Edgar the Exploiter

KyussBishop · 28-04-2012 9:39pm

bitbutter:
Can you flesh out your definition of independence here? Is part of it that because a person is on a lower wage, the employer is less demanding of him?

Some people may legitimately desire the greater independence or lessened responsibility of a job with a low wage, but that does not mean that because a person gets less in wages, their work environment is more relaxed or of less responsibility.
It's reasonable to presume that some employers would simply exploit the lack of a lower-floor in wages, to just get the same amount of work out of people for less payment.

This would be particularly pronounced when an economy is under hardship and with increasing low-skill unemployment, simply because the employer has more power over workers, by easily being able to find replacements in the labour market.

The one case where your case may make sense, is in a healthy economy with small low-skill unemployment, as then the workers have more bargaining power with regards to wages, but are far from free from exploitation, especially if individual circumstances hold them in the job.

Also, what cases (i.e. specific jobs) can people point out, where doing a job at a lower-wage is actually less demanding on the worker? It seems there must be an absolutely tiny minority of low-skill jobs, where the effort you have to put in is actually scalable like that (and you can't include hours worked as part of that scale, as we're talking money earned per hour).

Basically, it seems that minimum wage would increase the pay for most low skill jobs, without necessarily increasing the actual effort that needs to be expended in those jobs (outside of what I suspect is a tiny niche of specific jobs).

So, from my point of view, the benefits of maintaining wages at a level which makes meeting the minimum standards of living easier, and going some way to protect workers from wage exploitation, is much more important (and economically beneficial) than supporting an absolutely tiny niche of low-effort jobs.

Valmont wrote:

If in a 'well-functioning economy without large low-skill unemployment' the minimum wage is £5 an hour, it necessarily follows that anyone who is willing work for less than £5 but can't find anything at or above £5, has become unemployed because of the minimum wage law.

That's not true, if it's a healthy economy and there is demand (from employers) to fill a job like that (which is implied by 'low-skill unemployment'), the worker can find another job.

In fact this benefits those workers, because if they want to earn 'x' amount of money in a day, they can work less hours to meet that with minimum wage than without.

Just because there's a minimum wage, doesn't mean the jobs that need doing disappear; things still need to get done.

Valmont wrote:

The minimum wage aims to end some voluntary labour exchanges at a certain price. Assuming that people want to work for £x which is lower than the minimum wage of £y then the minimum wage must always create unemployment at whatever price it is set at.

That is not the aim of the minimum wage at all, and that is not its effect either (you're ignoring how there is absolutely no proof of a medium-to-long term increase in unemployment); that's an extremely narrow interpretation of the minimum wage which ignores much of the previous discussion, particularly the studies done on the minimum wage.

DubTony · 29-04-2012 12:56am

It rarely takes long for me to remember why I shouldn't involve myself in these theory forums. Too many of the contributors prefer to mire themselves in theory and studies, and hardly ever look at what happens in the real world.

So to take it to a level that all can understand, let's imagine a 16 year old school leaver, poorly educated and with little experience who goes to his local factory for a job. The boss tells him he can sweep the floor and carry things, and he'll pay him $3 an hour. The school leaver, let's call him Simon, agrees and begins work. At the end of week one Simon receives $ 120 and brings it home. He's delighted because the $120 allows him to go to the cinema, or go bowling, maybe buy a shirt, or bring his girlfriend to a cheap restaurant.

Now put yourself in Simon's shoes. How do you feel? A little more independent maybe? Don't have to go to Mammy for money to buy a can of coke? Don't have to beg Daddy for the money for a new Playstation game?

The fact is that most of the low paid workers in this and many other countries are single kids living at home. The income they gain from their low paid work gives them (what is for them) a massive amount of personal independence. It also gives them experience and in most cases training. The training gives them the skills to improve their financial situation. Some of them recognise that they need further education to improve their lot, and in many cases will be encouraged by their employer to get that education. Then they move on. There's an unlimited amount of cheap labour to replace them. Its all part of the cycle.

Minimum wage diminishes opportunities for these young people. If an employer is forced to pay a minimum wage he will get the best he can for that money, to the detriment of helping kids get on the bottom rung of the ladder. Unfortunately, the idea of "giving a kid a chance" rarely comes into it. The budget dictates.

By the way, there's a world of difference between "gives him independence" and "makes him independent".

Duggys Housemate · 29-04-2012 1:14am

Why are we arguing in dollars. In any case the dole is probably better than that..here

Suryavarman · 29-04-2012 1:55am

Duggys Housemate wrote: »

Why are we arguing in dollars. In any case the dole is probably better than that..here

The worker in question is 16 so they can't claim the dole.

KyussBishop · 29-04-2012 3:08am

DubTony wrote: »

It rarely takes long for me to remember why I shouldn't involve myself in these theory forums. Too many of the contributors prefer to mire themselves in theory and studies, and hardly ever look at what happens in the real world.

The studies are based on the real world data, and don't show an medium-to-long term increase in unemployment.

DubTony wrote: »

So to take it to a level that all can understand, let's imagine a 16 year old school leaver, poorly educated and with little experience who goes to his local factory for a job. The boss tells him he can sweep the floor and carry things, and he'll pay him $3 an hour. The school leaver, let's call him Simon, agrees and begins work. At the end of week one Simon receives $ 120 and brings it home. He's delighted because the $120 allows him to go to the cinema, or go bowling, maybe buy a shirt, or bring his girlfriend to a cheap restaurant.

Now put yourself in Simon's shoes. How do you feel? A little more independent maybe? Don't have to go to Mammy for money to buy a can of coke? Don't have to beg Daddy for the money for a new Playstation game?

The fact is that most of the low paid workers in this and many other countries are single kids living at home. The income they gain from their low paid work gives them (what is for them) a massive amount of personal independence. It also gives them experience and in most cases training. The training gives them the skills to improve their financial situation. Some of them recognise that they need further education to improve their lot, and in many cases will be encouraged by their employer to get that education. Then they move on. There's an unlimited amount of cheap labour to replace them. Its all part of the cycle.

Minimum wage diminishes opportunities for these young people. If an employer is forced to pay a minimum wage he will get the best he can for that money, to the detriment of helping kids get on the bottom rung of the ladder. Unfortunately, the idea of "giving a kid a chance" rarely comes into it. The budget dictates.

By the way, there's a world of difference between "gives him independence" and "makes him independent".

There's nothing stopping the kid working part-time hours with a minimum wage job, earning a lot more; what's the appreciable difference (for the kid) between that and having no minimum wage?

The jobs don't just disappear because there's a minimum wage; if there's not significant unemployment in the low-skill job market, the kid can find a job.

DubTony · 29-04-2012 1:09pm

KyussBishop wrote: »

The studies are based on the real world data, and don't show an medium-to-long term increase in unemployment.

If there was no minimum wage at the moment the rate of unemployment among young people would be less. The single biggest reason I've heard for businesses not hiring is because of budget. Somebody sets the budget and a manager inevitably works to it. The budget is not just what the company can afford, it's also used as a personnel control measure.

There's nothing stopping the kid working part-time hours with a minimum wage job, earning a lot more; what's the appreciable difference (for the kid) between that and having no minimum wage?

We are discussing the theory that minimum wage keeps unskilled workers off the bottom rungs of the earnings ladder. As I've stated, the min wage comes with penalties for people who don't have any skills. Employers generally want the most from each employee, and view training as a cost. So they naturally try to hire people who already have the necessary skills, leaving people like Simon without an opportunity

The jobs don't just disappear because there's a minimum wage; if there's not significant unemployment in the low-skill job market, the kid can find a job.

But they do. If someone is let go because the company can't afford to pay them, that job is gone. If the min wage is the reason for the increase in payroll, it follows that min wage costs jobs. And of course the kid can look for a min wage job, but as he's unskilled and uneducated, his chances of getting the job are lessened.

Remember that the broad minimum wage was introduced here in Ireland at a time when we had (what is referred to as) full employment, so the effect on unemployment was insignificant. What it did though, was affect competitiveness, pushing prices up and causing inflation.
Coincidentally (or maybe not) a year after min wage was introduced the government was forced to try to curb inflation, and created the "1 for 4" five year savings scheme.

KyussBishop · 29-04-2012 6:33pm

DubTony wrote:

If there was no minimum wage at the moment the rate of unemployment among young people would be less. The single biggest reason I've heard for businesses not hiring is because of budget. Somebody sets the budget and a manager inevitably works to it. The budget is not just what the company can afford, it's also used as a personnel control measure.

We are discussing the theory that minimum wage keeps unskilled workers off the bottom rungs of the earnings ladder. As I've stated, the min wage comes with penalties for people who don't have any skills. Employers generally want the most from each employee, and view training as a cost. So they naturally try to hire people who already have the necessary skills, leaving people like Simon without an opportunity

Can you outline the exact jobs that disappear? I don't see what actual jobs would differ between no minimum wage and having a minimum wage, minimum wage jobs simply aren't skilled for the most part.

DubTony wrote:

But they do. If someone is let go because the company can't afford to pay them, that job is gone. If the min wage is the reason for the increase in payroll, it follows that min wage costs jobs. And of course the kid can look for a min wage job, but as he's unskilled and uneducated, his chances of getting the job are lessened.

If there is low unemployment for low skill workers, there is demand by employers for low skill jobs, and that temporary job loss is counteracted by finding a new low-skill job; the stats do not show an appreciable medium-to-long term increase in unemployment, you are talking about the temporary unemployment in the immediate transition to minimum wage.

What minimum wage jobs require training and skills?

DubTony wrote:

Remember that the broad minimum wage was introduced here in Ireland at a time when we had (what is referred to as) full employment, so the effect on unemployment was insignificant. What it did though, was affect competitiveness, pushing prices up and causing inflation.
Coincidentally (or maybe not) a year after min wage was introduced the government was forced to try to curb inflation, and created the "1 for 4" five year savings scheme.

While minimum wage is correlated with a short term increase in inflation, there are a lot of things in general which contribute to that; again, it's one of the short-term transitionary effects, and supposedly can be mitigated by a gradual introduction of minimum wage.

SupaNova · 29-04-2012 7:09pm

KyussBishop wrote: »

If there is low unemployment for low skill workers, there is demand by employers for low skill jobs, and that temporary job loss is counteracted by finding a new low-skill job; the stats do not show an appreciable medium-to-long term increase in unemployment, you are talking about the temporary unemployment in the immediate transition to minimum wage.

There is a perfectly logical reason why this is the case. If a €4 minimum wage law is passed that causes some workers willing to work for €3.65 to become unemployed, just 2 years of 5% inflation reduces the real value of the minimum wage law to €3.61, and those people can regain employment.

Feel free to point to a study that deals with this in a reasonable manner.

Duggys Housemate · 29-04-2012 7:10pm

Ignoring anecdotes for now.

There was a claim made earlier in the thread that capitalism lifts all boats because it is so efficient in creating goods and services. This is only true if middle income groups can earn wages equal to productivity increases. Which is not happening. See this article from the NYT.
http://krugman.blogs.nytimes.com/2012/04/28/where-the-productivity-went/

KyussBishop · 29-04-2012 7:32pm

SupaNova wrote: »

There is a perfectly logical reason why this is the case. If a €4 minimum wage law is passed that causes some workers willing to work for €3.65 to become unemployed, just 2 years of 5% inflation reduces the real value of the minimum wage law to €3.61, and those people can regain employment.

Feel free to point to a study that deals with this in a reasonable manner.

While I'd put 2 years at 'long term' (meaning I don't think people would be unemployed that long; months even, is probably pushing it a bit), there doesn't seem to be anything to lose from minimum wage in that situation?

DubTony · 29-04-2012 7:48pm

KyussBishop wrote: »

Can you outline the exact jobs that disappear? I don't see what actual jobs would differ between no minimum wage and having a minimum wage, minimum wage jobs simply aren't skilled for the most part.

I can't outline all the jobs that "disappear" as they are too many to mention. But needless to say, if you walk into your local Spar or Centra you'll see mainly min wage workers on JLC Rates. Most of these store don't employ people to "sweep up and carry things" anymore. It's just not practical.

What minimum wage jobs require training and skills?

Again you missed the point. While there may not be a lot of training for the actual position to be filled, it's a lot easier, and less costly, for an employer to hire somebody who already has the experience. Having said that, if youve ever employed low skilled, low educated people you'll appreciate that it can be a real challenge to get them to clean the floor properly. Yes, they do, in most cases, need to be trained in floor cleaning. Can you operate a cash register? Do you know how to present products for sale so that the goods are displayed properly?
These are simple examples of min wage jobs that require training.
However the training that most people are interested in is the type that will help them advance in the workforce. If they can't get the "sweeping up and carrying things" job, they don't get the opportunity to learn anything to improve their employment prospects.

While minimum wage is correlated with a short term increase in inflation, there are a lot of things in general which contribute to that; again, it's one of the short-term transitionary effects, and supposedly can be mitigated by a gradual introduction in minimum wage

As I said, it is a factor. As for a gradual introduction? Well, I know nothing of that although I can't see any government gradually introducing something that would benefit small parts of the electorate a little bit at a time.

Duggys Housemate wrote: »

Ignoring anecdotes for now.

Of course.

KyussBishop · 29-04-2012 8:28pm

It really does seem to me, that the training for these jobs you mention is pretty negligible, and that there are a lot of such jobs with a tiny learning curve; in a low unemployment environment, I don't see what problem a kid would have finding some work like this.

If unemployment is low, and employers are looking for workers, what is stopping a kid finding a job?

Is it more the kind of job the kid will find that is the problem?

I don't see why (for a 16 year old) carrying bags or sweeping the floor is that more preferable if it pays less, to stacking shelves, organizing stock and learning the register if wanting to do that.

DubTony · 29-04-2012 11:12pm

KyussBishop wrote: »

It really does seem to me, that the training for these jobs you mention is pretty negligible, and that there are a lot of such jobs with a tiny learning curve; in a low unemployment environment, I don't see what problem a kid would have finding some work like this.

If unemployment is low, and employers are looking for workers, what is stopping a kid finding a job?

Is it more the kind of job the kid will find that is the problem?

I don't see why (for a 16 year old) carrying bags or sweeping the floor is that more preferable if it pays less, to stacking shelves, organizing stock and learning the register if wanting to do that.

I honestly feel like I'm talking to myself. I think I've been pretty clear, but you don't seem to get it. I've nothing more to offer here that hasn't already been said. If you need me to clarify something, although I can't imagine why, let me know.

KyussBishop · 30-04-2012 12:21am

Okey perhaps it's a failing in my understanding of your post, but either way it's just not clear to me what the full difference is (from the perspective of the worker) having a job below minimum wage vs a job at the minimum wage.

To put things another way:
What is different about a minimum wage job, that would dissuade a 16 year old from taking that job?

Valmont · 30-04-2012 6:27am

KyussBishop wrote: »

That's not true, if it's a healthy economy and there is demand (from employers) to fill a job like that (which is implied by 'low-skill unemployment'), the worker can find another job.

But if the employer wants a job doing but can't afford to pay the minimum wage, that job goes unfilled and the work is done by other employees who may have more pressing work to get on with. What employers would do in the absence of the minimum wage, I still argue, is by its very definition very difficult to quantify.

Here is an analogy: if a gang of thugs rampage down a street, smashing windows and burning down buildings, generate a directly measurable increase in work for glaziers, builders, and repairmen, would you argue that the rampage produced a net gain for the economy?

KyussBishop wrote: »

In fact this benefits those workers, because if they want to earn 'x' amount of money in a day, they can work less hours to meet that with minimum wage than without.

You are assuming that an employer wants to hire them for the minimum wage -- I am talking about instances where the employer would like to hire someone on for less than the minimum wage so I don't get your point here in relation to my previous post.

KyussBishop wrote: »

Just because there's a minimum wage, doesn't mean the jobs that need doing disappear; things still need to get done.

Here I think your misunderstanding of the workplace is shining through: these jobs always need to be done, yes, but the employers ability to expand production is necessarily limited when he has his higher-paid employees doing work that low-skill low-wage employees could be doing.

KyussBishop · 30-04-2012 8:48am

Valmont wrote: »

KyussBishop wrote:

That's not true, if it's a healthy economy and there is demand (from employers) to fill a job like that (which is implied by 'low-skill unemployment'), the worker can find another job.

But if the employer wants a job doing but can't afford to pay the minimum wage, that job goes unfilled and the work is done by other employees who may have more pressing work to get on with. What employers would do in the absence of the minimum wage, I still argue, is by its very definition very difficult to quantify.

Here is an analogy: if a gang of thugs rampage down a street, smashing windows and burning down buildings, generate a directly measurable increase in work for glaziers, builders, and repairmen, would you argue that the rampage produced a net gain for the economy?

The point I was making is that if unemployment is low enough and demand exists (from employers) for workers to fill minimum wage jobs, then after the introduction of the minimum wage, any workers that lose their job can find new jobs so long as the employer-demand still exists.

If employer demand did not exist, this would be noted in stats as a medium-to-long term increase in unemployment.

Valmont wrote: »

KyussBishop wrote:

In fact this benefits those workers, because if they want to earn 'x' amount of money in a day, they can work less hours to meet that with minimum wage than without.

You are assuming that an employer wants to hire them for the minimum wage -- I am talking about instances where the employer would like to hire someone on for less than the minimum wage so I don't get your point here in relation to my previous post.

The employer who would like to hire someone for less than minimum wage can't, so the worker finds an employer that will hire them at minimum wage.
If unemployment is low enough for there to be demand from employers for workers, the worker should have no problem finding such a job.

This will be a benefit to the worker, as the worker earns more, and can work less hours to earn as much as before.

Valmont wrote: »

KyussBishop wrote:

Just because there's a minimum wage, doesn't mean the jobs that need doing disappear; things still need to get done.

Here I think your misunderstanding of the workplace is shining through: these jobs always need to be done, yes, but the employers ability to expand production is necessarily limited when he has his higher-paid employees doing work that low-skill low-wage employees could be doing.

What's misunderstood? Minimum wage will make it harder for business which is not profitable enough, so either that business has to become more efficient, or has to shut down and its workers absorbed into more efficient/profitable business in the market (which should be no problem if unemployment is low enough to stimulate employer demand for workers).

Valmont · 30-04-2012 9:21am

KyussBishop wrote: »

The point I was making is that if unemployment is low enough and demand exists (from employers) for workers to fill minimum wage jobs, then after the introduction of the minimum wage, any workers that lose their job can find new jobs so long as the employer-demand still exists.

You're ignoring my point above that when we look at unemployment we have to ask 'at what price?'. You can't just speak of employer demand as if it's uniform -- as long as an artificial bottom in wages is maintained through the minimum wage, it necessarily precludes employers from hiring below that price.

KyussBishop wrote: »

The employer who would like to hire someone for less than minimum wage can't, so the worker finds an employer that will hire them at minimum wage.

What if they can't find an employer that will hire them at minimum wage? Do you accept that this individual has been prevented from gaining employment because of the minimum wage?

KyussBishop wrote: »

What's misunderstood? Minimum wage will make it harder for business which is not profitable enough, so either that business has to become more efficient, or has to shut down and its workers absorbed into more efficient/profitable business in the market (which should be no problem if unemployment is low enough to stimulate employer demand for workers).

So you also acknowledge that the minimum wage disproportionately harms smaller, less-profitable (but profitable nonetheless) businesses?

Memnoch · 30-04-2012 10:37am

Valmont wrote: »

So you also acknowledge that the minimum wage disproportionately harms smaller, less-profitable (but profitable nonetheless) businesses?

Not being able to have slaves who work without any kind of rights and are paid only in the amount of food needed to sustain them and a cramped room over their head will also disproportionately harm businesses.

Often compromises have to be made and I would rather they were made in support of basic human rights and the ability for someone who WORKS to be able to actually LIVE off their work is more important than whether or not a business that cannot be profitable without exploiting people can survive.

SupaNova · 30-04-2012 10:41am

KyussBishop wrote: »

If employer demand did not exist, this would be noted in stats as a medium-to-long term increase in unemployment.

Multiple times in the thread I've given reasons(inflation, growth, business cycles) for why the effects of minimum wage would not be noticeable in unemployment stats. I've even went to the trouble of spelling out the effects of inflation with a simple example. Do you not understand the reasons or are you continuously choosing to ignore them?

Memnoch · 30-04-2012 10:56am

You have given theoretical reasons why this might cause rising unemployment. While he has provided evidence to show that this does not bear out.

Also, what exactly is 'employment.' To me it is working for a living. If a person is working 8 hours a day and still not earning enough to meet the basic necessities of life, then I do not see the benefit to either the individual or society from such an arrangement.

The only one who really benefits is the 'employer,' who gets to increase their profit.

Obviously there are situations where someone might chose to work part time, to supplement income or be in training. Even so, I believe that people should be paid a fair wage for their work and that it is fundamentally and morally wrong to 'let the market decide,' beyond a certain lower limit because therein lies exploitation and financial slavery.

SupaNova · 30-04-2012 11:09am

Memnoch wrote: »

You have given theoretical reasons why this might cause rising unemployment. While he has provided evidence to show that this does not bear out.

I'll take that as an "I don't understand". Even the studies acknowledge these factors but fail to control for them in a reasonable and transparent manner, some flat out ignore them. It seems to be the case that people find a study(that they likely don't even read) that says what they want it to say and that's all the evidence they need.

What about the 100's of studies that show minimum wage to be harmful? What about that evidence?

David Neumark and William L. Wascher described their analysis of studies on the minimum wage, from several countries covering a period of over 50 years (but primarily from the 1990s onward).[3] According to the Neumark and Wascher, a large majority of the studies show negative effects for the minimum wage; those showing positive effects are few, questionable, and disproportionately discussed.

Memnoch · 30-04-2012 11:52am

I think in debates both sides tend to be guilty of only looking at evidence that supports their ideologies. I will get back to you when I have had a chance to read and ponder the study you've mentioned.

Permabear · 30-04-2012 1:32pm

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Soldie · 30-04-2012 1:49pm

Another example is Argos, which has only recently introduced self-checkout computers. IKEA springs to mind, too. The reason these companies are doing this is because labour is too expensive.

In this thread proponents of the minimum wage have argued that in its absence, there would be a race to the bottom à la The Iron Law of Wages. The reality is that when an economy approaches full employment, the price of wages is bid upwards.

K-9 · 30-04-2012 2:07pm

I would have thought self-service checkouts are getting more common because the technology has developed more and more.

Aldi pay above the minimum wage as far as I know. Germany doesn't have a minimum wage and they still use the same model there!

Permabear · 30-04-2012 2:44pm

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SupaNova · 30-04-2012 2:52pm

Pity there was no technology to replace the disappearance of fuel attendants which were once employed at almost every station in the country. It was an especially useful service for elderly people. Also at supermarkets I remember people who were hired solely to pack bags, bring your shopping to your car boot, and take your trolley back so you didn't have to, again elderly people probably miss this most. Could make a nice slogan eh: The minimum wage, cutting privately provided services to the elderly.

K-9 · 30-04-2012 3:13pm

Permabear wrote: »

This post had been deleted.

Which makes me wonder why Aldi haven't introduced them!

Many retailers are actually scrapping or reducing self-service checkouts because they haven't caught on as well as expected:

http://www.thejournal.ie/us-supermarkets-move-to-scrap-self-service-checkouts-236863-Sep2011/

The strange thing is, retailers actually claim the checkouts haven't resulted in reduced employment so I'm wondering where the big savings are:

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/7957800/Self-service-checkouts-have-not-cut-supermarket-queues.html

K-9 · 30-04-2012 3:16pm

SupaNova wrote: »

Pity there was no technology to replace the disappearance of fuel attendants which were once employed at almost every station in the country. It was an especially useful service for elderly people. Also at supermarkets I remember people who were hired solely to pack bags, bring your shopping to your car boot, and take your trolley back so you didn't have to, again elderly people probably miss this most. Could make a nice slogan eh: The minimum wage, cutting privately provided services to the elderly.

My local Centra offers services like that and you can even go one further, get Tesco to do the shopping for you and deliver it to your door for a few Euro!

Permabear · 30-04-2012 4:04pm

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K-9 · 30-04-2012 4:41pm

Permabear wrote: »

This post had been deleted.

Sorry, some. Deliberate misrepresentation, no, definitely not.

According to a Financial Times article from 2009:

So, it turns out that number of self-service checkouts is actually increasing exponentially.

Article is from 2009.

According to the Economist:

That makes it abundantly clear where the cost savings are to be found. Why exactly do you think companies are investing in this technology?

To save costs, but if they are just redeploying staff it doesn't suggest minimum wage is the problem.

bitbutter · 30-04-2012 5:47pm

KyussBishop wrote: »

bitbutter:
Can you flesh out your definition of independence here? Is part of it that because a person is on a lower wage, the employer is less demanding of him?

No, that wasn't what I had in mind. I had in mind that since Simon was earning this wage he had to rely less on charity/welfare than he otherwise would.

So, from my point of view, the benefits of maintaining wages at a level which makes meeting the minimum standards of living easier,

How have you determined what the 'minimum standards of living' are? This sounds very suspect to me. What are your background assumptions: Living for how long?, under what conditions?

and going some way to protect workers from wage exploitation

Can you define exploitation?

Permabear · 30-04-2012 6:01pm

This post has been deleted.

Eliot Rosewater · 30-04-2012 6:26pm

K-9 wrote: »

Aldi pay above the minimum wage as far as I know. Germany doesn't have a minimum wage and they still use the same model there!

I suppose because Aldi want to attract the best staff, and because working at Aldi is harder than working at Dunnes Stores. Aldi staff have to remember hundreds of keycodes for products, and are, I believe, constantly timed to ensure they're working as fast as (humanly) possible.

I think Aldi's a good example of competition amongst firms for relatively low-skilled jobs, and also as an example of the way in which the minimum wage affects non-minimum wage levels. That is, if the minimum wage goes up the price Aldi have to pay for their non-minimum wage staff also goes up.

K-9 wrote: »

Which makes me wonder why Aldi haven't introduced them!

I've come up with a few reasons:

The supervisor over the self-service section at Aldi would probably manually proccess the items faster themselves, given the hectic rate at which Aldi checkout staff work.
The number of shoppers who use self-service tills - mainly shoppers with 10 items or less - is compartively small in Aldi stores.
Aldi stores are actually much smaller than Tesco or other supermarkets, and don't have really the "critical mass" necessary to justify self-service machines.
Related to the last point: with self-service machines Aldi would have to have two staff on checkouts all the time (one for self-service, one for regular) when much of the time in Aldi barely one checkout staff member is required.
Aldi stores don't have much extra space.

KyussBishop · 30-04-2012 6:45pm

Valmont wrote:

This post had been deleted.

If employers are seeking workers at minimum wage, and there is low unemployment, why would the recently-unemployed worked not get hired?

Valmont wrote:

So you also acknowledge that the minimum wage disproportionately harms smaller, less-profitable (but profitable nonetheless) businesses?

It harms business that just isn't profitable enough; not necessarily small business. That's the (in my opinion very worthwhile) cost of having a floor on wages, to meet a minimum cost of living. More efficient business will take up the old ones market share and employers, so long as unemployment is low enough for there to be employer-demand for workers.

SupaNova wrote:

Multiple times in the thread I've given reasons(inflation, growth, business cycles) for why the effects of minimum wage would not be noticeable in unemployment stats. I've even went to the trouble of spelling out the effects of inflation with a simple example. Do you not understand the reasons or are you continuously choosing to ignore them?

I didn't ignore you I replied to you here:

KyussBishop wrote:

SupaNova wrote:

There is a perfectly logical reason why this is the case. If a €4 minimum wage law is passed that causes some workers willing to work for €3.65 to become unemployed, just 2 years of 5% inflation reduces the real value of the minimum wage law to €3.61, and those people can regain employment.

Feel free to point to a study that deals with this in a reasonable manner.

While I'd put 2 years at 'long term' (meaning I don't think people would be unemployed that long; months even, is probably pushing it a bit), there doesn't seem to be anything to lose from minimum wage in that situation?

SupaNova wrote:

What about the 100's of studies that show minimum wage to be harmful? What about that evidence?

David Neumark and William L. Wascher described their analysis of studies on the minimum wage, from several countries covering a period of over 50 years (but primarily from the 1990s onward).[3] According to the Neumark and Wascher, a large majority of the studies show negative effects for the minimum wage; those showing positive effects are few, questionable, and disproportionately discussed.

Heh, and right under that bit you quoted from Wikipedia:

Several researchers have conducted statistical meta-analyses of the employment effects of the minimum wage. In 1995, Card and Krueger analyzed 14 earlier time-series studies on minimum wages and concluded that there was clear evidence of publication bias (in favor of studies that found a statistically significant negative employment effect). They point out that later studies, which had more data and lower standard errors, did not show the expected increase in t-statistic (almost all the studies had a t-statistic of about two, just above the level of statistical significance at the .05 level). Though a serious methodological indictment, opponents of the minimum wage largely ignored this issue; as Thomas C. Leonard noted, "The silence is fairly deafening."

In 2005, T.D. Stanley showed that Card and Krueger's results could signify either publication bias or the absence of a minimum wage effect. However, using a different methodology, Stanley concludes that there is evidence of publication bias, and that correction of this bias shows no relationship between the minimum wage and unemployment. In 2008, Hristos Doucouliagos and T.D. Stanley conducted a similar meta-analysis of 64 U.S. studies on dis-employment effects and concluded that Card and Krueger's initial claim of publication bias is still correct. Moreover, they concluded, "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."

https://en.wikipedia.org/wiki/Minimum_wage#Statistical_meta-analyses

Memnoch wrote:

I think in debates both sides tend to be guilty of only looking at evidence that supports their ideologies. I will get back to you when I have had a chance to read and ponder the study you've mentioned.

I would say the evidence either way is kind of inconclusive at the moment, except for the obvious immediate increase in worker wages; so that leaves the burden of proof on those claiming harm.

Permabear wrote:

This post has been deleted.

I view that as a natural inevitability with or without minimum wage; the technology will be used as soon as it becomes profitable at all, and not having a minimum wage just makes the 'return of investment' on the self-service checkouts slightly longer. As long as there's no medium-to-long term increase in unemployment, there does not seem to be a downside.

Permabear wrote:

And then we have the many companies that have responded to higher wage demands in the West by shifting their operations to lower-wage economies in the developing world.

Sorry but if it means no sweatshops here, then I'm fine with that; we're not a developing country.

Permabear wrote:

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You're putting words in peoples mouths here, warping peoples views into a strawman.

Permabear wrote:

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And there's the knocking down of the strawman, of the argument nobody made (even an attempt to label people Marxist); that's a bit dishonest now isn't it?

Permabear wrote:

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Well, it seems that if the stats don't show a medium-to-long term increase in unemployment, everybody ends up with a job in the end, so this doesn't stand.

Permabear wrote:

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This is where I agree to an extent; when the economy is not performing well and unemployment is high, it does become a barrier. It is hard to determine how to balance this though; it should at least be reduced to promote employment, but it is rather a weak tool for stimulating employment; it is also propping up people in debt, so for those, removing the wage floor may actually harm the economy.

So, taking a pragmatic look at that now in an unhealthy economy, it should be reduced at least, but past that I'm not sure what's best with it.

Soldie wrote:

In this thread proponents of the minimum wage have argued that in its absence, there would be a race to the bottom à la The Iron Law of Wages. The reality is that when an economy approaches full employment, the price of wages is bid upwards.

In an economy like what we have now though, where there is high unemployment and the worker-employer balance tips in favour of the employer, a race to the bottom and exploitation is far more likely (another balancing concern, in considering what to do with the minimum wage).

bitbutter wrote:

No, that wasn't what I had in mind. I had in mind that since Simon was earning this wage he had to rely less on charity/welfare than he otherwise would.

Okey fair enough; in that case, won't he be even better off on a minimum wage job, so long as unemployment is low and thus employer-demand for workers higher?

bitbutter wrote:

How have you determined what the 'minimum standards of living' are? This sounds very suspect to me. What are your background assumptions: Living for how long?, under what conditions?

Minimum standards of living i.e. meeting minimum agreed upon government 'cost of living' estimates (which is usually statistically studied on a regular basis, as far as I can tell).

bitbutter wrote:

Can you define exploitation?

In extreme cases, sweatshops which overwork and underpay workers; note I don't apply that on a wide scale, it is just one of the easier examples of exploitation.

K-9 · 30-04-2012 6:46pm

Permabear wrote: »

This post had been deleted.

Inadmissible? Where did you get the idea that I said it is inadmissible. Sometimes I really do wonder!

It's a growth area in retail because the technology has improved and the cost has come down. However:

Defenders of the minimum wage somehow remain oblivious to the basic economic point that when the price of any good or service increases, consumers will search for substitutes. Since employers are the "consumers" of labor, it's not surprising to see many of them take this route. A perfect example is my local Tesco, which recently installed self-service kiosks to replace human checkout workers. Another example is Aldi, which keeps staffing levels at a minimum so as to pass on lower costs to the shopper.

You seem to assume it is the cost of labour that is driving this and not improvements in technology. Put it this way, if Tesco workers took a 20% wage cut tomorrow, you think Tesco would stop the roll out of new self-service checkouts?

Unless you have some compelling evidence to suggest that self-service checkouts are on the decline, rather than (as pretty much every industry report acknowledges) being on the increase, maybe it's time to stop being so pedantic about the dates of newspaper articles.

It's hardly pedantic, its a 3 year old article that contained projections, which are predictions! Pedantic would be grammar corrections or accusing posters of deliberate misrepresentation.

In July 2011, MSNBC noted that:

A prediction does not mean it will happen! You seem to be misinterpreting my position, I never said they are in decline, that would be pretty dumb in a growth area. What I am saying is they face barriers, your own MSNBC piece suggests the same, you must have missed that part.

As for:

It is accepted in numerous consulting reports on the retailing industry that introducing self-checkout lanes lowers labor costs. If you think can refute this overwhelming consensus by citing one sentence from a 2010 article in the Telegraph, maybe it's time to look up the meaning of the term "logical fallacy."

To quote your own article again, the one you appear to have just scanned!

For Home Depot, an early adopter that introduced self-checkout lanes a decade ago, the move initially was about labor savings, said Mike Guhl, vice president of store and credit systems. But contrary to what many believe, he said the systems have not resulted in any lost jobs. Instead allowing one cashier to monitor four self-checkout stations has freed other employees to work elsewhere in the store.

It lowers labour costs through extra productivity in other areas, which is very important in a competitive retail environment. Which suggests to me that our minimum wage isn't such a big problem as you'd like to make out.

You should revise a logical fallacy as well permabear, you're presenting one here now. You can't seem to get your head around the concept that self-service checkouts don't necessarily mean job losses.

Reuters, March 2012: "Wal-Mart to use more self-checkout lanes"

So, tell us this: If Wal-Mart plans to save millions of dollars by using self-checkout, how exactly does that work if it is just going to redeploy those staff elsewhere?

Well you'd need to ask the employers who have noted that increased self-service checkouts result in redeployment of staff into other areas.

KyussBishop · 30-04-2012 6:55pm

If self service checkouts are reducing staff, and they eventually get rid of checkout workers, they can probably then afford to hire back on the bag carriers and whatnot for the old folk anyway

SupaNova · 30-04-2012 7:03pm

KyussBishop wrote: »

Heh, and right under that bit you quoted:

Don't pat yourself on the back just yet.

Before you let your confirmation bias go into overdrive did you check to see were the 14 studies talked about in 1995 by Card and Krueger used in the greater than 50 used in David Neumark and William L. Wascher's 2006 review of minimum wage literature. Also in your quote the reason given by T.D. Stanley(2005) for his conclusion of bias was that a different model came to a different conclusion, I wonder if the model was similar to the grossly inadequate models linked to in the thread?

Soldie · 30-04-2012 7:13pm

Is it just me or are those massive multi-quote posts extremely offputting? I don't think they're conducive to a debate in the slightest.

KyussBishop · 30-04-2012 7:14pm

Sorry but it would be confirmation bias to give much credence to stats going either way in light of the heavy skepticism; I said earlier I judged the evidence to be mostly inconclusive.

In either case, it seems that if there is any harm from minimum wage, it is limited to the transitionary period.

KyussBishop · 30-04-2012 7:16pm

Soldie wrote: »

Is it just me or are those massive multi-quote posts extremely offputting? I don't think they're conducive to a debate in the slightest.

Well, that is mainly a product of me having been away most of the day, and quite a lot of posts having come about in the meantime; I could split the multiquote posts into a few posts per who I'm replying to, though I don't see a huge difference.

Soldie · 30-04-2012 7:26pm

KyussBishop wrote: »

Well, that is mainly a product of me having been away most of the day, and quite a lot of posts having come about in the meantime; I could split the multiquote posts into a few posts per who I'm replying to, though I don't see a huge difference.

My post was more of a random thought, not one that was necessarily directed at you. When I see big posts filled with multiple quotes, and most of those quotes are only one sentence, and they're responded to with just one sentence, it makes me not want to read any of the post. I literally scrolled right by your post without reading any of it because it makes my eyes hurt. When the posting style gets that forensic it takes a lot away from the discussion. I think it would be more useful to try to find some common ground and see where the debate goes from there instead of tit-for-tat style posts. Again, maybe it's just me...

KyussBishop · 30-04-2012 7:29pm

*shrug* I don't know, I don't view it quite so much as tit-for-tat, multiquotes just seem to be the best way to address separate parts of peoples posts in-context.

DubTony · 30-04-2012 7:53pm

Re self scanning till. For those who haven't figured it out yet, the reduction in labour costs doesn't come immediately. As staff are redeployed in other areas they are still available in the store to operate a cash register when needed. Tesco use this very effectively, with many of their floor staff having started on tills, being moved onto the floor and getting called every now and then to operate a till when needed. As staff leave, or move to other stores, they aren't replaced.

As for supermarkets claiming that there are no reductions in staff levels; well, they're not lying. There is no reduction in staff. But what happens is that there are fewer new jobs created, because with the introduction of self scanning, the "surplus" staff have already taken up the roles.

So in the context of this thread, we can look at self scanning lanes as the technological equivalent of minimum wage. The job may not go immediately, but you can be sure that there'll be no hiring done any time soon.

K-9 · 30-04-2012 8:53pm

DubTony wrote: »

Re self scanning till. For those who haven't figured it out yet, the reduction in labour costs doesn't come immediately. As staff are redeployed in other areas they are still available in the store to operate a cash register when needed. Tesco use this very effectively, with many of their floor staff having started on tills, being moved onto the floor and getting called every now and then to operate a till when needed. As staff leave, or move to other stores, they aren't replaced.

As for supermarkets claiming that there are no reductions in staff levels; well, they're not lying. There is no reduction in staff. But what happens is that there are fewer new jobs created, because with the introduction of self scanning, the "surplus" staff have already taken up the roles.

So in the context of this thread, we can look at self scanning lanes as the technological equivalent of minimum wage. The job may not go immediately, but you can be sure that there'll be no hiring done any time soon.

I suppose it depends on the chain and market they are in. Tesco are big in the internet grocery shopping area so I assume staff would be redeployed there. In the US they can get employment with a chain that is taking the checkouts out because they aren't as efficient as people think! Or in Ireland with Aldi or Lidl, who obviously think self-service checkouts aren't worth the cost yet.

SupaNova · 01-05-2012 2:14am

KyussBishop wrote: »

*shrug* I don't know, I don't view it quite so much as tit-for-tat, multiquotes just seem to be the best way to address separate parts of peoples posts in-context.

Soldie is not the only one, at least keep your replies to 1 poster's post at a time, it makes it much easier to read, your last long post replied to 6 people.

KyussBishop · 01-05-2012 2:55am

Right so 6 completely separate posts, many containing just a line or two, makes more sense.

While I acknowledge the point Soldie made and understand/take-note of it for future reference, it's a bit ironic from you when you're not averse to referring people to 70-page-long essays on economic theory, and bashing them when they skim through it, or bashing them for not having read entire books, or for not going on a Google-search-escapade to figure out obscure aspects of an economic theory, that could sooner be figured out by asking people.

It's a routine thing you do, so it's a touch hypocritical to then complain about having to expend some effort reading a moderately-large post.

SupaNova · 01-05-2012 3:20am

KyussBishop wrote: »

Right so 6 completely separate posts, many containing just a line or two, makes more sense.

Having one giant post responding to 6 different posters feels a bit like reading a wall of text with no paragraphs.

While I acknowledge the point Soldie made and understand/take-note of it for future reference, it's a bit ironic from you when you're not averse to referring people to 70-page-long essays on economic theory, and bashing them when they skim through it, or bashing them for not having read entire books, or for not going on a Google-search-escapade to figure out obscure aspects of an economic theory, that could sooner be figured out by asking people.

You said you wanted to research Austrian economics, so I pointed you to some material. Maybe your idea of research is skimming and asking questions on a forum, and careful reading of specifically recommended source material is silly. Also I did not bash anyone for not reading entire books. And I'm not sure what obscure aspects of economic theory I have asked you to figure out?

It's a routine thing you do, so it's a touch hypocritical to then complain about having to expend some effort reading a moderately-large post.

I read your post it just made my eyes hurt, its not about effort, but aesthetics and readability, think reading white text on a yellow background.:cool:

Valmont · 01-05-2012 6:24am

KyussBishop wrote: »

Sorry but it would be confirmation bias to give much credence to stats going either way in light of the heavy skepticism.

Not one to be outdone, KyussBishop does away with the very foundations of science in a debate on the minimum wage. :pac:

But I accept your concession that the minimum also harms small businesses who are guilty of the cardinal sin of not being profitable enough to absorb the cost of regulations. But it is ironic that in this scenario you support it is increasingly the big corporations who can afford to do business along the expensive lines imposed by the state with smaller businesses suffering disproportionately.

KyussBishop · 01-05-2012 7:10am

Valmont wrote: »

Not one to be outdone, KyussBishop does away with the very foundations of science in a debate on the minimum wage. :pac:

But I accept your concession that the minimum also harms small businesses who are guilty of the cardinal sin of not being profitable enough to absorb the cost of regulations. But it is ironic that in this scenario you support it is increasingly the big corporations who can afford to do business along the expensive lines imposed by the state with smaller businesses suffering disproportionately.

Yes because it's more scientific to pick a study which best suits either of our particular 'sides', and then to dig heels in, than recognize there are conflicting studies and more research needs to be done.

If a business isn't profitable enough to pay its workers, that's just tough really; better it shut down and everyone get reemployed at acceptable wages, than scrape by with lower wages, trying to keep an unsustainable business going.

Edgar the Exploiter

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