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Saturday, December 10, 2005

Shame on You Sue Bradford, Minimum Wage Laws are Cruel

Green MP Sue Bradford's private member's Bill aimed at raising the minimum wage to $12 per hour(Abolition of Age Discrimination Bill) has been drawn in the ballot.

Grace Millar, secretary of the Unite union which is also campaigning to raise the minimum wage says Unite welcomes Sue Bradford's work to end youth rates through a private members Bill.

What do these people hope to achieve with this idiocy? If raising the minimum wage helps anybody at all, or increases real wealth, why not raise it to $100 or $1,000 per hour? Why stop even there?

Its simple economics. Labour is subject to the law of supply and demand like any product or service. If you raise the price of something, people consume less of it.
If you lower the price people will consume more.

Once, second hand BMW's were expensive and rare. Now because of Japanese imports they are cheap and common. Porsches are still expensive and still rare. If you halved the price tomorrow, you'd see a lot more of them

If you artificially raise the price of labour, people (employers) will buy less of it. If you raise the price at the bottom end, employers will simply employ no bottom end labour, replace it with machinery or spend their limited funds on higher end skilled labour.

If you are poorly skilled, young and lacking experience, disabled or lacking language skills, you need the opportunity to get skills and training. You are worth comparativelyly little to an employer as he is going to find it very hard to make a profit on your labour. Therefore if he has to pay you more than you're worth to him, you stay on the scrapheap. Minimum wages keep marginal workers from gaining that first toehold on the ladder to greater skills and higher earnings.

Imagine if the government set a minimum price for tomatoes-say $3 per Kg. Does that mean everybody would pay $3 for crappy substandard tomatoes. No they would only buy good high quality tomatoes worth more than $3, or they would by carrots or courgettes instead. Blemished tomatoes would be fed to pigs instead of going into low income family's shopping baskets.

If there was a minimum price on houses, say $150,000, what would happen to the lower end houses worth less than that. Everybody who owned a low quality home would never sell it and could never afford to buy anything better.

That's how it is with minimum wages. They force low end workers right out of the market. As with every socialist measure it harms those most, who it is designed to help. Sue Bradford, Unite and the CTU should be ashamed of themselves for their out and out cruelty

6 Comments:

Blogger Oswald Bastable said...

We must strive to have everybody earning more than the average wage!

;-)

9:41 AM  
Blogger Lindsay Mitchell said...

Here is some just published research;

www.ncpa.org/newdpd/dpdarticle.php?article_id=2630

How the $8-50 citywide minimum wage affected the Santa Fe labor market

9:54 AM  
Blogger Trevor Loudon said...

I agree Oswald, the only way to achieve a general lift in wage rates is through production efficiency. That is achieved by letting the free market work. Hong Kong once had low wages. They're a lot better now. Same with China, Ireland and a host of other countries who've freed up their economies

4:28 PM  
Blogger Oswald Bastable said...

Actually, my previous post was a piss-take of the lefties that can't comprehend basic economics.

(It is impossible for everyone to earn more than the average)

I think you have interpreted it as meaning we all have to lift our game, which is quite correct!

I believe someone (unknown) actually used that line in election speech!

4:53 PM  
Blogger Waymad said...

T'will give a great boost to the robotics industry. I once heard an executive (long ago, far away) describe supermarket shelf-stackers thus: 'you could put trained monkeys on the supply carts and get less mistakes'.

So an unintended consequence of SB's effort will be to shift the cost comparison between humans of the skill-challenged variety, and non-human operators. And that will have a knock-on effect on union membership.

Hmmm - have we a win-win here?

10:26 AM  
Anonymous Anonymous said...

A minimum wage helps guarantee a living wage for anyone who is a full time worker, without the need for government “top-up” benefits.

The argument that having a minimum wage causes unemployment is very weak. In recent times, people on the minimum wage tend to be working in jobs where the labour demand is fixed. For example, at a fast food restaurant there would be a person on each till, several people cooking and someone cleaning. Adding more labour to capital won’t increase profit levels in this situation. Each position needs to be filled in order to have a fully functioning enterprise. Chances are that if the minimum wage was raised slightly, it would still be profitable for the firm to employ people in each of these positions. The minimum wage would have to be very high before it starts to have a significant effect on unemployment.

10:35 AM  

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