The Minimum wage

StevieJ

Thrugelmir wrote: »

Would you pay someone that to

a) mow your lawn
b) serve you a cup of tea
c) deliver leaflets
d) wash and clean your car

I guess it depends how fast they can do it

StevieJ

chewmylegoff wrote: »

There is a limited market for everything, because demand is not infinite. You need to detach yourself from simplistic economic theories which do not translate into reality.

Their posts do have an extracted from Lipsey feel to them

StevieJ

CLAPTON wrote: »

I'm not sure your point; are they lesser people in your mind that others?

my point is that we stop (make illegal) some people's choice to work while encouraging other people to remain idle.
It's a point worth thinking about; liberty is worth something

Not the people but the concept, these are economic migrants who would be pressurising the pay levels of the most vulnerable in our society, one reason why I am thankful of some respite in the form of the minimum wage.

jamesmorgan

StevieJ wrote: »

How do you work that one out? if the rival pays more then the tax credits reduce,

Payments of tax credits is largely irrelevant to employers. They pay the maximum wage they can afford to secure the services of employees. They are not in the business of ensuring that employees have a certain standard of living. Tax credits are something that happens after wages have been agreed and are simply a method of redistributing wealth. Having a higher NMW doesn't lessen the need for tax credits unless in raising it, it also reduces pay differentials (which is unlikely).

jamesmorgan

CLAPTON wrote: »

The money you have paid has gone to some-one else who is better off.
So in economic terms the 'real' increase in wealth is a reality; the distribution of that wealth may not to your liking but that's another matter.

They are not better off as they simply have to use that money to buy another house.

ILW

jamesmorgan wrote: »

Payments of tax credits is largely irrelevant to employers. They pay the maximum wage they can afford to secure the services of employees. They are not in the business of ensuring that employees have a certain standard of living. Tax credits are something that happens after wages have been agreed and are simply a method of redistributing wealth. Having a higher NMW doesn't lessen the need for tax credits unless in raising it, it also reduces pay differentials (which is unlikely).

That is not true, they tend to pay the minimum they need to get the job done. Otherwise they would tend to go out of business due to being undercut.

jamesmorgan

chewmylegoff wrote: »

There is a limited market for everything, because demand is not infinite. You need to detach yourself from simplistic economic theories which do not translate into reality.

The issue is whether unemployment is caused by a lack of work (ie lack of demand) or a lack of workers willing to work for a salary that generates a profit. I contend that it is the latter, although I accept my learning is more towards the Austrian school of economics. I recognize that alternative theories, especially Keynesian and Marxist favour the former causes. Which is right has yet to be proved.

jamesmorgan

ILW wrote: »

That is not true, they tend to pay the minimum they need to get the job done. Otherwise they would tend to go out of business due to being undercut.

Of course they try to pay the minimum, but if someone can still generate profit from that worker by paying them a higher salary, then the worker will simply move. In practice the desire of the employer to pay the minimum salary and that of the employee to earn the highest salary drive salaries to the same place (at a cost that still enables the employer to generate around 10% profit).

StevieJ

jamesmorgan wrote: »

Payments of tax credits is largely irrelevant to employers. They pay the maximum wage they can afford to secure the services of employees. They are not in the business of ensuring that employees have a certain standard of living. Tax credits are something that happens after wages have been agreed and are simply a method of redistributing wealth. Having a higher NMW doesn't lessen the need for tax credits unless in raising it, it also reduces pay differentials (which is unlikely).

Tax credits are paid depending on wage level, so are a major determinent of wage levels, the employer can pay a low wage and the employee accept this wage if both know that the govt will make up that wage to a level that is acceptable to the employee. Therefore a rival employer would have to beat the wage plus the subsidy to entice the worker away on purely economic grounds. I remind you of what you had written and what I was responding to

If an employer pays you a lower wage because you are getting tax credits, they still risk losing you to a rival who can still afford to pay you more.

ILW

jamesmorgan wrote: »

Of course they try to pay the minimum, but if someone can still generate profit from that worker by paying them a higher salary, then the worker will simply move. In practice the desire of the employer to pay the minimum salary and that of the employee to earn the highest salary drive salaries to the same place (at a cost that still enables the employer to generate around 10% profit).

Where did the 10% come from?