Minimum Wage? (1 Viewer)

[williamc]

minimum wage is a joke shouldnt even be a safety net like costello wanted. all it does is increase unemployment

 

[spyro14]

If you're okay with the minimum wage being lowered, or not keeping pace with inflation, why are those two ideas acceptable and abolishing it entirely is not?

Comes back to exploitation in my mind. Give either employee's or employer's an inch and they will take a mile.

 

[Graney]

What do you consider exploitation?

 

[spyro14]

What do you consider exploitation?

Working for much less than what you're worth.

 

[williamc]

Working for much less than what you're worth.

that never happens.

according to producer theory employers will pay a wage as to which the marginal benefit of their work = the marginal cost of employing them.

 

[williamc]

You are disputing several things I said.

You're suggesting the minimum wage can drop to an unreasonable level. It can't. It cannot go below what people are willing to work for. If they don't like it, they can always quit. This is doubly true in a society that maintains some form of welfare for the unemployed.

The employer will not be able to find staff if the wage he offers is unreasonable and below a living allowance. Employers will always be required to maintain reasonable wages to attract quality staff, regardless of whether a minimum wage exists.

I'm saying it shouldn't be avoided, it should be done if necessary.

im sorry graney, you obviously do not have a strong grasp of some basic microeconomic concepts.

edit: too much mixN economics and business/HR

 

[spyro14]

that never happens.

according to producer theory employers will pay a wage as to which the marginal benefit of their work = the marginal cost of employing them.

Never heard of that theory but that many moderate size words must be true 0.0. On a serious note, who are you inclined to side with though? would you completely abolish minimum wage if certain circumstances arose if given the power?

 

[Graney]

I'll readily admit that. My understanding of economics, as it goes, is extremely basic. Any points I make are simple, obvious, and founded on basic logic.

In our recent history, just prior to the recession, unemployment wouldn't realistically have dropped much further with the removal of minimum wage. Those unemployed were largely unwilling, or unable to work. Welfare reform, rather than minimum wage reform, would make a difference.

Please explain where I'm wrong.

 

[spyro14]

I'll readily admit that. My understanding of economics, as it goes, is extremely basic. Any points I make are simple, obvious, and founded on basic logic.

In our recent history, just prior to the recession, unemployment wouldn't realistically have dropped much further with the removal of minimum wage. Those unemployed were largely unwilling, or unable to work. Welfare reform, rather than minimum wage reform, would make a difference.

Please explain where I'm wrong.

Saying Welfare reform is too specific in my eyes, You have to look at all supply side policies to takle unemployment or so i'm told.

 

[williamc]

I'll readily admit that. My understanding of economics, as it goes, is extremely basic. Any points I make are simple, obvious, and founded on basic logic.

In our recent history, just prior to the recession, unemployment wouldn't realistically have dropped much further with the removal of minimum wage. Those unemployed were largely unwilling, or unable to work. Welfare reform, rather than minimum wage reform, would make a difference.

Please explain where I'm wrong.

Prior to the recession, Australia was at what economists would call our "natural rate of unemployment," or NAIRU. https://moeller.wikispaces.com/file/view/300px-NAIRU-SR-and-LR_svg.png

Basically, any macroeconomic attempts (through expansionary fiscal or monetary policy) would result in a rise in inflation because, unemployment, including cyclical unemployment, ceteris paribus was almost 0. Furthermore, it basically wouldn't derive any further employment. The only way for Australia to lower the freakish low unemployement rate, which prior to the reccesion was down to 4.2%, would be through microeconomic reform. Removal of the minimum wage would not cause any inflationary pressures and only lower unemployment, all other things equal.

 

[spyro14]

Prior to the recession, Australia was at what economists would call our "natural rate of unemployment," or NAIRU. https://moeller.wikispaces.com/file/view/300px-NAIRU-SR-and-LR_svg.png

Basically, any macroeconomic attempts (through expansionary fiscal or monetary policy) would result in a rise in inflation because, unemployment, including cyclical unemployment, ceteris paribus was almost 0. Furthermore, it basically wouldn't derive any further employment. The only way for Australia to lower the freakish low unemployement rate, which prior to the reccesion was down to 4.2%, would be through microeconomic reform. Removal of the minimum wage would not cause any inflationary pressures and only lower unemployment, all other things equal.

Sorry WTF. Ceteris Paribus was almost 0? I was under the impression that Ceteris Paribus isn't something you quanitify, it was simply a name for an economic condition where all things remain constant so that the effect of a certain change can be pinpointed. So explain what it being 0 means to me.

 

[williamc]

Sorry WTF. Ceteris Paribus was almost 0? I was under the impression that Ceteris Paribus isn't something you quanitify, it was simply a name for an economic condition where all things remain constant so that the effect of a certain change can be pinpointed. So explain what it being 0 means to me.

grammatical error, im half drunk.

cp, the natural rate of unemployment was almost 0.

 

[spyro14]

grammatical error, im half drunk.

cp, the natural rate of unemployment was almost 0.

Thanks for the clarification and honesty

 

[Graney]

I didn't advocate an expansionary fiscal or monetary policy?

I may be being simplistic here, humor me, but when number of available jobs is significantly greater than the number of jobseekers, employment vacancies are high and unemployment is extremely low, what benefit could there possibly be in abolishing the minimum wage?

 

[spyro14]

I didn't advocate an expansionary fiscal or monetary policy?

I may be being simplistic here, humor me, but when number of available jobs is significantly greater than the number of jobseekers, employment vacancies are high and unemployment is extremely low, what benefit could there possibly be in abolishing the minimum wage?

Just to annoy you....Stop advocating Expansionary fiscal and monetary policy and stop being simplistic..

 

[Graney]

I'll cut you.

 

[John0]

A rise in unemployment would make a lowering of the minimum wage appropriate, to help employers in being able to afford to retain their staff. It is a tragedy if someone loses their job, when they would have willingly accepted less pay, only because the government mandated a level of minimum wage above what their employer could afford.

I disagree, lowering the minimum wage isn’t appropriate when unemployment rises, while it does make sense to lower the wage in order for employers in order to retain staff (Im making the assumption that firms cant retain staff due to reduced demand), there’s a bigger picture to consider. By reducing the minimum wage it encourages more of the labour force towards unemployment benefits. By having a reduced minimum wage and a greater proportion of the labour force on unemployment benefits, the income for each worker has drastically decreased(in comparison to maintaining the original minimum wage). By decreasing income, an employee’s consumption of goods & services will decrease, leading to reduced demand for goods & services that firms produce. Firms will have to scale back operations further due to this fall in demand which would be attributed to reducing the minimum wage making the original problem worse.

Removal of the minimum wage would not cause any inflationary pressures and only lower unemployment, all other things equal.

I agree that reducing the minimum wage wouldn’t cause inflationary pressures (if anything cause deflation), but unemployment would rise for the reasons I mention above.

 

[Graney]

By reducing the minimum wage it encourages more of the labour force towards unemployment benefits.

Abolish unemployment benefits, remove the incentive, problem solved.

By decreasing income, an employee’s consumption of goods & services will decrease, leading to reduced demand for goods & services that firms produce. Firms will have to scale back operations further due to this fall in demand which would be attributed to reducing the minimum wage making the original problem worse.

The firms will be able to employ more staff than they would have done otherwise, fueling demand for goods and services.

If wages are cut and firms choose not to employ more staff, what do you think they'll do with their extra money?
They'll either spend it on goods and services, or invest it, either of which will promote employment and consumption.

 

[volition]

This thread is full of misinformation.

The minimum wage is unquestionably a stupid policy:
1. Because it hurts the people who are worst off. People whose labour is not worth the amount of the minimum wage end up just not being employed at all, which is not a favourable result. It is far better for them to at least have a job (even if it doesn't pay as much), and be getting some type of experience or on the job training than just to be jobless.
2. It is an impingement on the freedom to associate and deal with who you like. If I want to go and work for $5/hr and someone is willing to pay me that, I should have the right to do that. No bureaucrat should have the right to barr a person from their right to choose to work in a certain job.
3. The government lacks the information to set the wage at the correct price because it lacks the information provided by the price mechanism. google the economic calculation problem for more info on this.

To put it another way, think about what wages really are. They are merely a price, the price of a person's labour. Minimum wages are retarded for the same reason that price controls are. The minimum wage is popular politically, but economically it is retarded policy.

 

[Graney]

1. Because it hurts the people who are worst off. People whose labour is not worth the amount of the minimum wage end up just not being employed at all, which is not a favourable result. It is far better for them to at least have a job (even if it doesn't pay as much), and be getting some type of experience or on the job training than just to be jobless.

They can always choose to be voluntarily employed, and receive experience that way, while receiving a decent living allowance from unemployment benefits.

An undeniably shit job, taken out of desperation, is worse for the recipient, than to receive free government subsidised welfare, education and training.