Minimum Wage

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A couple of years ago, the government of Alberta (the province in which I live) was getting a lot of criticism because it had the lowest minimum wage in Canada, at $5.90 an hour. So they finally raised it to $7.00 an hour. Net effect: zero. Less than 1% of the working population were making minimum wage, and most of those were part-time high-school students. Meanwhile, McDonald's routinely starts people at $9 or $10 an hour; companies have trouble getting staff because there are more jobs than there are people to fill them, so finding someone offering less than $10 an hour is a rarity.

Well, most economic questions are very complex to some extent and many are divisive as well among economists. Maybe I undervalued it there when I said not very complex. I dunno.

Value will fluctuate as markets change. There is perhaps some question on the minimum wage and economic stability I suppose as some people do think that minimum wages make economies more stable by dealing with issues of purchasing power as low-wage workers are bigger spenders. Others think that it won't hurt the economy too much in these terms as the money that would have gone to those workers would then go to other processes and problems and the economy will continue on from that. Some would argue that the market would continue without intervention and that it would do better. Others would argue that interventions in many aspects are required. I'd say that a rather large number of economists would say that the fed is acceptable and necessary but some attack that assertion as well. Really though, I don't think that the current argument requires any thought about the non-existence of the fed so we can assume that if we start having demand go down then the fed will pump currency into the economy as needed.

Last edited by Awesomelyglorious on 14 Jan 2007, 11:04 pm, edited 1 time in total.

Interesting, would you argue that minimum wages are not required then? What you are providing is an example of low-skilled labor wages being capable of rising independently of legislation based upon supply and demand which is usually an argument made by the side opposed to minimum wages, as well you give a good reason for people of low skill to move to Alberta.

The state does not define how much a job is worth - the employer and employee will agree. Minimum wage is a crock and as a Libertarian, it must be removed.

As well, the reason it even exists - it doesnt even do what its supposed to do. Minimum wage should be enough to live on and it clearly is not hence the reason for this thread, I'm assuming

Next time you get a job that pays minimum, think of this:
"Wow, super, I'm getting paid as low as LEGALLY possible"

EDIT: I hate economics and working for 'money.' I think money taints productivity and greed overcomes. I think society WOULD be better if everyone focused on their specialities rather then just working on what they get paid for (I use professional sports as a reference as the quality has gone down since the contract amounts have increased.

Here it is. I just moved to Calgary this past Summer - back in Ontario - Minimum wages are handed out in almost every company. There, its the complete opposite. Since there are not a lot of jobs available, many companies use minimum wage. Since one does, others do - there is no competition in THAT market (employees are screwed).

The point of 'pay' is like a contract in the NHL or professional sports team. If you dont get paid enough, you can move to another city and play for them and get paid. However, when you have a general pay, instituted by the 'Government' then that competition is gone and working at Music World or McDonalds doesnt matter anymore, the pay is the exact same.

You may lose quality workers this way. Some people may WANT to work at Music World and, if paid a dollar more, may end up providing an employer more bang for their buck. Minimum wage removes that competition and what you get is a pile of kids and uneducated people, barely making anything, but more importantly, not giving a damn about the company. We all know the quality and care people have with their jobs - no one likes them, they hate them

But this obsession people have with education creates the problem, doesn't it? Employers use academic qualifications to select applicants not necessarily because the qualifications say the person is able to do the job, but because those qualifications can differentiate between the abilities of applicants. If you educate the population as a whole by a given amount over that which has been done previously, then you're doing nothing to aid an individual get a position, are you? You're just making life hell for everyone and putting those who don't want to be educated for the sake of it at a disadvantage.


The basic requirement is that people are educated to the minimum standard required to do the the type of work they're suited to. So, there will always be an incentive. For someone with an IQ of 80 that minimum requirement might be a good grounding in basic mathematics and the use of the English language (in a UK context); it would include some general education of a geographical and historical nature, too. That can quite easily be accomodated by education upto the age of 15 or 16. For someone with an IQ of 130 then it's quite reasonable to expect they may continue full time education into their midtwenties as they have the capacity to benefit from that. If a country is to maximise its economic potential from the assets it has then it needs to be realistic as to a person's ability, and channel resources (finance) to where they can be best utilised. That means, for example, sending smart people (from all socio-economic backgrounds) to well-funded universities, and training those who aren't as smart (or who simply prefer manual work) to the minimum standard required to enter employment they're suited to. It doesn't mean sending 50% of 18 year olds to second-rate universities where if they're not up to scratch they can always get a degree in some non-subject like flower arranging. And of course, if any person wants to continue education beyond the basic minimums I've outlined, them that should be for them, or their employers, to finance.

Keep in mind that I'm saying that as someone from the UK, and your systems are slightly different to ours, but you should get the gist of what I mean.


I don't see the need for that. Most people are just concerned with their pay at the end of the week, and I really don't blame them. It's not a justification for additional education.


It's true, there needs to be some pay differential between occupations of differing responsibility or skill, the problem is finding the right balance. The US model that creates an underclass is not acceptable ethically speaking, IMO.

ascan,

You're right, employers do use education as a way to differentiate between abilities of applicants. And I think that for many highly-skilled professions, this is legitimate, because of how people get trained in these professions in the first place. For example, let's say that I wanted to be a synthetic organic chemist, making new polymers. If I did not show on my resume that I had at least college-level education in chemistry, then I would have a more difficult time explaining to employers why they should hire me. Practically speaking, it's significantly harder to get training in synthetic organic chemistry without college-level chemistry, because there's no other way to get that training. I'd have to know a minimum level of chemical theory to do my job, and that requires education.

That being said, keep in mind that employers do not use just academic qualifications in selecting employees from their applicant pool. They also look at work experience, which is in itself a form of education/training. Both education and experience combined make up the productive employee, and I think they go hand in hand in producing a competitive worker. Education gives the bare minimum theoretical skills to do the job; experience takes that education and gives it real-world, practical experience. There's only so much anybody can do with one without the other. Without education, it would be impossible for a person to progress beyond a certain point in their field, not because there is some kind of arbitrary standard for those jobs, but because the person simply would not have the understanding needed to do the job competently. Without practical experience, the person would have little understanding of the full meaning of what they learned in school, including what things can go wrong even when theory dictates that things should work perfectly.

I understand your statement that people be educated to the standard required to do the work they want to do. But in childhood and teenage years, how do you even know what different types of work exist out there, without somehow hearing or getting exposed to it? Even making the person aware of the existence of advanced-training work is education. You're right, if people don't want to do a certain type of work, then they should not be forced to take further classes in it. However, I think it would be a mistake and very limiting of people not to require very basic classes in those fields. I would never have known about chemistry if I were not required to take it in high school, then my career path would have been totally different. I would have been stuck in my own little world. And within the scope of AS, this would have been very dangerous since we Aspies have a tendency to shy away from anything new and foreign. Additionally, not requiring such basic classes in high school puts more of an emphasis on a teenager's own desires as far as career development is concerned. I would argue that doing as such would be detrimental, I mean, most teenagers frankly don't fully understand what they're doing, because they lack the life experience to evaluate their own actions. That definitely included me when I was younger.

By the way, I am not making the argument that a person who is not as smart or who prefers manual work should go to university. When I say "get a rounded education," I mean at the high school level. University is the place to learn theory in a wide variety of fields requiring advanced training, and it's not as significant a qualification for jobs that do not require it. However, if I saw on a resume that somebody had a college degree and somebody else didn't, my initial thought would be that the person with the college degree has a more developed sense of perspective and well-roundedness (I'm talking about liberal arts educations here of course) than the person without the degree. Nonetheless this would be something I would need to verify in the applicant interview process. Any person with some manual dexterity and minimal level of competence can flip burgers at McDonald's (not to belittle anybody who does that as a profession, it's a meaningful job), but not just any person can do so at increased efficiency. Ever get frustrated by perceived lack of competence when waiting for food at the fast food joint? That's what I mean. I would argue that more education results in higher productivity across the board, regardless of the vocation. Sure, maybe some vocations will have much bigger boosts in productivity due to education, but there will be boosts nonetheless. Those people who don't want to be educated don't have to be, but those people should not complain if employers want to improve their own productivity by hiring people capable of being more productive.

I get the overall sense in your post that we are thinking of education as doing slightly different things, and I think that's the source of the disagreement... like when you said that people could get a degree in flower arranging.... because I agree with you, there shouldn't be a college degree in that!

Yeah, I don't blame people who are just concerned about their pay at the end of the week too, but if they have no knowledge about life outside of their daily lives, then they really should keep quiet about it. Problem is, they don't. They complain that they don't like their existing situation, instead of getting the qualifications (education and experience) to proceed further in their field. Even worse of a problem is, they vote on issues that they don't understand. But it's not a fault of the system. It's the fault of people who don't understand or don't want to do what it takes to move further in their field. I'm not saying that they are less of a person to do things that way, just saying that as the system exists, people do need to stay competitive if they want to be satisfied with their positions.

Yeah, it's difficult finding the right balance, and I don't think that the US model quite does it well, either. Gross overpay at the high end, and stories of the "golden parachute" are appalling, to say the least. But there has to be something to prevent the lull in productivity which happens when people no longer need to compete. Hence, the right balance. Does minimum wage help to strike that balance? I don't know, I'd have to think about it more.

Another issue to consider is to think on what groups receive the minimum wage and to ask yourself if it is the best way to target the groups we want to support while not working on behalf of those that we don't. After all, do we want the 17 year old who got his first job at Burger King to necessarily receive a living wage or would that intervention to force that lead to waste? As well, would the minimum wage hurt employment levels among teenagers and other highly unskilled workers in a manner that could be more costly for society? Finally, if the costs are shifted on consumers for the minimum wage then would minimum wage increases help the minimum wage receivers as much as we would hope necessarily considering that wal-mart wage earners will be paying a part of their own salary? As well, what needs to be looked at is whether or not workers are being exploited in the first place, AKA, do they have enough power on their own or do imperfections in the labor market hurt them exceptionally? The whole issue of high wages at the top and low at the bottom has a lot to do with the changing nature of the market, there is high competition for top-performers at the top to some extent and a greater need for skilled labor for the population, although possible corruption as well in certain aspects, but at the bottom there is a decreasing number of jobs due to outsourcing and technology so are stagnant and declining wages for these low-skilled workers natural? Pretty much, what must be looked at is the entire picture and whether or not it is a good policy or even the best policy. It is a good thinking activity.

Interesting post, Awesome, and I think that a kid at Burger King shouldnt make a living of his job. Having said that, the removal of minimum wage may mean that kid gets paid less. However, if Burger King were to keep lowering its wages, since there is no minimum, those 17 year olds may just get a job elsewhere leaving Burger King employee'less,' so to speak.

Now, as for decreasing jobs - its a trend that will only continue like it has. Blacksmiths are no longer 'required.' This trend will continue and DOES continue with every invention or discovery to make our lives easier.

Whats left? What if all the becomes left are the top jobs? Well, one idea I've tossed around is for everyone to become utterly useless (like they are). Instead of cutting your own grass, someone else does it. Although, thinking of this, if everyone has more time then they could all just cut their own and state complete 'independence.'

All I know is the most business' like to report how many 'thousands' of people they have laid off but I rarely see a company hiring that large number. What will that lead to? What if society doesn't have enough jobs left? More Doctors? More philosophers? More psychologist? More of everything? How will society respond?

Where will society lead if all we do is make everything automatic?

Those are all great questions, Awesomelyglorious. Definitely worth thinking about!

If there is a reduction in the number of low-skilled jobs, then workers would need to obtain training to qualify for higher-skilled positions. Otherwise they would be unemployed and unable to make ends meet. If too many people decide to obtain training, such that there are not enough people interested in filling those low-skilled jobs, then companies would raise the salary/wage of those positions to attract employees to fill those positions. So perhaps the libertarian view of letting the market dictate salaries and wages is best (i.e. eliminating the minimum wage), at least for those who are actually able to work. If there were a tremendous need to have people working at Burger King, then why not have a 17-year-old continue to work there, and have an enticing market-determined wage to boot? And if there is no market need for the Burger King worker, then whose responsibility is it that the 17-year-old move onto a different job? How does the 17-year-old know to do this without knowing the system? How does he even know what other jobs are out there, unless he is taught the options?

The thing is, if a person needs to get education to obtain a different job, my personal belief is that there should not be an economic obstacle towards getting such training. Education can be difficult enough as it is; not being able to afford such training because the current job paid poorly makes lower-paying jobs a bit of a trap, and makes it more difficult for people to float where they should go in a free-market system.

I think that part of the reason that low-skilled jobs have historically paid so poorly, is because people are born unskilled, and not everybody gets training. If somebody doesn't like his wage, then quit and I could find somebody else to take the job, basically. Stuff like job outsourcing falls under that category too. Even fewer people get advanced training, leading to a large number of people at the bottom in a skillset sense, and fewer people at the top. Moreover people with advanced training could always perform the lower-skilled job, but lower-skilled people could not do advanced-skilled jobs. It's only with organizations such as labor unions that have buoyed salaries for low-skilled jobs.

With regard to outsourcing: in a free-market situation, yeah I think it is normal for the wages of the low-skilled outsourced jobs to plummet. There's an excess of unemployed and fewer jobs available for those low-skilled workers, so workers would be desperate for any kind of money they are qualified for. Of course, people would have to understand that the other option for these people would be to obtain training for a different job, something that a lot of these people do not do. Is it because they simply do not want to change profession, or is it because they simply do not know that the option exists?? This is actually not a trivial question at all; ignorance leads to people thinking that they have no choice, when they in fact do. However, there's a limit to how far outsourcing will go. Eventually there will be more jobs than interested workers in places like India and China, and then labor in those places would become more expensive. Consequently outsourcing would decline and there would be a return of jobs to the United States, or the UK, etc.. That's the theory, anyway.

Some people might try to counterargue an ethical standard against the free-market situation. When wages are driven down, then there is a real possibility of some human suffering. Moreover, those people who are not able to be productive through no fault of their own will suffer too. Whose responsibility is it to reduce such suffering, and to take care of those people who can't work? Companies, or the government? And if it's the government's responsibility to take care of its own citizens, then how can the government protect the very poor from suffering so much? Is this where the minimum wage plays a role? If not, what would be a more effective way for the government to do this task?

Would having more time lead them to want to cut their own grass? It reduces the cost somewhat of course, but it still does not change the fact that lawn cutting is generally undesirable.
True, but then again we have also seen that the unemployment rate tends to hang around the same percent. It perhaps is possible that jobs will die off, I tend to doubt that though because I don't think that humanity will progress beyond wanting more of something or higher quality. We could use more doctors, if we have a cultural change then philosophy could be important, considering trends in schooling child psychology is becoming popular. In my mind so long as man wants, which man is likely to always do because of how our perceptions change, jobs will tend to exist.
Then we will have left the scarcity nature of existence. The major question is whether or not this will be desirable or practical given the changing nature of the world and the fact that automation tends to be very expensive and not always worth that cost. I tend to doubt that jobs requiring mobility will be that removable unless we force them so, and that jobs requiring intelligence will be that replaceable.
The first part is true to some extent, although of course more low-skilled jobs could possibly be created if lower pay was permissable based upon the amount of value that such a job would provide to employers. Too many people are not likely to receive training though considering that training is very costly(in both time and money) and not all people would necessarily be receptive to training.
Some argue so to some extent, others don't. I think that economist J. K. Galbraith actually believed that we would be better off with government setting prices for us, although now many would argue otherwise. Some do claim that the minimum wage is an area where good intentions go awry though, while others argue that minimum wages are a good thing.

Well, if there is no market need for that worker then he won't get a job and instead will look for another one. It typically ends up being his responsibility to look for a job and the responsibility of worker needing people to put out the information to guide this person's actions. The 17-year-old may not know everything, we sadly enough, do not live in a world of perfect information, hopefully though our 17-year-old is clever enough, lucky enough, or knows people that can give him the information to go job hunting although really such isn't a hard bit to figure out. The real difficulty in options is not the options that he can find that all of his friends know about, teenagers can often get jobs easily enough, I remember that many of my friends back in high school had jobs, but rather the problem is the opportunities that require information that may not be so knowable such as vocational schools and college, etc. This might mean some outreach to those of lower socioeconomic background and such to make sure that those with talent use it.

Without an economic obstacle how can he really value that training for what it deserves? Now of course, this is not to be callous in any regard, but the training is an investment made by that person and it does utilize resources that could have gone to any number of other things, not only that but not all training is equal in terms of how it serves the rest of society. It may be argued that loan programs are necessary to deal with this issue but complete subsidies might lead to problems with the trade-off between price and quality, which still must be made and is a current issue we have today. People pick higher quality and this leads to higher tuitions and problems like that, should we cap quality in order to allow for our social program or should we allow individuals to make more of their own trade-offs? This to ends up being a question.

That undoubtedly has truth to it. These people are easily replaceable and things like that. The question leading from there is whether or not labor unions are good or bad. Some would say that they are good as they help people at the bottom, they help deal with certain market imperfections, and that they stop some corporate evils being inflicted and balance corporate power, others would argue that labor unions are a market imperfection, that they artificially raise the prices of certain types of labor and that they ultimately harm the overall economy.

Of course it is normal for wages to plummet. It is not a trivial question, as we cannot assume that man knows everything and as such it might help if he were educated about his options. India and China have 1 billion people each, they are not going to run out of human resources soon considering that they have more people there than that of the nations that they sell to.

Some do argue with ethics against the free-market situation, others argue with ethics for. It then falls down to the individual's sense of ethics. Is it a company's duty, is it a government's duty, is it the duty of whomever sees the problem? Yeah, that is a big part of the minimum wage debate, some argue that other governmental programs that are not the minimum wage would be better, I know that Milton Friedman argued for his idea of a Negative Income Tax, others would say that the minimum wage is acceptable, others would say that all welfare and intervention solutions really have their shortcomings. It really depends.

When I was in high school in Ontario, there was a provincial election. At the time, the minimum wage was something like $2.00 an hour for students (anyone working part-time while going to school who was not yet 18), and somewhere around $3.00 for adults. (Hey, this was 30 years ago, after all.) During the election, the NDP (a socialist party) campaigned that they would raise the minimum wage to $4.00 an hour for everybody. My classmates who had part-time jobs were all against the idea, saying that if their employer suddenly had to double their pay, most of them would lose their jobs.

The economic obstacle does not give the training value. The training's value comes from what the student/future worker can get in terms of increased job prospects.

As far as the tradeoff between price and quality, this assumes that tuition/education costs are provided entirely by the students. If it is public education, then the operational costs of education would come from the government. It would be an entirely different question altogether where this money from the government would come from.

The economic obstacle is a part of the nature of the training, it plays a part in its valuation of costs and benefits. Well the thing is that training and education do not always mean good uses of resources, I could go for a PhD in Russian American Literature, does society gain from that? Nothing, I might derive some pleasure from that but that does not mean that my preference for Russian American Literature should be subsidized though. The economic obstacle allows one to perform rational calculations of resources and gives reason to avoid waste. If there were free training classes on Java programming I might choose to take one but never use it once in my life and the net gain to society from those like me would be 0 yet the costs of offering would still be high. This is not rejecting the use of some subsidization for lower income groups in the name of mobility, however, the question still comes in on the fact that if people don't deal with the full value then they won't mind wasting it as much on relatively useless endeavors. Of course, this may be part of an ideological bias here, I just tend to be distrusting of complete college subsidization as I think that it will create a new slew of problems and will have its own issues that may be worse than the ones already had.

Well, the big thing is that the current academic system in the US has free competition and the elimination of that system would probably not be doable. If we decided to do that though, then what would most likely happen though is that politicians would pick price and this would cause issues with student choices between higher and lower quality schools based upon their beliefs on college and other variables. Really though, I am suspicious of shifting away from a US higher education policy because even though there is high cost, we are noted for having many of the highest quality schools as well.

Oh I see what you mean now. I think I am talking about something a bit different from what you are referring to. Yeah there is a cost associated with offering the service (education), but the obstacle that I am referring to is that of direct tuition expense that must be paid by the student specifically. Either the cost has to be paid by the student, the government, or somebody else, that is true.


The question this begs is whether the more expensive schools really do give the highest quality post-secondary educations. I went to UC Berkeley as an undergrad, and that school is widely known for its academic programs, here in the US and internationally. However its California-resident tuition (the economic obstacle as far as the student is concerned) is much lower than those of most private schools. Yes, the government and other organizations foot the rest of the bill for the tuition at this school and at other schools. However, I wonder if the US system really has the most efficient way of converting funds invested into education quality and quantity. That I could not answer without having a better sense of how much other countries invest in their education systems.

Have you seen how different other countries' educational systems can be? It's really quite fascinating to me. I always like to give the example of Norway because I'm more familiar with it, plus it being high-welfare, it gives a good comparison to the US. Public education from grade school through university is completely free in Norway, at least to the student, except that they have to pay for their own books (and from what I've seen, these can actually be expensive!). Also from looking at the university admissions criteria (www.samordnaopptak.no), it seems incredibly easy to be admitted to the program of choice. Thus, it would seem relatively easy and straightforward for any prospective student to gain the training he or she wanted. However, most students opt not to go to college because they don't see a point to it. The quality of secondary education is bad (teachers frequently not appearing in classes at the videregående or senior high school level, for example), entering vocational training is highly encouraged regardless of actual jobs available, and since welfare/unemployment payouts/etc. is high, then there's much less incentive towards seeking different professions. There are limited number of spots available for secondary school students to take college-prep classes (generell studiekompetanse), so there is a very early bottleneck for highly-skilled labor. Videregående level education (grades 11-13) is also optional, not compulsory, but unfortunately I don't have the numbers of students that choose to leave school after grade 10. I wonder if the state pays for those students too if they can't find work. It's almost like the government actively discourages advanced-skilled labor. The only way, really, that Norway can even sustain its current level of welfare is from the extraordinarily high tax rate (around 50%), and the money saved up by the government by the sale of oil and natural gas, thanks to Statoil. On the surface it's a peaceful country with a supposed tradition of equality and democratic socialism, but underneath the society and economic structure are horribly unstable. The society and economy, workforce and industries are all not diverse, totally contributing to the instability. It's kind of sad, perhaps it's economic and social progress that the country sacrifices in order to minimize poverty, and subsequently, crime.

With respect to quality of post-secondary education, yeah it's definitely interesting that American universities are extremely highly regarded. So much, that at least in the sciences American companies prefer hiring graduates from American universities than from European universities (and I mean beyond the usual work visa stuff).

I think machines should take over our work force personally, this way people can devote more time to personal growth, mentally, physically, spiritually, recreationally, or whatever they choose to do.
I think you could find a better alternative to money and our current mainstream governments here in this link:

http://www.technocracy.ca/