer of the price level since those on the minimum wage tend to consume a disproportionately high portion of their income day to day, which I suppose is as we would expect.

In response to the o/ps point to my mind welfare the existence of the welfare state is in effect a minimum wage so in my opinion having both is unnecessary.

However I think it is worth noting that many actors in the economy choose to work at the existing minimum wage when the welfare system might be more economically advantageous in the short term.

Does the o/p have a theory on what that suggests?

givyjoe

PeakOutput wrote: »

minimum wage should be cut by at least 1euro if not 2 and yes im on the minimum wage and yes it would completely destroy my plans for the next 3/4 months but its what is necessary for the country and arguing otherwise is ridicolous

welfare should be the absolute minimum required to survive for people who refuse to work. it should be better for people who really want to work but cant find a job and for people who cant work. the minimum wage should then be a little bit above this rate

it is most certainly not the wages at the top end of the industry that is causing our uncompetitiveness(sp??) the idea is ridicolous.companies pay for education and expertise and they dont mind doing it i hence why companies like intel / google / apple etc have not left. and has been pointed out even if it was the case that it was the upper end the reduction of the minimum wage also reduces wages across the economy

Were Dell workers on the minimum wage? No they were not, it was wages which were well above this level which caused them to pick up and leave, not to mention the fact people have stopped buying Dell computers FFS! But thats a different issue.

Small business owners will argue all the live long day that it's too high, with most of them arguing this solely because it's eating into the profits gonig directly into their pocket, fair enough, except they were making profits which were never, ever sustainable opening coffe shop after coffeeshop and the like taking their 'slice of the pie'.

Arguing against your point is far from ridiculous, how in god's name could you afford to work for two euro less per hour? Do you live at home? Have you kids etc?

If a company cant afford to pay basic levels of pay, it shouldnt be in business the market cant support it, lack of demand, too much competition whatever. SME's im sure will continue to argue that min wage is too, high, an understandably, it is the softest target, no matter how much lobbying they do, electricity suppliers, insurance, materials etc which are their real high costs simply wont bow to such pressure.

The last thing that should be touched is the minimum wage, especially if welfare is going to stay at the same level, absolutely insane. Doing so is going to further enlarge the chasm between rich and poor...!

BTW, google and apple are exceptions as they are one of the few large multinationals actually growing, they can afford to pay those wages, they are others and direct competitors which are even bigger, yet are culling staff, silently it seems as it hasnt made the news. (as of yet).

Also, how on earth do you prove who is refusing to work?! Ludicrous statement, how do you determing accross the board what is the 'minimum to survive'?

For OP's question, if we abolish the min wage, clearly welfare will have to be drastically cut or people simply wont work, why should they cripple themselves financially to please the righteous.

BluePlanet

ei.sdraob wrote: »

why the need for a min wage when a welfare net exists?
at some point it becomes impractical to work on a low wage and opt to chose dole instead

The minimum wage could be set higher than the dole, thus making mw jobs slightly attractive.
If you just eliminate (or lower) the mw, then obviously those workers are better off on the dole.

tellingeye

It's unrealistic for people who think that we can survive this financial crisis and expect our wages to stay the same!

hiorta

Could I suggest the the job of a business is to make money and not just arrive at a profit?

ei.sdraob

hiorta wrote: »

Could I suggest the the job of a business is to make money and not just arrive at a profit?

if a business cant make money > it closes or doesnt startup in first place

no business > no jobs

no jobs > no taxes

no taxes > nothing to pay for welfare/PS and mounting debt


min wage is just one component in the high wages we have nowadays

welfare almost quadrupled in a decade, that would push the infation of cost of living by similar or larger amounts in same timespan, and it seems thats exactly what happened

givyjoe

The problem I alluded to earlier perfectly alluded to earlierm article by Freedman.

http://www.colorado.edu/studentgroups/libertarians/issues/friedman-soc-resp-business.html

Dont if it's accessible on you tube, but there is a documentary on Wall Mart which highlights the issues of letting a corporation run down wages as these chaps do.

Japer

RTÉ Prime Time (David) wrote: »

I'm a producer for RTE's Prime Time and I'm looking to get in contact with people who are currently on the minimum wage who might be interested in contributing to a programme on the subject.

I'm looking for people who have perhaps lost a job in another industry and who are now having to work for minimum wage and couples where one of whom is on minimum wage.

However I'm interested to hear from anyone who is on minimum wage and feels they have a story to tell.

David

david.lawless@rte.ie

Good idea. I really think a subject for an interesting programme would be the huge amount of people who are self-employed, who are making less than the minimum wage and who are not entitled to social welfare, as they would be means tested. There are plenty of self employed people ( not just those in the construction sector such as architects or tradespeople , but also salespeople, small manufacturers, sellers of luxury goods and services etc ) around the country who may have worked hard for a few decades , been careful and frugal with their earnings in order to provide for their old age, and now have found themselves unable to even make the minimum wage this last year or two. Some are too proud to admit they are not busy / not making money. People think less of people who are financially unsucessful eg remember the saying " a good tradesperson is always busy". Some people, for whatever reason, are eating through their savings / living on loans / have partners who are working, and would be glad to get the minimum wage, and who would be willing to work for say 8 euro an hour. That would still be more than many people work for in N. Ireland.

Sleepy

I really didn't mean this to become a rant as to why we should / shouldn't lower or abolish the minimum wage.

Consider minimum wage legislation as a tool.

Now: what is the purpose of that tool?

From what I can see: in a country without a welfare system, it's to ensure that employees are paid at least enough to live on.

In a country with a welfare system, the welfare level acts as this, negating the need for the tool.

Are there other benefits to having the tool in place?

Western sean - I can think of many reasons why it might be in someone's interest to work for a salary which is less beneficial to them than the dole - e.g. getting experience, on-the-job training or simply the self esteem benefits of earning your living. Are you saying the idea of minimum wage is to prevent employers from taking advantage of such people?

Macha

Sleepy, I see what you're saying about leaving it up the market and the basic laws of supply and demand but markets are known to fail and isn't it possible that employers collude to set low wages? I can survive a failure in the housing market but I don't think I could survive a failure in the income market!

Also, what about internships? These are effectively jobs that are not subject to the minimum wage that people take up for other benefits (Experience, contacts, etc). But these internships are effectively the preserve of the wealthy as those who are poor could not survive off no salary. (ahem, not sure if internships are relevant but trying to get my head around the subject).

ei.sdraob

taconnol wrote: »

Sleepy, I see what you're saying about leaving it up the market and the basic laws of supply and demand but markets are known to fail and isn't it possible that employers collude to set low wages? I can survive a failure in the housing market but I don't think I could survive a failure in the income market!

Also, what about internships? These are effectively jobs that are not subject to the minimum wage that people take up for other benefits (Experience, contacts, etc). But these internships are effectively the preserve of the wealthy as those who are poor could not survive off no salary. (ahem, not sure if internships are relevant but trying to get my head around the subject).

there is an "income" market