The Minimum wage

Carl31

Would removing the minimum wage help this country out of the economic problems it has?
Maybe we are too far down the line now, as it would probably cause more harm than good removing it, but has it made employment too expensive for Business to operate in a competitive way?

Generali

Carl31 wrote: »

Would removing the minimum wage help this country out of the economic problems it has?
Maybe we are too far down the line now, as it would probably cause more harm than good removing it, but has it made employment too expensive for Business to operate in a competitive way?

It doesn't help youth unemployment. I started working for well below what would have been a minimum wage at the time and worked my way into a position where I could earn more.

Having said that, it's a bit harsh for those that perennially find themselves at the bottom of life's earning pile.

mcfisco

Even that great bastion of the free market economy - the US - has a minimum wage [I think in all states]
It would be wrong to sacrifice some of the poorest at the alter of the worst employers in the country just to allow others to make their own decisions

abaxas

Banning redundancy payments and allowing people to be sacked without notice would solve that problem.

jamesmorgan

All the minimum wage does is to provide employment protection for those in work from those who are out of work (especially those with little experience). It is the principle reason that we have high youth unemployment in this country.

Take the simple example of a choice between employing 2 experienced workers at £7/hour or 3 inexperienced workers at £4/hr. Assuming the employer gets the same productivity from the 3 inexperienced workers as the 2 experienced workers, it makes financial sense to employ the inexperienced workers. If the minimum wage is set at £5/hr the decision is reversed and the experienced workers are retained.

Everyone has a market rate based on their productivity. If an employer can't employ an inexperienced worker at this rate due to the minimum wage they simply don't get employed. Without employment they never gain the experience to justify the minimum wage.

The greatest supporters of the minimum wage are the unions. Their loyalties are to their current members (ie people in employment). It is just a method of obtaining job protection.

crash123

mcfisco wrote: »

Even that great bastion of the free market economy - the US - has a minimum wage [I think in all states]
It would be wrong to sacrifice some of the poorest at the alter of the worst employers in the country just to allow others to make their own decisions

Yes the USA does have a minimum wage. Whilst vising Yellowstone Park area we stop at a small town and I went to the washrooms in the town hall. On the notice board was the info regarding the minimum wage for that area (Wyoming) which was about $5.50 an hour. Not a lot. However if you worked in the food service industry(waitress etc) and you received tips these became part of your pay. Not good.

StevieJ

Carl31 wrote: »

Would removing the minimum wage help this country out of the economic problems it has?
Maybe we are too far down the line now, as it would probably cause more harm than good removing it, but has it made employment too expensive for Business to operate in a competitive way?

Are you on a different planet? it should go up so that the taxpayer doesn't have to subsidise business profits with top up benefits

Carl31

crash123 wrote: »

Yes the USA does have a minimum wage. Whilst vising Yellowstone Park area we stop at a small town and I went to the washrooms in the town hall. On the notice board was the info regarding the minimum wage for that area (Wyoming) which was about $5.50 an hour. Not a lot. However if you worked in the food service industry(waitress etc) and you received tips these became part of your pay. Not good.

thats what tipping has always been about in the US, waiting staff are paid a poor rate due to the tipping culture, its incentive to provide a good service.

Tipping over here isnt required, we dont operate a tipping culture as in the US, yet we feel obliged to copy and end up paying over the odds for some reason (well i dont)

jfh7gwa

jamesmorgan wrote: »

Everyone has a market rate based on their productivity. If an employer can't employ an inexperienced worker at this rate due to the minimum wage they simply don't get employed. Without employment they never gain the experience to justify the minimum wage.

I recall hearing something similar on the radio a few months ago, where (if I recall correctly) the owner of a hairdressing salon was brought in to discuss raising the minimum wage to a living wage from a small business owner's point of view.

I think the example the radio host gave was if his £5-an-hour something Saturday girls that only did hair washing for the hairdressers' clients and made tea/coffee (basically unskilled, generally very young, generally girls, usually wanting to become hairdressers) were upgraded to.. say.. £9/hr... he'd just have to let the handful go altogether.

Because the productivity that their skills brings to his business (or lack of) isn't close to meeting that £9/hr price tag. As in, if he has one in for a 5hr shift, he'd have to pay £45 gross wages (plus associated employee costs). But that by working for £9/hr, they don't bring in £45+costs or more worth of business/revenue for the salon. So he'd rather spend that £9/hr on, say, someone who's currently doing a hairdressing course, maybe close to finishing, and give them extra shifts. Because their skillset extends beyond the hair washing and tea making - he could maybe give them straight bob cuts to do, or men's shaver work, and bring in a higher revenue for their higher wages. He can't do that with his "saturday girls".

Thus the most inexperienced folk won't get their foot on the ladder or experience of the working environment at the most basic level.

I've probably done a crappy job of explaining it, but it made a lot of sense when they were talking anyway :rotfl:

ukcarper

I wonder how many people advocating the abolition of the minimum wage are on it or think they will ever be on it.

The minimum wage is not £6.08 for everyone its £4.98 for 18 to 20 year olds and £3.68 for 16 & 17 years olds with a lower rate still for apprentices.

chewmylegoff

jamesmorgan wrote: »

All the minimum wage does is to provide employment protection for those in work from those who are out of work (especially those with little experience). It is the principle reason that we have high youth unemployment in this country.

if this was true, then how come youth unemployment was just as bad (in percentage terms) in the 80s when there was no minimum wage?

i am not sure that the minimum wage is really high enough to have any particular impact on unemployment (and if anyone is really willing to work for less than minimum wage is because they are only doing the work to get the tax credits which warp the labour market).

i suspect the problem is more a combination of the wrong kind of education so that the segment of the "young" who are unemployed for any significant period do not have the skills to do certain jobs, and there aren't enough "unskilled" jobs to go around so the older people with more experience who are willing to do the jobs for the same pay get the jobs.