Minimum Wage

hmmm

Jingle_Balls wrote: »

Luckily, I'm moving to a slightly higher paid job tomorrow, but I only got that through business connections, not skill.

That's a form of upskilling, you're using your connections to get a better job - upskilling could also mean taking on more responsibility at work. With any luck, you'll shortly reach the 32k barrier at which point SF/SWP will see you as "rich" and take more than half your salary off you in tax.

ciaranlong

chopper6 wrote: »

I don't understand the argument that bringing up children is expensive and therefore you'd be better off not working.

I know from being a child that bringing up kids costs money so if you can't afford them don't breed them...contraceptives are freely available these days.

The state should not be rewarding people for reckless breeding.

Where can one get contraceptives for free? You might get a good deal if you buy in bulk in Tesco or Aldi, but even then it would be a non-trivial amount of money for someone on the dole, or even on the minimum wage.

chopper6

ciaranlong wrote: »

Where can one get contraceptives for free? You might get a good deal if you buy in bulk in Tesco or Aldi, but even then it would be a non-trivial amount of money for someone on the dole, or even on the minimum wage.

So people are forced to have children because they cant afford condoms?

Can the woman not get the pill free on her medical card?

golfwallah

I sympathise with anyone considering themselves “stuck” on minimum wage, who wants to improve their situation. I feel likewise for unemployed people who are finding it difficult to get work. My sympathies run out for those making welfare a lifestyle choice. But there are several ways to look at the minimum wage and the link with welfare benefits.

In setting policies, those in power have lots of studies and expert opinions to choose from - some for and others against having a minimum wage, the rate set and its impact on welfare.

All of this has to be seen against the backdrop of an economy that has changed immensely from the times when a good leaving cert or a reasonable degree almost guaranteed a job in the civil service, semi-state company, bank, local authority, etc. to those starting out in the world of work. Those days of a protected economy and good pay for what is now considered basic education and skills are long gone.

Ireland’s now open economy has to compete with overseas economies that are constantly improving in terms of education and skills training to provide the goods and services that people want at prices they are prepared to pay.

This competitive environment means that to stay in business, employers have to ensure that value added by labour exceeds its cost. This means that those with the skills most in demand get paid best and those with basic minimum qualifications and skills end up on minimum wage or on welfare.

For the majority, it’s not enough any more to drift through school and get some basic degree in arts, archaeology, history, Celtic studies, or esoteric subject, you need an education, skills and experience that are in demand in the marketplace. And if you find yourself unemployed or in a minimum wage job and want a better income, then no matter how hard, you need to figure a way to get the qualifications and skills needed for a better job.

There’s lots of published material on this issue, for example:
USA: The Minimum Wage Delusion:
http://www.forbes.com/sites/jamesdorn/2013/05/07/the-minimum-wage-delusion-and-the-death-of-common-sense/

Europe: Distributional effects of a minimum wage in a welfare state - The case of Germany:
http://www.wiwiss.fu-berlin.de/fachbereich/vwl/steiner/forschung/MW_inequality_29-10-2013.pdf?1383324203

Taking into account negative employment effects and increases in consumer prices induced by the minimum wage would wipe out any positive direct effects on net incomes of households affected by the minimum wage.

Ireland – Welfare too high conclusion: The Costs of Working in Ireland (Niamh Crilly, Anne Pentecost and Richard S.J. Tol): http://cdn.thejournal.ie/media/2012/06/ESRI-report.pdf

The main finding is that the additional costs of working are highly significant at nearly €7000 per year without children; increasing to nearly €9000 per year with one child under the age of five. These substantial additional costs seriously hamper work incentives as it is shown that there is a 25-fold increase (without young children) in the number of individuals who have a higher income when unemployed than when in employment with the inclusion of these additional costs of working.

Ireland: Min wage neither too high nor too low – study on publicpolicy.ie: http://www.publicpolicy.ie/the-minimum-wage-too-high-or-too-low/

The evidence presented above suggests that the minimum wage is neither too high nor too low. International comparisons that take into account the high Irish price level or the high level of median wages here show that the Irish minimum wage is high, but not excessively so. Meanwhile, the minimum wage is high enough to ensure it pays to take up full-time work, while other state supports help incentivise jobseekers to take up part-time work.

2nd article – Incentive to work: http://www.publicpolicy.ie/evidence-on-the-incentive-to-work-2/

Despite a relatively generous welfare net and the costs associated with working, most of the evidence suggests that the majority of unemployed people would be better off in a job.

Cookie_Monster

macraignil wrote: »

This thread was started on the topic of minimum wage being low in proportion to the cost of living here.

But it's not as has already been stated.

As other posts have mentioned slightly higher paid jobs because of the tax system here also leave people on a very low wage for the cost of living here.

the tax system is ridiculously generous for low paid workers in comparison to those on higher incomes and compared to other EU countries.

What an employer decides to pay is very relevant to somebody covering the costs involved in having a family.

To the employee it is. The employer, however, doesn't need to justify a rate that ensure a prospective employee can cover their outgoings, simply needs to offer market rates.

macraignil

Cookie_Monster wrote: »

The employer, however, doesn't need to justify a rate that ensure a prospective employee can cover their outgoings, simply needs to offer market rates.

Is that just explaining why a minimum wage has become a requirement in an economy with high long term living costs and a labour market open to millions of potential employees from economies with lower living costs?

Cookie_Monster

macraignil wrote: »

Is that just explaining why a minimum wage has become a requirement in an economy with high long term living costs and a labour market open to millions of potential employees from economies with lower living costs?

no, not really. Min wage just artificially raises wages across the board and drives the cost of living up more than it otherwise would.

golfwallah

macraignil wrote: »

Is that just explaining why a minimum wage has become a requirement in an economy with high long term living costs and a labour market open to millions of potential employees from economies with lower living costs?

We live in a free, open and democratic political economy, where a major part of the continued price of freedom is hard work. Hard work is required to get the qualifications and / or experience to provide an income doing something that is in demand. In a broad general sense, the system is geared towards constantly improving peoples’ capability to compete in the big bad world. Unfortunately that means there will be winners and losers and many on a scale between the two.

There have been experiments with alternative forms of political economy. We did it ourselves in Ireland with protectionism and tariff barriers from the 1920s up to the 1960s – result was low living standards for those who stayed and emigration for the rest, mostly to poorly paid, minimum wage type jobs and the social welfare was also pretty bad. This began to change in the 1960s with Anglo – Irish free trade and even more so in the 1970s with our entry into the EEC and later to the EU. The result has been better education, higher living standards for the majority and a much improved welfare net - but we have to compete. No we haven’t solved emigration, but, at least, most of those who leave are equipped with an education / skill set to gain jobs and experience further up the food chain than minimum wage. They also have the option to return home eventually and contribute positively to Ireland Inc.

Other alternatives have been tried, as in Eastern Europe, where communism just about provided lots of low quality, minimum wage type jobs in an unsustainable political economy, where the price was loss of freedom of choice. Thankfully, this “lowering down for all” communist system proved a failure and eventually collapsed, although remnants still survive in North Korea and China.

As Churchill so aptly put it:

The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.

ciaranlong

chopper6 wrote: »

So people are forced to have children because they cant afford condoms?

Can the woman not get the pill free on her medical card?

I actually don't know the answer to this question, but I would love to know. I guess if there were enough resources then I would be in favour of any woman on a medical card being entitled to get the pill for free.

macraignil

Cookie_Monster wrote: »

no, not really. Min wage just artificially raises wages across the board and drives the cost of living up more than it otherwise would.

I don't agree. In my opinion minimum wage is only keeping up with price inflation that already exists. Do you have any evidence for your claim that minimum wage is the driving force behind the rising cost of living? Minimum wage here has not been increased since 2007 and there still has been increases in prices. Minimum wage here was only introduced in 2000 and there were increased prices before then as well. Minimum wage could not have been the driving force behind the huge increases in the cost of housing as nobody relying on minimum wage could buy a house here.

Since the EU legislates for free movement of labour, if wages were just led by market forces only we would see huge proportions of jobs taken over by younger europeans happy to live in shared accommodation and on a tight budget while they improve their English before going to some other English speaking country where they can earn better wages. This young mobile labour force can also go to low cost of living countries when it suits them. What happens to Irish people not able to work in the high demand areas like IT who want to live here long term? Should we just let them freeze on the street as seems to be current government policy?

As highlighted by the government report mentioned earlier in this thread social welfare has been financially a better option to low wage employment due to the additional costs of working and this would be even worse of a problem if there was no minimum wage. I think we have to start subsidizing employment maybe through improvements to the family income supplement and allow greater access to continued education which is very expensive here for those on low waged jobs. Many courses are only open to those who are on social welfare and fees for other courses are higher than people on low wage can afford.

golfwallah

macraignil wrote: »

I don't agree. In my opinion minimum wage is only keeping up with price inflation that already exists. Do you have any evidence for your claim that minimum wage is the driving force behind the rising cost of living? Minimum wage here has not been increased since 2007 and there still has been increases in prices. Minimum wage here was only introduced in 2000 and there were increased prices before then as well. Minimum wage could not have been the driving force behind the huge increases in the cost of housing as nobody relying on minimum wage could buy a house here.

Your opinion that minimum wage should keep pace with inflation, ignores one inconvenient economic factor – competition. In an open, pan-EU market, this prevents employers from increasing prices to recover increases in minimum wage and forces them to seek increases in productivity (i.e. to get more production from the same total pool of labour cost) or go out of business. The result will be layoffs, more automation and/or finding ways for a reduced labour force to produce more see here: http://www.forbes.com/sites/timworstall/2013/12/03/so-lets-look-at-what-happens-when-they-raise-the-minimum-wage-in-bangladesh/

Since the EU legislates for free movement of labour, if wages were just led by market forces only we would see huge proportions of jobs taken over by younger europeans happy to live in shared accommodation and on a tight budget while they improve their English before going to some other English speaking country where they can earn better wages. This young mobile labour force can also go to low cost of living countries when it suits them. What happens to Irish people not able to work in the high demand areas like IT who want to live here long term? Should we just let them freeze on the street as seems to be current government policy?

You’re mixing a lot of different issues here – minimum wage, high end jobs and high accommodation costs. We already have a lot of cross-EU movement into minimum wage type jobs (particularly in retail and the hospitality sectors) in Ireland, many of which our own young people don’t want to do. As regards the impact of rising accommodation costs of high end jobs – yes, this is a big factor in our competitiveness that government is belatedly trying to address. No the system ain’t perfect and mistakes have been made but the majority of expert opinion for a solution is to increase the housing supply – not minimum wage levels, for which independent studies have demonstrated are either too high (Tol & co.) or neither too high nor too low (http://www.publicpolicy.ie/the-minimum-wage-too-high-or-too-low/). Other options are for high tech firms to move to locations with less expensive accommodation costs.

As highlighted by the government report mentioned earlier in this thread social welfare has been financially a better option to low wage employment due to the additional costs of working and this would be even worse of a problem if there was no minimum wage. I think we have to start subsidizing employment maybe through improvements to the family income supplement and allow greater access to continued education which is very expensive here for those on low waged jobs. Many courses are only open to those who are on social welfare and fees for other courses are higher than people on low wage can afford.

Increases in family income supplement and easier access to higher education could be helpful – perhaps you could dig out some research yourself to support your case and how such initiatives could be funded (without increasing government borrowings)?

There’s a lot of material in the public domain on the economics around minimum wage – you could just as easily research this material yourself – as opposed to coming on boards.ie and asking questions that would require others to do this for you. This might enable you to put forward more informed views and realistic, politically plus economically doable options that might find some level of general support. That said, I’ve attempt to address some of the issues you have raised, even if this doesn’t sit well with your existing opinions.

macraignil

golfwallah wrote: »

Your opinion that minimum wage should keep pace with inflation, ignores one inconvenient economic factor – competition. In an open, pan-EU market, this prevents employers from increasing prices to recover increases in minimum wage and forces them to seek increases in productivity (i.e. to get more production from the same total pool of labour cost) or go out of business. The result will be layoffs, more automation and/or finding ways for a reduced labour force to produce more see here: http://www.forbes.com/sites/timworstall/2013/12/03/so-lets-look-at-what-happens-when-they-raise-the-minimum-wage-in-bangladesh/

Ireland has productivity levels that compete well with other countries according to oecd figures. So I do not see how productivity can be used as an excuse to not keep minimum wage some way in line with inflation.

You’re mixing a lot of different issues here – minimum wage, high end jobs and high accommodation costs. We already have a lot of cross-EU movement into minimum wage type jobs (particularly in retail and the hospitality sectors) in Ireland, many of which our own young people don’t want to do. As regards the impact of rising accommodation costs of high end jobs – yes, this is a big factor in our competitiveness that government is belatedly trying to address. No the system ain’t perfect and mistakes have been made but the majority of expert opinion for a solution is to increase the housing supply – not minimum wage levels, for which independent studies have demonstrated are either too high (Tol & co.) or neither too high nor too low (http://www.publicpolicy.ie/the-minimum-wage-too-high-or-too-low/). Other options are for high tech firms to move to locations with less expensive accommodation costs.

I agree house construction needs to be increased to help prices from inflating to excessive levels. You say that many minimum wage jobs here are ones young people do not want to do and that is a reason their should be a reasonable financial return for doing that work.

Increases in family income supplement and easier access to higher education could be helpful – perhaps you could dig out some research yourself to support your case and how such initiatives could be funded (without increasing government borrowings)?

There’s a lot of material in the public domain on the economics around minimum wage – you could just as easily research this material yourself – as opposed to coming on boards.ie and asking questions that would require others to do this for you. This might enable you to put forward more informed views and realistic, politically plus economically doable options that might find some level of general support. That said, I’ve attempt to address some of the issues you have raised, even if this doesn’t sit well with your existing opinions.

Not asking anyone to do any research for me. Not sure why you find my suggestions so politically and economically undoable but I am guesing its something to do with those Fina parties.

golfwallah

macraignil wrote: »

Ireland has productivity levels that compete well with other countries according to oecd figures. So I do not see how productivity can be used as an excuse to not keep minimum wage some way in line with inflation.

The OECD figures, for which you provided a link, are for total labour productivity – not just the minimum wage component. These overall totals and averages derived from them are meaningless when discussing basic tenets of economics that when prices for labour or any other factor of production increase, demand falls and buyers seek alternatives. We are not talking averages here. We are talking minimum wage rates for the least skilled jobs that can more easily be substituted by automation and/or increased productivity in a competitive race to stay in business.

You have not convinced me that increasing minimum wage in line with inflation will be of benefit either to those on minimum wage or the economy in general, when the general laws of economics dictate that such increased costs cannot be recovered through higher prices in an open competitive market place such as the EU.

So – it’s nothing to do with excuses, just basic economic laws of supply and demand.

I agree house construction needs to be increased to help prices from inflating to excessive levels. You say that many minimum wage jobs here are ones young people do not want to do and that is a reason their should be a reasonable financial return for doing that work.

I said “our own young people” don’t want many of these jobs – they are being taken up by migrants from other EU states, without having to increase minimum wage rates.

Not asking anyone to do any research for me. Not sure why you find my suggestions so politically and economically undoable but I am guesing its something to do with those Fina parties.

At this stage we are going around in circles as you are back to making guesses that I have something to do with FF or FG, which is simply throwing straw in the wind. I, along with the majority of voters that I know, make my voting choices on the basis of personal perception of what is in my best interests, those of my family and the country in general. There is no evidence of a surge in voter demand for higher minimum wages right now!

macraignil

golfwallah wrote: »

The OECD figures, for which you provided a link, are for total labour productivity – not just the minimum wage component. These overall totals and averages derived from them are meaningless when discussing basic tenets of economics that when prices for labour or any other factor of production increase, demand falls and buyers seek alternatives. We are not talking averages here. We are talking minimum wage rates for the least skilled jobs that can more easily be substituted by automation and/or increased productivity in a competitive race to stay in business.

The averages I provided a link to are not meaningless when looking at the economy as a whole. They demonstrate the Irish labour force has higher productivity levels than many other countries and it is my opinion that this should allow some protection of payment to employees even in the least skilled jobs.

You have not convinced me that increasing minimum wage in line with inflation will be of benefit either to those on minimum wage or the economy in general, when the general laws of economics dictate that such increased costs cannot be recovered through higher prices in an open competitive market place such as the EU.

So – it’s nothing to do with excuses, just basic economic laws of supply and demand.

I don't really trust your application of the basic laws of economics to wage rates. I believe better paid employees are often more productive. Increased costs of a variety of sources can be compensated for by selling higher value products and using more efficient production methods. The fact some products are still not produced in China demonstrates this.

I said “our own young people” don’t want many of these jobs – they are being taken up by migrants from other EU states, without having to increase minimum wage rates.


What about "our own young people" who are not able for high demand jobs in IT and also don't emigrate. I was suggesting improved subsidising of employment for long term residents like those with a family. This could help people not be better off completely on social welfare and by encouraging people into some sort of work make savings in the social welfare budget that could pay for the changes. Improved access to education for those on low wages in the same way as social welfare recipients are given upskilling would also pay for itself in the long term with improved earnings and productivity from those who participate.

At this stage we are going around in circles as you are back to making guesses that I have something to do with FF or FG, which is simply throwing straw in the wind. I, along with the majority of voters that I know, make my voting choices on the basis of personal perception of what is in my best interests, those of my family and the country in general. There is no evidence of a surge in voter demand for higher minimum wages right now!

I agree there is no evidence of any surge of voters in Ireland. The main surges I have seen in recent years have been towards emigration due the combination of high living costs and low wages for many jobs here.

mjv2ydratu679c

Cookie_Monster wrote: »

no, not really. Min wage just artificially raises wages across the board and drives the cost of living up more than it otherwise would.

Bingo - we should be looking to reduce the cost of living rather than increasing the minimum wage.

Voltex

Jose Alive Mouthful wrote: »

Bingo - we should be looking to reduce the cost of living rather than increasing the minimum wage.

..and one way to do that is to get rid of the minimum wage. If we did so what do you think would happen to the young male segment of the Live Register? It would fall. A secondary effect would be a drop in the cost of transfer payments to these young males. A third effect would be an increase in on the job training these young males would achieve. A forth effect would be an increase in the productive capacity of the State due to increased skills and working capacity of the national labour force. A fifth effect would be an increase in the general wealth of the nation.
This list could go on and on..there is no single legitimate case that uphold the notion that a minimum wage is benefiting society.

macraignil

Voltex wrote: »

..and one way to do that is to get rid of the minimum wage. If we did so what do you think would happen to the young male segment of the Live Register? It would fall. A secondary effect would be a drop in the cost of transfer payments to these young males. A third effect would be an increase in on the job training these young males would achieve. A forth effect would be an increase in the productive capacity of the State due to increased skills and working capacity of the national labour force. A fifth effect would be an increase in the general wealth of the nation.
This list could go on and on..there is no single legitimate case that uphold the notion that a minimum wage is benefiting society.

A direct link to removing the minimum wage with creating new jobs has not been proved. There are many contradictory arguements on the matter. One example, from the US is Washington State, which has continued to raise its minimum wage since it was introduced in 1998 and has also seen greater growth in employment there over fifteen years than the US as a whole. Since the start of this year thirteen US states raised their minimum wage and saw greater growth in employment than those that didn't.
Link to article.

While a simple model of economics would agree with cheaper employees meaning more jobs I would argue that the relationship is more complicated. Ireland is still a high cost location for labour intensive industries that have thrived in countries like Bangladesh and China. Even without a minimum wage Ireland is unlikely to provide cheap enough labour for labour intensive manufacturing etc. to move here. While I agree reducing unemployment would be a positive thing I do not agree that removing the minimum wage is the way to do it. There is not just one but the wikipedia page on the subject lists fifteen legitimate reasons for minimum wage being of benefit to society.

Voltex

macraignil wrote: »

A direct link to removing the minimum wage with creating new jobs has not been proved. There are many contradictory arguements on the matter. One example, from the US is Washington State, which has continued to raise its minimum wage since it was introduced in 1998 and has also seen greater growth in employment there over fifteen years than the US as a whole. Since the start of this year thirteen US states raised their minimum wage and saw greater growth in employment than those that didn't.
Link to article.

While a simple model of economics would agree with cheaper employees meaning more jobs I would argue that the relationship is more complicated. Ireland is still a high cost location for labour intensive industries that have thrived in countries like Bangladesh and China. Even without a minimum wage Ireland is unlikely to provide cheap enough labour for labour intensive manufacturing etc. to move here. While I agree reducing unemployment would be a positive thing I do not agree that removing the minimum wage is the way to do it. There is not just one but the wikipedia page on the subject lists fifteen legitimate reasons for minimum wage being of benefit to society.

Maybe I didn't make my point clearly enough. Im not suggesting that the abolition of the minimum wage would allow the creation of a cheap manufacturing base.

What I am suggesting is that the existence of the minimum creates a barrier for young people and those with low skill levels. This barrier retards their ability to gain meaningful employment, to develop skills from on the job training and allowing for them to at some point achieve higher wages and income due to increased levels of skills and competence.

macraignil

Voltex wrote: »

Maybe I didn't make my point clearly enough. Im not suggesting that the abolition of the minimum wage would allow the creation of a cheap manufacturing base.

What I am suggesting is that the existence of the minimum creates a barrier for young people and those with low skill levels. This barrier retards their ability to gain meaningful employment, to develop skills from on the job training and allowing for them to at some point achieve higher wages and income due to increased levels of skills and competence.

I understand the point you are trying to make. I just don't agree with it. The examples I refered to from places which have improved their minimum standards of employment show that while improving pay for low waged jobs these places have also seen more job creation than places that did not.

Allowing people work for lower rates of pay does not facilitate developing skills from on the job training as there is no evidence that any additional jobs will be created.

Maintaining minimum standards of employment reduces the financial stress that prevents low payed workers from engaging in further education.

Having a minimum standard of pay encourages people to take up work rather than remaining on welfare payments.

Lowering pay will remove money from the economy particularly with low paid jobs where the entire wage is often spent in a short period.

Better wages means workers can afford to work less hours creating an opportunity for additional jobs.

There already exists ways employers can hire younger less skilled workers on lower rates of pay through apprenticeships and the jobs bridge scheme. The minimum wage rate is also lower for people under 18 and for those in structered training with their employer.

I do not believe the high rate of unemployment in Ireland is caused by the minimum wage.

Farmer Pudsey

Lowering the minimum wage will not create employment. Lower paid employment competes with social welfare for workers. If you had no minimum, wage now with a lot of low paid work in public bodies and across larger scale employers all that happens is that those that contract for this type of work would uses lower wages as a means of cost cutting to employ workers.

Neither am I an advacote of rising it as at present we have virtually the highest in Europe. Most of those employed at the minimum wage is either those I already suggested or temporary staff taken on for high volume periods like Christmas.

In general you need certain protection for those at lower end of the job scale. First time employers always have the benefit of putting workers on training rates and get employer PRSI holidays and could in theory use jobbridge as an short term employment startup. However it is of little use to the economy to create employment that cannot function within the system at present.

On the other hand rising the minimum wage will put pressure on employers that have to operate in an already competitive environment.