Edgar the Exploiter

KyussBishop

SupaNova wrote:

Well the downside is supposed to be unemployment, and the first model I looked at had to adjust for growth and inflation, which is much to author's discretion, and would have to use furthermore imperfect statistics such as GDP and CPI numbers based on other authors discretion. I don't think this approach could ever yield anything strong enough to make a conclusion as to whether minimum wage had a positive or negative effect on unemployment. This is admitted, and they sort of throw it in study to say look at least there wasn't "upheavel" as some would claim, which is a red herring.

The one from Katz is severely flawed for the reasons given above.

So if these flawed studies are considered to be overwhelming evidence I don't know what to say. And this consensus(about 53% or so on another thread) you allude to is based on such flawed studies.

Well, there's immediate empirical evidence showing the increase in worker wages in line with cost-of-living standards, so that benefit is definite, and the evidence for an increase in unemployment highly suggests any effect is negligible.
Even for those people who do directly become unemployed, there is social welfare and job retraining to pick them up, and if the low-skilled job market is not saturated, there are immediately more jobs available to them (what's to stop people just getting another low-skill job?).

Basically, any evidence for an immediate increase in unemployment both shows a negligible increase at most, and shows only short-term changes which our favourite entity 'the market', along with social welfare, likely correct by themselves in the medium-to-long term.

So in short, lots of evidence of a good outcome (increased worker wages), negligible evidence of a bad outcome, and systems in place to mitigate any negligible bad outcome.


I would be a lot more skeptical of the benefits of a minimum wage if stats showed a definite medium-to-long term increase in unemployment, but that doesn't seem to be the case.

The only case where minimum wage remains potentially harmful overall, is where the low-skilled job market is saturated, in an economic downturn with rising unemployment.

Valmont

later12 wrote: »

To be honest, I find this topic interesting and I have little time for this sort of catfighting on a Saturday evening. If you have nothing better to do, go do it with someone else please. I'm not going down that route.

With all due respect Later12, I was responding in kind to your implication that I sit around learning economics by watching my "favourite" youtube channels. I just thought the video would be a good launching platform for a debate.

SupaNova

Channel Zero wrote: »

Valmont,
someone has made a response to the video in your OP.

https://www.youtube.com/watch?v=rcPNXuhAnEs

While I actually agree with some of what he said regarding some of the simplifications made in the original video, there is huge amounts of emotion inserted, and he creates to many straw-men to shoot down. There is quite a detailed response here:
http://www.youtube.com/watch?v=l5-VgLh-_vk&feature=related

Channel Zero

SupaNova wrote: »

So if these flawed studies are considered to be overwhelming evidence I don't know what to say. And this consensus(about 53% or so on another thread) you allude to is based on such flawed studies.

Ok, you say the studies are flawed. Fair enough.
It then begs the question; if these studies are considered to be essentially flawed, why have they utterly transformed the views of so many respected ecomonists' long-held theoretical assumptions in light of them?

Sorry now and it's not aimed at you, but it seems to some of us cynics that the ironclad theory that is wheeled out to dismiss the results is just another trojan horse fallacy (similar to 'trickle-down') when applied to the real world, one that many fundamentalist free-marketeers cling to for their own ends frankly. One that is disseminated through the usual well-connected sources.

Here's a summary of one of the pdf's from earlier. Possibly it's a fair, relatively unbiased summation of the last few years research.
Without the ****e from big business interests in other words.
http://www.epi.org/publication/bp178/

Terms like Overly harmful or significant are subjective, this could be 1% more unemployment to some, 3% or 5% to others. Now whether the study finds 1% more unemployment, or 1% less it doesn't matter if it is a severely flawed study.

True. If it is a severely flawed study. Which many would say they are not.

SupaNova wrote: »

Employers pay tax to fund the welfare state, so are they then subsidising themselves?

Employers pay tax to fund the welfare state yes, to fund people with genuine welfare needs. Not to receive it back as a subsidy when the employer hires a worker for a wage that worker cannot live on. Why should others subsidize a private business in this manner but see none of the profit? That's not to say some small employers shouldn't receive help in other ways in the general scheme of things. It just shouldn't be this way; at the expense of the employee.

SupaNova wrote: »

While I actually agree with some of what he said regarding some of the simplifications made in the original video, there is huge amounts of emotion inserted, and he creates to many straw-men to shoot down. There is quite a detailed response here:
http://www.youtube.com/watch?v=l5-VgLh-_vk&feature=related

Had a quick look at the first half. Dunno. A bit dodgy mate.:)
Am prepared to give him the benefit of the doubt for the moment, in that he actually sincerely believes what he's saying. Lots of 'yea but no but' back-pedalling though.

He more or less says, 'My film didn't actually mean to imply this or that.'
'When i said that "the worker enjoys the independance his job gives him", i didn't really mean to imply that the worker was totally independant.'
Hmm..
'My film does not suggest that the minimum wage punishes the employer or that it legislates the employee into wealth.' Sure it doesn't..

Well, on the bright side, by making (or being paid to make) a thoroughly misleading propaganda film, which will no doubt be used the world over to impart false information, he has zero credibility. So i suppose he can't sink any lower by making this follow-up.

SupaNova

Channel Zero wrote: »

Ok, you say the studies are flawed. Fair enough.
It then begs the question; if these studies are considered to be essentially flawed, why have they utterly transformed the views of so many respected ecomonists' long-held theoretical assumptions in light of them?

In the studies I have read they were generally quite honest about identifying most of their own flaws, but then go on to brush them aside without reasons as to why a study with these flaws is still valid.

Then what respected economist has had their views utterly transformed by these studies, i.e. changed from of position of being against the minimum wage to being for it?

Channel Zero

SupaNova wrote: »

Then what respected economist has had their views utterly transformed by these studies, i.e. changed from of position of being against the minimum wage to being for it?

http://www.epi.org/publication/minwagestmt2006/

SupaNova

Channel Zero wrote: »

http://www.epi.org/publication/minwagestmt2006/

The claim you made was that respected economists had their views utterly transformed because of these studies. This doesn't back up the claim.

Channel Zero

SupaNova wrote: »

The claim you made was that respected economists had their views utterly transformed because of these studies. This doesn't back up the claim.

It does in my opinion, and it's a fair enough claim considering that the traditional view across the board has reversed in light of the studies like the ones linked.
You can quibble about my wording if you want, but there's no point in denying that there has been a complete sea change in how economists have viewed the effects of increasing MW.


As a general point, dismissing real world research on the grounds that it is ideologically disturbing is unscientific.
Unfortunately, even as more evidence is produced, groups with vested interests will shout louder to protect those interests by denying facts and producing slick propaganda.

Valmont

If the minimum wage is good thing, why not raise it even higher than it already is?

Duggys Housemate

Valmont wrote: »

If the minimum wage is good thing, why not raise it even higher than it already is?

Engaging in mole whacking again, I will say that this is an argument to extremes. Its like saying if giving people pensions ( which, I acknowledge you disagree with) is good, why not give them all gold yachts.

KyussBishop

Valmont wrote: »

If the minimum wage is good thing, why not raise it even higher than it already is?

I say keep it at (or around) the minimum amount required to meet the cost of living, as that's its purpose.

When in an unhealthy economy with rising unemployment of low skilled workers, it should probably be reduced a bit to promote employment.

In a healthy economy with little unemployment of low skill workers, and rising cost of living, it should be raised higher than it is, to meet the cost of living.


A better question: Why should the minimum wage be raised higher than the minimum needed to meet the cost of living?

DubTony

KyussBishop wrote: »

In a healthy economy with little unemployment of low skill workers, and rising cost of living, it should be raised higher than it is, to meet the cost of living.

Assuming that a healthy economy implies that there are more people employed than in an unhealthy one, this creates a shortage of workers which, in turn, drives up wage rates. In a "normal" market, (one without political interference) wage rates increase at this time. People move more often from job to job to avail of the higher rates and better terms and conditions being offered in the marketplace. This negates the need for a minimum wage.

Wage increases also play their part in increasing the cost of living. I have more anecdotal evidence but I think I'll leave it for now as I understand this is a theory forum.

Valmont

KyussBishop wrote:

When in an unhealthy economy with rising unemployment of low skilled workers, it should probably be reduced a bit to promote employment.

So you acknowledge that the minimum wage creates unemployment then?

KyussBishop

DubTony wrote: »

Assuming that a healthy economy implies that there are more people employed than in an unhealthy one, this creates a shortage of workers which, in turn, drives up wage rates. In a "normal" market, (one without political interference) wage rates increase at this time. People move more often from job to job to avail of the higher rates and better terms and conditions being offered in the marketplace. This negates the need for a minimum wage.

Wage increases also play their part in increasing the cost of living. I have more anecdotal evidence but I think I'll leave it for now as I understand this is a theory forum.

Fair enough, that sounds logical; it's actually a good argument to keep a minimum wage though, because of businesses which may try to exploit workers, who may not have the option of switching jobs (either through oligopoly or individual circumstances).

In that circumstance, there does not appear to be any downside of a minimum wage.

Valmont wrote:

So you acknowledge that the minimum wage creates unemployment then?

If minimum wage was already in place, and an economic downturn took place, it would not have created unemployment but it may exacerbate it for low-skill industries.

In that circumstance, you need to adjust the minimum wage to limit the effects of growing unemployment, but you also need to balance it against other factors too; that could be an entire other (interesting) topic in itself.

Do you agree, that in a well-functioning economy without large low-skill unemployment, minimum wage does not lead to an increase in medium-to-long term unemployment?

DubTony

KyussBishop wrote: »

In that circumstance, there does not appear to be any downside of a minimum wage.

My experience has proved otherwise. In a strong economy the min. Wage actually created a floor that employers could bench against. When I was approached by an employee looking for a pay rise, I could point out that he was on the JLC rate for someone of his experience, and that I really couldn't afford to pay any more. This was usually enough to end the conversation, unless the employee was aware of how valuable he was. Most weren't. So they remained on the minimum and earned the same as under performing workmates. In a more open economy their under performing colleagues would have earned less allowing the stronger workers to earn more regardless of position or experience. If an employee pointed out that he was better or worked harder than his colleague, I simply pointed to the pay scale and that I had to pay the colleague the same rate irrespective of his performance, meaning that my budget was maxed. Only when a good employee murmured about going elsewhere did I capitulate. But inevitably someone else would lose out, as the budget had to be adhered to.

Another downside was that training was foregone as the cost was exorbitant. (In most cases employees being trained up would shadow a manager or supervisor which effectively leads to 2 wages being paid where the work of only one is done). Most people will be aware of the shoddy service offered by convenience stores during the Celtic tiger period. This was simply because the cost of providing effective training was high and many employees were thrown in at the deep end and allowed sink or swim. With the scarcity of job applicants for each position advertised, bad employees were kept on but not trained properly (I personally feel that this is a pointless and self defeating practice, but many retailers are governed by tight budgets and some can't, or refuse to, see further than the cash register). This led to a bad experience for customers, and ultimately a negative perception of the business in general.
Employees may have had a minimum wage, but rarely progressed within the industry, and so were unlikely to be in the position to avail of better opportunities.
And finally, the reason c-store prices were as high as they were, was due to several factors including the high cost of labour.

KyussBishop

DubTony wrote: »

My experience has proved otherwise. In a strong economy the min. Wage actually created a floor that employers could bench against. When I was approached by an employee looking for a pay rise, I could point out that he was on the JLC rate for someone of his experience, and that I really couldn't afford to pay any more. This was usually enough to end the conversation, unless the employee was aware of how valuable he was. Most weren't. So they remained on the minimum and earned the same as under performing workmates. In a more open economy their under performing colleagues would have earned less allowing the stronger workers to earn more regardless of position or experience. If an employee pointed out that he was better or worked harder than his colleague, I simply pointed to the pay scale and that I had to pay the colleague the same rate irrespective of his performance, meaning that my budget was maxed. Only when a good employee murmured about going elsewhere did I capitulate. But inevitably someone else would lose out, as the budget had to be adhered to.

Another downside was that training was foregone as the cost was exorbitant. (In most cases employees being trained up would shadow a manager or supervisor which effectively leads to 2 wages being paid where the work of only one is done). Most people will be aware of the shoddy service offered by convenience stores during the Celtic tiger period. This was simply because the cost of providing effective training was high and many employees were thrown in at the deep end and allowed sink or swim. With the scarcity of job applicants for each position advertised, bad employees were kept on but not trained properly (I personally feel that this is a pointless and self defeating practice, but many retailers are governed by tight budgets and some can't, or refuse to, see further than the cash register). This led to a bad experience for customers, and ultimately a negative perception of the business in general.
Employees may have had a minimum wage, but rarely progressed within the industry, and so were unlikely to be in the position to avail of better opportunities.
And finally, the reason c-store prices were as high as they were, was due to several factors including the high cost of labour.

That's a good point for businesses operating with a low margin of profit; a minimum wage would tend to curtail business models or expansion in specific markets, which have difficulty funding employers at that level.

I suppose that is an aspect of the minimum wage which is unavoidable, that it will drive out some businesses like that, but in a healthy economy, other more profitable businesses will take up their place and take on the employers from the previous business.
In the end, this still maintains the benefit of workers being able to maintain basic costs of living, and with a healthy business/labour market (so long as the economy stays healthy).

bitbutter

Channel Zero wrote: »

He more or less says, 'My film didn't actually mean to imply this or that.'
'When i said that "the worker enjoys the independance his job gives him", i didn't really mean to imply that the worker was totally independant.'
Hmm..

A question for you: If someone says "He really appreciates the independence that wheelchair gives him". Do you interpret this as a claim that the person in the wheelchair is totally independent? (however you choose to define totally independent).

'My film does not suggest that the minimum wage punishes the employer or that it legislates the employee into wealth.' Sure it doesn't..

If i remember correctly, this criticism related to way the film portrayed the _intention_ of those advocating minimum wage, not its actual effects. In my view, the film does not state or imply that the intention of those who instigate MW is to punish employers or legislate employee wealth. If you disagree I'd like to know which part of the film suggests otherwise to you.

Well, on the bright side, by making (or being paid to make) a thoroughly misleading propaganda film, which will no doubt be used the world over to impart false information, he has zero credibility.

Can you be specific about what exactly is misleading in the film?

Channel Zero

Hi bitbutter. Your username is the same one as the guy who made the video, so am going to take a wild guess that you're both in fact one and the same, (ie Tomasz Kaye http://www.youtube.com/watch?v=4QYpjwMMpTc) and that you have found this thread after googling your own name. If i'm wrong about that, apologies.

bitbutter wrote: »

A question for you: If someone says "He really appreciates the independence that wheelchair gives him". Do you interpret this as a claim that the person in the wheelchair is totally independent? (however you choose to define totally independent).

In my opinion it's a weak analogy, therefore the answer is redundant.
Physical independence as per your question above and economic/financial independence as per your propaganda cartoon are obviously two different concepts.
But to answer your question anyway, no i would not presume that the person is totally independent of movement, meaning that he could travel anywhere in the world without any physical assistance.
When independence is mentioned in an economic/financial context as was in your cartoon, then you're clearly attempting to imply to the target audience that the worker's wage does make him ecomonically independent.

Basically, whoever was responsible for making that video (maybe it's you, maybe not) is a propagandist, therefore is not necessarily interested in the truth so much as manipulation and deception.

In my view, the film does not state or imply that the intention of those who instigate MW is to punish employers or legislate employee wealth. If you disagree I'd like to know which part of the film suggests otherwise to you.

I disagree completely, but i've no intention of wasting my time watching it again at your request, or 'debating' you on this or anything else frankly. The implication is clearly therein, and what's more; I'm fully sure that that was your intention as a propagandist, despite your denial.
It's just another piece of deceptive rubbish to join all the rest of the rubbish emanating from the internet. I see it's already doing the rounds on right-wing blogs. No surprises there then. They lap up anything that panders to their self-serving, tax-dodging, union-busting extremist world view.

Good day to you sir.

bitbutter

When independence is mentioned in an economic/financial context as was in your cartoon, then you're clearly attempting to imply to the target audience that the worker's wage does make him ecomonically independent.

What strikes me the most is that you seem oblivious to the transparent double standard you're employing.

1. "Even though his wage is low, he appreciates the independence that it gives him"

2. "Even though his wheelchair isn't the best, he appreciates the independence that it gives him"

You assume the most expansive, least plausible sense of 'independence' when it appears in my film (who believes that $3 p/h is enough to be 'totally financially independent'?), but assume a much more limited sense of 'independence' (interpreting it as a relative increase--as i intended it in the film) when it appears in a very similar sentence in the context of physical mobility. You neglect to mention why you believe this difference in interpretation is justified. To me it seems anything but.

The most likely explanation seems to me that like Bill Burns, you're willing to go out of your way to form uncharitable interpretations of the words of your opponents, while maintaining much more reasonable interpretations of the same words in analogous sentences in different contexts.

Basically, whoever was responsible for making that video (maybe it's you, maybe not) is a propagandist, therefore is not necessarily interested in the truth

A propagandist, qua propagandist, is not necessarily interested in truth--that's correct. Just as a politician qua politician isn't, or a forum user qua forum user isn't. I happen to be a propagandist who is also interested in truth.

so much as manipulation and deception.

Propaganda does not necessarily hinge on manipulation or deception. I certainly wouldn't be interested in making the sort that did. Reason and persuasion are much more robust.

and what's more; I'm fully sure that that was your intention as a propagandist, despite your denial.

So: although you don't know me, and you've seen, at best, only a couple of videos I've made, you're "fully sure" that you know me well enough to rule out the possibility that what I'm telling you about my intentions is truthful. That's an impressive display of bigotry.

Valmont

KyussBishop wrote: »

Do you agree, that in a well-functioning economy without large low-skill unemployment, minimum wage does not lead to an increase in medium-to-long term unemployment?

Whenever we talk of unemployment we have to ask: unemployment, but at what price?

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.

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.

KyussBishop

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

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

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

Suryavarman

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

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

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

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.

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

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

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

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?