Minimum wage @ $18 per hour?

[benlav]

Apparently there is going to be a push of some sorts to publisize a minimum wage of $18 per hour. Not only do I genuinely believe this would reduce the labour force - with fewer workers earning more, I also believe it is a waste of time and energy. I'm curious to know whether there is anyone here who believes the opposite? Minus the trolls and abuse, I'd really like to know how they believe it won't break the economy.

[varkk]

You can't break what is already broken. I haven't read up to much on the proposal but I think it is based on a recent report which said that for a family to have a decent life they need to earn $18 for 40 hours of work.

[Arnifix]

Everyone deserves a living wage. Of course, it's pathetic that a minimum wage is even required to force employers to do the right thing, but oh well. People will always fight for the right to impoverish minorities and the poor.

[mattnz]

Well it's just redistributing the wealth to lower social classes isn't it?

It may not break the economy in that you have a larger number of people with more expendable income. These people then spend that money, and if you've got 10 people on $40kpa, they could buy a lot more cheese than one on $400k. Some industries would be winners, others would be losers, but I think that there's this misconception that people who start earning more are going to go chuck the extra money on a bonfire, and everyone will go bankrupt.

But then again it might get broken. I'm not an economist.

[mattnz]

Well it's just redistributing the wealth to lower social classes isn't it?

It may no break the economy in that you have a larger number of people with more expendable income. These people then spend that money, and if you've got 10 people on $40kpa, they could buy a lot more cheese than one on $400k. Some industries would be winners, others would be losers, but I think that there's this misconception that people who start earning more are going to go chuck the extra money on a bonfire, and everyone will go bankrupt.

But then again it might break it. I'm not an economist.

[benlav]

I absolutely believe that everyone is entitled to a living wage, don't get me wrong there. I just don't think the minimum wage is the way to do it. Unemployment is high by historical standards. I believe this will force more out of employment.

[Arnifix]

I absolutely believe that everyone is entitled to a living wage, don't get me wrong there. I just don't think the minimum wage is the way to do it. Unemployment is high by historical standards. I believe this will force more out of employment.

So I googled "minimum wage causes job loss"

http://www.businessforafairminimumwage.org/news/00135/research-shows-minimum-wage-increases-do-not-cause-job-loss

What a surprise that there is plenty of evidence this is bullshit.

From Wikipedia:

Several researchers have conducted statistical meta-analyses of the employment effects of the minimum wage. In 1995, Card and Krueger analyzed 14 earlier time-series studies on minimum wages and concluded that there was clear evidence of publication bias (in favor of studies that found a statistically significant negative employment effect). They point out that later studies, which had more data and lower standard errors, did not show the expected increase in t-statistic (almost all the studies had a t-statistic of about two, just above the level of statistical significance at the .05 level).[79] Though a serious methodological indictment, opponents of the minimum wage largely ignored this issue; as Thomas C. Leonard noted, "The silence is fairly deafening."[80]

In 2005, T.D. Stanley showed that Card and Krueger's results could signify either publication bias or the absence of a minimum wage effect. However, using a different methodology, Stanley concludes that there is evidence of publication bias, and that correction of this bias shows no relationship between the minimum wage and unemployment.[81] In 2008, Hristos Doucouliagos and T.D. Stanley conducted a similar meta-analysis of 64 U.S. studies on dis-employment effects and concluded that Card and Krueger's initial claim of publication bias is still correct. Moreover, they concluded, "Once this publication selection is corrected, little or no evidence of a negative association between minimum wages and employment remains."[82]

In short, raising the minimum wage doesn't cause an impact on employment numbers. Also, it showed me that NZ was the first country in the world to have a minimum wage, set into law over 100 years ago! Way to go us.

[Pyromanik]

TL;DR pretty much every post, someone derpify the explanation of why higher wages means less jobs?

[Arnifix]

TL;DR pretty much every post, someone derpify the explanation of why higher wages means less jobs?

The logic is that business owners cannot afford to pay higher wages or that raising minimum wages will just increase the cost of all products/services.

Which is a crock of shit. An unprofitable enterprise will always be unprofitable. If it is only profitable due to exploiting cheap labour, then it deserves to fail.

[benlav]

Yeah Anri, I have come across that in the past. I guess the bias I have there is that most increases are incremental so it can be built into the books going forward. So my angle is that an increase from say $13 to $18, being almost 40% which be more overwhelming than normal.

[Pyromanik]

The logic is that business owners cannot afford to pay higher wages or that raising minimum wages will just increase the cost of all products/services.

Which is a crock of shit. An unprofitable enterprise will always be unprofitable. If it is only profitable due to exploiting cheap labour, then it deserves to fail.

Gotcha, thank you.

[Lyesalot]

Bullshit that people can't live on the current minimum wage IMO.

[mycoolcar]

It is not a new minimum they are trying to have established. It is a "living wage" which the group promoting it are trying to convince big businesses who "can afford" to pay their staff more, to do so. They are starting by targeting councils, banking institutions, lawyers etc. to have them pay cleaning/reception staff more.

In short, they believe by paying staff who would normally be on minimum wage a "living wage" companies will see benefits such as:
- Lower staff turnover (and so reduced training cost etc)
- A happier work force
- Higher quality of work as a flow on from the happier work force

They back this up with similar things which have been done in London, Vancouver and a few other cities. The amount of this "living wage" has not yet been officially announced by the group trying to promote it (officially they will say tomorrow) but they have said its in the region of $16-$19 per hour.

John Key has already said the govt wont be looking to change minimum wage, but encourages any employers who can afford to pay their staff more to do so.

[nevjmac]

It's not the case of can't live Lyes, it's more to live comfortably

And basically what MCC said. Minimum wage should exist for the younger that are working after school shifts as they generally do not require a wage to live on. But for those that are working 40 hour weeks the minimum wage is not sufficient

[Arnifix]

Yeah Anri, I have come across that in the past. I guess the bias I have there is that most increases are incremental so it can be built into the books going forward. So my angle is that an increase from say $13 to $18, being almost 40% which be more overwhelming than normal.

Where are you getting this very specific $18 figure from? I'm not seeing any recent mentions in the news for it.

I agree with you that a jump of $5 is a big thing to cope with but that's not traditionally how a minimum wage increase is put together. Again, what is your point of reference for this? Can you link us? Is this shit coming from Kiwiblog, because if it is...

Ultimately I think it would be far more sensible for the government to set up a standard method to determine how much the minimum wage should increase by per year, and have it do so, once a year, like clockwork. So 1 January the wage goes up $1.50 and the government announce "If the economy trends where we expect in 1 years time, the wage will go up by x amount." Then 6 months later then can say "Yes, it will go up that amount." or "No, it will go up by y instead because z."

Minimises any shocks to business and ensures that minimum wage earners are fairly compensated and kept ahead of any inflation.

EDIT: Given I've just started reading this living wage thing (hadn't previously seen it in the news, my bad) I should clarify. Where I have refereed to a minimum wage, I am referring to the American concept of the wage which you require to live. The American minimum wage is below the level where many people and families are able to live on it.

[benlav]

Americans also rely massively on tips which is bad. Banks a greedy, I work for one, I know. You decrease profits, your share price drops as dividends and growth slows. Bank bosses get paid less via incentives and bonuses. Having been dissillusioned over the past 5 years, I can't see them playing ball.

[Xenolightning]

It's not the case of can't live Lyes, it's more to live comfortably

And basically what MCC said. Minimum wage should exist for the younger that are working after school shifts as they generally do not require a wage to live on. But for those that are working 40 hour weeks the minimum wage is not sufficient

You're an apprentice, which means you get less than minimum, could you live off your wage if you had to? Ignoring any dependants for this scenario.

I believe if you can't afford to have kids then you shouldn't have them.

[Kayne]

You're an apprentice, which means you get less than minimum, could you live off your wage if you had to? Ignoring any dependants for this scenario.

I believe if you can't afford to have kids then you shouldn't have them.

I'm on $12.20 an hour, 2nd year apprentice. I'll be getting about 13$ around june.

I heard they're giving a 2k incentive to all new apprentices... Shit why can't they divide 2k into my wages. Unlucky that I missed out

Although there is a 1st year who's 38, on 10$ an hour, and some how pays child support and is living with his missus.

I have no clue how people do it.

[Tiwaking!]

EDIT: Given I've just started reading this living wage thing (hadn't previously seen it in the news, my bad) I should clarify. Where I have refereed to a minimum wage, I am referring to the American concept of the wage which you require to live. The American minimum wage is below the level where many people and families are able to live on it.

America has a minimum wage?

Why not hire illegal immigrants? They work harder for much less and instead of firing them, you deport them back to their country.

[toofast]

TL;DR pretty much every post, someone derpify the explanation of why higher wages means less jobs?

total money/minimum wage = number of jobs.

[Arnifix]

America has a minimum wage?

Why not hire illegal immigrants? They work harder for much less and instead of firing them, you deport them back to their country.

According to the Wikipedia, technically yes.

"US$7.25 per hour under U.S. Federal law (or 2.13 for employees who receive tips, known as the tipped minimum wage), $9.04 in the U.S. state of Washington."

But as you say, paying an "illegal immigrant" is much cheaper. Speaking of which would you care to earn some shiny trinkets, native man?

[Ninja]

IMHO this shit dont work

lets look at it like this

min wage gets upped >
all other wages have to go up to match it i.e. people who earn more than minimum, the qualified and skilled workers who should be payed more than minimum. >
so now truck drivers need more money, and train drivers and nurses so on... >
The prices for all services go up, food goes up cause its more expensive to transport it (and supermarkets now have 30% higher wage cost)
 supermarkets is just one example, doctors costs would go up cause they would have to pay their nurses and anesthetists more.
i cant be bothered typing more but i think you get the idea

basically as prices go up, everyone ends up in the same boat again, with not enough money to get by

[Arnifix]

IMHO this shit dont work

lets look at it like this

min wage gets upped >
all other wages have to go up to match it i.e. people who earn more than minimum, the qualified and skilled workers who should be payed more than minimum. >
so now truck drivers need more money, and train drivers and nurses so on... >
The prices for all services go up, food goes up cause its more expensive to transport it (and supermarkets now have 30% higher wage cost)
 supermarkets is just one example, doctors costs would go up cause they would have to pay their nurses and anesthetists more.
i cant be bothered typing more but i think you get the idea

basically as prices go up, everyone ends up in the same boat again, with not enough money to get by

Sorry, math disagrees with you. This is one of the reasons this is an issue, the answer seems, using napkin math, to have an obvious solution. That's why it was widely believed among economists. However, with modern historical records, this is being proven wrong.

Googling "minimum wage increase causes inflation" shows multiple links stating that either a causative link cannot be established (ie, there is not enough evidence that proves that a raise in minimum wage causes inflation) or that shows the opposite, high inflation requires minimum wage increases if a countries minimum wage earners are to remain financially solvent.

Quoting Nguyen Viet Cuong from the National Economics University, Hanoi, Vietnam. http://mpra.ub.uni-muenchen.de/36750/1/Impact_of_MW_increases_on_CPI_in_Vietnam.pdf

"It is often argued that minimum wage increases can lead to increased inflation. In Vietnam, there have been 9 increases of the minimum wage since the year 1993. The real minimum wage increased by around 118% during the period 1994-2009. The CPI increased by 245% during this period. Increased minimum wages are sometimes to blame for an increase in the prices of commodities and services in Vietnam. Yet, there has been no quantitative analysis of the impact of minimum wage increases on inflation in Vietnam. This paper is the first attempt to examine the impact of the minimum wage increases on inflation during the period 1994-2008 using OLS regressions. Inflation is measured by the monthly overall CPI and monthly food CPI. It is found that the minimum wage increases did not increase the overall and food CPIs. Instead, the point estimates of both short-run and long-run effects of the minimum wage increases on these CPIs are negative. However, these estimates are not statistically significant at the 5% level.

It should be noted that the minimum wage increases often took place one or two months before the Vietnamese New Year festivals. Thus, observed increases in monthly inflation after the minimum wage increases resulted from increased consumption demand during the New Year festivals, not from the minimum wage increases. There are two possible explanations for insignificant impacts of minimum wage increases on inflation. Firstly, the number of laborers who are affected by minimum wage increases might be small. According to Nguyen (2009), there are around 10% of workers who have low-wage and can be affected by minimum wage increases. In addition, around 60% of laborers are self-employed and working for other households. These groups are not influenced by minimum wage increases. Secondly, the number of enterprises affected by minimum wage increases, and under market competition these enterprises are unable to pass through to prices the higher costs due minimum wage increases. It implies that the production unit cost as well as the aggregate demand is not increased. As a result, there are no significant impacts of minimum wage increases on inflation. Analysis of channels through which the minimum wage increases impinge on inflation requires different data sets such as enterprise surveys and household surveys, thus it is beyond the scope of the paper, but certainly important for future research.

There are two main policy implications for Vietnam deriving from this study. Firstly, the minimum wages should be increased to compensate wage workers for real wage reduction caused by inflation in Vietnam. The annual growth rate of real minimum wages is still lower than that of GDP. In the most recent increase of the minimum wage in May 2009, although the nominal minimum wage increased by 20%, the real one decreased by 3% (due to high inflation in 2008). Secondly, previous increases in minimum wages are found not to lead to high inflation. So a reasonable increase in minimum wages is a result of inflation, not a cause of inflation."

[Apostrophe Spacemonkey]

IMHO this shit dont work

lets look at it like this

min wage gets upped >
all other wages have to go up to match it i.e. people who earn more than minimum, the qualified and skilled workers who should be payed more than minimum. >
so now truck drivers need more money, and train drivers and nurses so on... >
The prices for all services go up, food goes up cause its more expensive to transport it (and supermarkets now have 30% higher wage cost)
 supermarkets is just one example, doctors costs would go up cause they would have to pay their nurses and anesthetists more.
i cant be bothered typing more but i think you get the idea

basically as prices go up, everyone ends up in the same boat again, with not enough money to get by

Agree.

Artificially raising the wage by rising the minimum wage doesn't help if the economy is not there to support it.

I would imagine most supermarket workers are on the minimum wage.

[Pyromanik]

It's not about upping costs, it's about reducing profits.

Greedy motherfuckers don't want to do that, so that's why we have minimum wage in the first place.

By reducing profits one can afford better/more staff and in turn grow their business for increased profits.
But it's always the short game people play.