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Does a minimum wage hurt unskilled & unexperienced workers?



dingodan

New member
Feb 16, 2011
10,080
If we believe that it's wrong to employ anyone for less than £8ph and we pass a minimum wage law, does it have the effect of guaranteeing that everyone is paid at least £8ph? Or does it have the effect of reducing the number of people in work?

Imagine a person at the lower end of the skills/experience spectrum could have been employed at £6ph, chosen over a more experienced applicant who would have commanded £8ph. But with minimum wage laws the employer will be paying £8ph regardless, and so has no incentive to employ the person with less skill or experience. Under these conditions the minimum wage law has only served to give the low skilled worker no basis on which to compete for the job.

That's the theory, makes sense to me, what to you think?

A better explanation:

 


Paul Reids Sock

Well-known member
Nov 3, 2004
4,458
Paul Reids boot
To me it would more mean a case of the person whom previously demanded £8 an hour now demanding £10 an hour because they feel they are worth more than minimum wage
 


beorhthelm

A. Virgo, Football Genius
Jul 21, 2003
35,265
a lot of "ifs" there for something that's happened. £6.50, with lower youth and apprentice rates.
 


yxee

Well-known member
Oct 24, 2011
2,521
Manchester
I thought it was obvious, but with the amount of politicians promoting this idea maybe not...

Artificially raising the cost of labour effectively prices unskilled workers out of the market. The lucky ones who get to keep their jobs have more money and drive up consumer prices, which pushes the unlucky ones further into relative poverty.

Yet another example of government intervention doing exactly the opposite of its intention.
 


Brother Sid

Member
Jan 4, 2006
94
Horsham
In my opinion if you are in business and you are unable to utilise someone's labour at £8/ hour or maybe even £10/hour to make a profit for your company, then you shouldn't be in business.
 




yxee

Well-known member
Oct 24, 2011
2,521
Manchester
In my opinion if you are in business and you are unable to utilise someone's labour at £8/ hour or maybe even £10/hour to make a profit for your company, then you shouldn't be in business.

Your opinion is factored into the economy, and I would expect you to never purchase anything made by someone paid less than that amount (I wonder if this is true?).

However it is only an opinion and that is not enough to force someone else (e.g. me) to have to pay an inflated price for cheap everyday goods.
 


Justice

Dangerous Idiot
Jun 21, 2012
18,249
Born In Shoreham
In my opinion if you are in business and you are unable to utilise someone's labour at £8/ hour or maybe even £10/hour to make a profit for your company, then you shouldn't be in business.
So all the massive High st stores and Supermarkets shouldn't be in business?
 


beorhthelm

A. Virgo, Football Genius
Jul 21, 2003
35,265
In my opinion if you are in business and you are unable to utilise someone's labour at £8/ hour or maybe even £10/hour to make a profit for your company, then you shouldn't be in business.

this old chestnut doesn't scale to 100, 1000 or so on. even for just 10 employees, the rise suggest would account for 2 peoples wages.
 




soistes

Well-known member
Sep 12, 2012
2,643
Brighton
When the National Minimum Wage was introduced in 1999, it was widely predicted that it would result in massive job loss, particularly at the bottom end of the labour market among unskilled workers.

That didn't happen on any significant scale -- and the broad consensus among economists these days is that a minimum wage set at a prudent level does not have a negative effect on overall employment. There may be some specific exceptions to this in certain sectors (hospitality and care sectors are often mentioned), but even there there is little evidence of the NMW having had a widespread negative effect on employment chances.

There are umpteen academic studies of this issue: see, for example, http://cep.lse.ac.uk/pubs/download/dp0781.pdf

Of course, there must be a level at which such a job loss effect would kick in, but the good thing about the current system is that the independent Low Pay Commission (which recommends the level of the NMW) seems to have been remarkably successful in weighing the evidence (including evidence from businesses and small businesses) and setting the minimum wage no higher than the level which might cause job loss.

It's not clear whether the current Labour Party proposal for an £8 minimum wage, which seems a bit arbitrary, implies that it intends to do away with the Low Pay Commission and existing process of deciding the level (based on research, and evidence of likely employment effects), and to replace it with a process based on some political decision about the appropriate level. If so, then my guess would be that the risk of getting it wrong will increase.
 


Worthingite

Sexy Pete... :D
Sep 16, 2011
4,959
Worthing
The NMW hasn't gone up in line with the rate of inflation since 2009. For the full length of this Tory administration the poorer and unskilled have been stiffed repeatedly. And my biggest argument is - why shouldn't people be paid a "livable" wage? Minimum wage jobs are often the hardest, dirtiest and most demanding, and yet people are paid a disgustingly low amount for it, and were certain parts of society to have their own way, they wouldn't even get that.

http://www.theguardian.com/news/datablog/2013/apr/15/minimum-wage-increases-versus-inflation
 


soistes

Well-known member
Sep 12, 2012
2,643
Brighton
The NMW hasn't gone up in line with the rate of inflation since 2009. For the full length of this Tory administration the poorer and unskilled have been stiffed repeatedly. And my biggest argument is - why shouldn't people be paid a "livable" wage? Minimum wage jobs are often the hardest, dirtiest and most demanding, and yet people are paid a disgustingly low amount for it, and were certain parts of society to have their own way, they wouldn't even get that.

http://www.theguardian.com/news/datablog/2013/apr/15/minimum-wage-increases-versus-inflation

Not quite true -- or rather a slightly selective analysis, taken from the Guardian in March 2013 when the new rates were announced. If you had quoted the corresponding Guardian articles for March 2014 and 2015 (below), announcing the new rates for those years, you'll see that we've just had two years of above inflation increases in the NMW.
The point is that the LPC was fairly cautious in setting the rate during the depths of the recession (for obvious reasons), but there has been a bit of a catch-up since then, and the stated ambition is for that catch up to continue.
http://www.theguardian.com/society/2014/mar/12/national-minimum-wage-rise-above-inflation
http://www.theguardian.com/society/2015/mar/17/minimum-wage-to-rise-to-6-pounds-70-pence-an-hour
 




Diablo

Well-known member
NSC Patreon
Sep 22, 2014
4,173
lewes
Certainly won`t hurt any Workers its the employers it will hurt... however it will make those not working find it harder to get job.
 


Hampster Gull

New member
Dec 22, 2010
13,462
I think it is sensible at present. But the danger is it keeps rising to a point where you risk becomes real. I am pretty confident that could happen with a labour government under pressure.
 


Simster

"the man's an arse"
Jul 7, 2003
54,110
Surrey
I think it is sensible at present. But the danger is it keeps rising to a point where you risk becomes real. I am pretty confident that could happen with a labour government under pressure.
Yes but you also think the country is doing all right now whereas the 15 years under Labour were "a total disaster" - which is clearly total nonsense.

Firstly, they were the ones who introduced it at the start of their last watch because the Tories had previously refused to do so, so this is something that is a cornerstone of their beliefs. Secondly, there is no way on earth that Labour would raise the minimum wage beyond sustainable levels - because they didn't at any time during the FIFTEEN years they were in power and had a minimum wage in place. To suggest they would is about as lazy and realistic as saying the Tories would DESTROY the NHS if they had outright power.
 




dingodan

New member
Feb 16, 2011
10,080
Certainly won`t hurt any Workers its the employers it will hurt... however it will make those not working find it harder to get job.

What about those on the borderline? Couldn't some people lose their jobs if they are considered good value at the rate they are paid, but would not be if there is an arbitrary increase in the wage they must be paid?
 


dingodan

New member
Feb 16, 2011
10,080
The NMW hasn't gone up in line with the rate of inflation since 2009. For the full length of this Tory administration the poorer and unskilled have been stiffed repeatedly.

But this is the question. If you raise the minimum wage - do you help the poor and unskilled?

In terms of wages keeping up with inflation, to the extent that the government has a role, that role is supposed to be to keep inflation low, not to try to set wages high.

They try to mess with wages to compensate for the way that they have messed with the economy as a whole, a healthy economy wouldn't even have this problem, the market is supposed to determine the price of labour, not politicians.
 


Diablo

Well-known member
NSC Patreon
Sep 22, 2014
4,173
lewes
What about those on the borderline? Couldn't some people lose their jobs if they are considered good value at the rate they are paid, but would not be if there is an arbitrary increase in the wage they must be paid?

Get your point although perhaps I should have said .......It will mainly hurt those looking for work and employers.......Any Worker now paid less than minimum wage will obviously gain..
 


MattBackHome

Well-known member
Jul 7, 2003
11,689
Artificially raising the cost of labour effectively prices unskilled workers out of the market. The lucky ones who get to keep their jobs have more money and drive up consumer prices, which pushes the unlucky ones further into relative poverty.

Yet another example of government intervention doing exactly the opposite of its intention.

Except this hasn't happened here - See [MENTION=25508]soistes[/MENTION] reply.
 




Diablo

Well-known member
NSC Patreon
Sep 22, 2014
4,173
lewes
But this is the question. If you raise the minimum wage - do you help the poor and unskilled?


Those in a job yes....those not in job or looking you make it harder for them to find employment.
 





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