The minimum wage

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medusala said:
But it's ok to demand that others pay more tax?
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Boo hoo, how many actually pay 30%?
Plus super benefits, company car and fuel, perhaps subsides private medical insurance, negative gear a couple of properties, claim expenses of a very expensive accountant. All legitimate of course, so don't blame them but I don't think they are martyrs.
 

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medusala said:
The point is simple. Economic forecasting is typically rubbish.



Sure it is. Treasury, CBO etc are hardly better (and arguably worse due to political interference).



Nope but Montier is worth a read. I used to work at Dresdner when he and Albert Edwards were there. Albert well worth a read too.

I don't quite know how you can say economic models / forecasting are rubbish and be a Keynesian. Seems rather contradictory to me.

Edwards on China

“Unfortunately, the world has seemed so reliant on China as a growth engine, I think this will accentuate the disappointment even more when it hard lands.”

Once the bubble bursts, “Canada might be a lightly done muffin, but Australia will be absolutely toast.”
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I don't think economics models are rubbish. I think bad models are rubbish. Don't confuse bad unconditional forecasts with conditional forecasts of things that are reasonable to predict. The fed /rba stuff isn't to bad when you get into, agree that its harder with cbo/ treasury and you have to read between the lines a bit. For private financial sector specific research anything good seem to well remain out of the public eye and its the bad that gets pushed on the masses. But montier is really just criticising bad practise in the financial industry more than anything, it's not a rebuttal of informed macro policy. Also it is worth noting that he comes at it more from a minskian perspective than an austrian. He views seem developed from the financial instability hypothesis and i'm pretty sure i have seen him cite it a few times, rather than saying the root cause is a problem in natural interest rates like an austrian would.

Again more specifically empirical evidence suggests that its size of recession is a good predictor of intensity of recovery, not size of bubble predicts intensity of downtown. I'm not saying bubbles don't exist but you have the casualty the wrong way around, the size of the bubble isn't a good indicator of how the fall will be. Personally i think that depends more on policy responses.
 
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The debate seems to confuse a few issues being the minimum wage and a minimum income. They are separate issues and until people get their heads around that we will have people locked out of participating in society.MAGGIE, you have mentioned a few examples.

Do we really think locking people out of society is a good thing?


We need to assess minimum wages as some people are not worth $x/hr or they may not be able to work more than 1 hour or may not be able to commit to hours (ie health issues) but not only have something to contribute, they may want to contribute. Why should they be locked out of participating, especially if they want to? Flexible thinking is required!

We also can't have a working poor, so a minimum income (note: income not hourly wage) needs to be guaranteed. This may work like Austudy where social welfare and employment income integrate.

Is the issue that hard?
 
Kidd Vicious said:
If I had to work a job for $12 an hour, I'd just take the dole and at least I could get some fat cash and play xbox all day.

Unless of course, the govt is planning to reduce welfare aswell.
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at least that is a choice

but why lock people out of participating in work and society who make the other choice? Through getting involved enbales better experience, training and opportunities. It may lead to higher wages and happiness by remaining engaged as an important part of society!

why not have a security payment that guarantees a minimum income and the work you gain over the top integrates into a fair overall wage?
 
Power Raid said:
The debate seems to confuse a few issues being the minimum wage and a minimum income. They are separate issues and until people get their heads around that we will have people locked out of participating in society.MAGGIE, you have mentioned a few examples.

Do we really think locking people out of society is a good thing?


We need to assess minimum wages as some people are not worth $x/hr or they may not be able to work more than 1 hour or may not be able to commit to hours (ie health issues) but not only have something to contribute, they may want to contribute. Why should they be locked out of participating, especially if they want to? Flexible thinking is required!

We also can't have a working poor, so a minimum income (note: income not hourly wage) needs to be guaranteed. This may work like Austudy where social welfare and employment income integrate.

Is the issue that hard?
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I have not confused anything. Have been on and seen both sides.
Those that believe the minimum wage is too high, then I would like one of them to set aside what they think that amount should be and try living on it for 3 months.
Whether someone is worth x or y is not really a useful arguement to make as when both go shopping or pay their rent they are both paying the same amount irrespective of what they earn.
 
Power Raid said:
but why lock people out of participating in work and society who make the other choice? Through getting involved enbales better experience, training and opportunities. It may lead to higher wages and happiness by remaining engaged as an important part of society!
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The reality of working hard at min wage jobs and working your way up is simply is myth for many people.
 
Kidd Vicious said:
The reality of working hard at min wage jobs and working your way up is simply is myth for many people.
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your right, for some people they are capped in terms of what they can achieve but does that mean they should not be allowed to participate? Is locking people out of society and punishing them with isolation, because they have limitations, fair?
 

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medusala said:
More money will go to those who are priced out of the labour market.



Another person who doesn't understand the argument.



Another economics thread full of epic misology
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The problem is most people know it's a Uni course but believe that at it's heart economics is no more than voodoo.
A small step up from chicken guts or astrology.
They are not really that far wrong.
 
Pie eyed said:
The problem is most people know it's a Uni course but believe that at it's heart economics is no more than voodoo.
A small step up from chicken guts or astrology.
They are not really that far wrong.
Click to expand...

Don't disagree

Astrology > Keynes.
 
Look, most of the service sector involved in fast food, groceries, shipping etc. and also the manufacturing sector are moving towards further automation.

Jobs are going to be progressively cut by big employers regardless.

Advocating for wage reductions is only about increasing revenue, share prices and bonuses. It will not lead to a lift in employment.

Small businesses might benefit, but the savings would likely be banked in most work places. Costs like high rent, and electricity prices are a much greater burden.
 
Play by Numbers said:
Look, most of the service sector involved in fast food, groceries, shipping etc. and also the manufacturing sector are moving towards further automation.

Jobs are going to be progressively cut by big employers regardless.

Advocating for wage reductions is only about increasing revenue, share prices and bonuses. It will not lead to a lift in employment.

Small businesses might benefit, but the savings would likely be banked in most work places. Costs like high rent, and electricity prices are a much greater burden.
Click to expand...

I definitely hear where you are coming from but there is always more work to be done than their is human resources.

but your outcome will occur unless we change our thinking and how we participate.
 
Power Raid said:
The debate seems to confuse a few issues being the minimum wage and a minimum income.

We need to assess minimum wages as some people are not worth $x/hr or they may not be able to work more than 1 hour or may not be able to commit to hours (ie health issues) but not only have something to contribute, they may want to contribute. Why should they be locked out of participating, especially if they want to? Flexible thinking is required!
Click to expand...

Correct me if I'm wrong, but I read it as minimum income being just that - the minimum amount one needs to keep their head above water. In my case mortgage, utilities, annualised bills, food, petrol etc., say maybe $500 a week.

$500 a week over 40 hours worked is $12.50/hr, ignoring tax and welfare of course.

Let's say minimum wage is $15/hr and my labour is only worth $10/hr to a potential employer. Is the solution I simply work 50 hours a week? This line of thinking has a practical limit, I can't just work 200 hours a week at $2.50/hr for example.

Is the solution I work for $15/hour but only for 27 hours but I work more efficiently? This also has a practical limit.

Is the solution I work for $10/hr for 20 hours at the first job and $15/hr for 20 hours a week at another job which values my labour as such?

I agree flexible thinking is required, but you can never escape the practical constraints of productivity and number of hours worked. The problem in Australia is that people expect a high standard of living relative to their productivity, and it is politically unpalatable to propose that anyone needs to work more/harder/smarter simply to maintain their current lifestyle.

Australia needs downward pressure on costs more than anything. $400,000 shitbox houses, fruit and veg that is grown abundantly selling for $8/kg etc. It's ridiculous.
 
Scotland said:
Correct me if I'm wrong, but I read it as minimum income being just that - the minimum amount one needs to keep their head above water. In my case mortgage, utilities, annualised bills, food, petrol etc., say maybe $500 a week.

$500 a week over 40 hours worked is $12.50/hr, ignoring tax and welfare of course.

Let's say minimum wage is $15/hr and my labour is only worth $10/hr to a potential employer. Is the solution I simply work 50 hours a week? This line of thinking has a practical limit, I can't just work 200 hours a week at $2.50/hr for example.

Is the solution I work for $15/hour but only for 27 hours but I work more efficiently? This also has a practical limit.

Is the solution I work for $10/hr for 20 hours at the first job and $15/hr for 20 hours a week at another job which values my labour as such?

I agree flexible thinking is required, but you can never escape the practical constraints of productivity and number of hours worked. The problem in Australia is that people expect a high standard of living relative to their productivity, and it is politically unpalatable to propose that anyone needs to work more/harder/smarter simply to maintain their current lifestyle.

Australia needs downward pressure on costs more than anything. $400,000 shitbox houses, fruit and veg that is grown abundantly selling for $8/kg etc. It's ridiculous.
Click to expand...

I think more than anything we need better productivity.

We need some entrepreneurial thinking moving into new ways & means of thinking about our social & productive future. New industries? Certainly new ways of 'paying' people. Managers & CEO's on 200-500 times the wages of workforce. Stupid & unsustainable from both an economic & social perspective.

We have too many bloody economists giving us negative tripe about costs. We dont have enough collaborative thought about the future & the industries & jobs that it will give us.

Too many dumb politicians only concerned about their ability to attack the other side & keep/gain power. Too many narrow minded 'economists' who just worry about 'costs' (just in case you missed that point the first time 'round:p) & not enough consideration of 'benefits', especially social benefits.

Just one thing. The most important input into production is people.

Well trained people, investing in people is the best way forward that I can think of. Teaching people to think. that will raise productivity & improve our future national prospects.

In general we need to be less individualistic. We need to think more socially. Just earning more & more is never enough, it is rarely satisfying. Most 'normal' people derive great benefit from social interaction. Teaching this lesson to kids, that to give & to help in the community you live in, has its own reward of social integration & satisfaction.

That doesnt preclude one from earning a good wage & having a good life.


Financial & individualistic Greed is not good. It is not healthy. It is not normal & is not sustainable.

Broad based 'Quality of life' is a better measure of satisfaction the monetary 'standard' of living we keep looking at.
 
Play by Numbers said:
Look, most of the service sector involved in fast food, groceries, shipping etc. and also the manufacturing sector are moving towards further automation.

Jobs are going to be progressively cut by big employers regardless.

Advocating for wage reductions is only about increasing revenue, share prices and bonuses. It will not lead to a lift in employment.

Small businesses might benefit, but the savings would likely be banked in most work places. Costs like high rent, and electricity prices are a much greater burden.
Click to expand...
My niece has a jewellery shop in a small shopping centre, outer suburbs of Melbourne.
Employs one part-timer @$20 per hour for 20 hours, cost $400.
I asked her if they reduced amount paid to say $12 per hour, would she employ another person and would it help?
Her response was that it wouldn't make any difference, she would just take the money as more profit. The problem in her shopping centre is not the wages paid but sales. Had already costed wages in her business expenses based on x amount of sales. Said if business owners are complaining about wages, they hadn't done their homework.
People are not spending.
Asked the same of a friend who has a coffee shop in same shopping centre and the answer is the same.
 
Scotland said:
Correct me if I'm wrong, but I read it as minimum income being just that - the minimum amount one needs to keep their head above water. In my case mortgage, utilities, annualised bills, food, petrol etc., say maybe $500 a week.

$500 a week over 40 hours worked is $12.50/hr, ignoring tax and welfare of course.

Let's say minimum wage is $15/hr and my labour is only worth $10/hr to a potential employer. Is the solution I simply work 50 hours a week? This line of thinking has a practical limit, I can't just work 200 hours a week at $2.50/hr for example.

Is the solution I work for $15/hour but only for 27 hours but I work more efficiently? This also has a practical limit.

Is the solution I work for $10/hr for 20 hours at the first job and $15/hr for 20 hours a week at another job which values my labour as such?

I agree flexible thinking is required, but you can never escape the practical constraints of productivity and number of hours worked. The problem in Australia is that people expect a high standard of living relative to their productivity, and it is politically unpalatable to propose that anyone needs to work more/harder/smarter simply to maintain their current lifestyle.

Australia needs downward pressure on costs more than anything. $400,000 shitbox houses, fruit and veg that is grown abundantly selling for $8/kg etc. It's ridiculous.
Click to expand...

What I am suggesting is there needs to be a better integration of social welfare and wages. The minimum income does not need to come from wages alone. It is difficult to set the policy right but I would point towards Austudy as a framework.

Having a minimum hourly rate is important to avoid having the working poor (yes, I know they are anyway by Australian standards). The issue with addressing this alone is it reduces participation rates, reduces productivity and is quite frankly cruel.

Telling people they can't participate and locking them out of society is one of the cruellest things you can do to someone. This needs to stop and the only way I can see this happening is by integrating social welfare as part of the minimum income.

Wouldn't it be good to have a minimum income, larger participation rates, higher productivity, lower cost of living and everyone feeling the can participate because the barriers to entry have been removed?
 
Maggie5 said:
My niece has a jewellery shop in a small shopping centre, outer suburbs of Melbourne.
Employs one part-timer @$20 per hour for 20 hours, cost $400.
I asked her if they reduced amount paid to say $12 per hour, would she employ another person and would it help?
Her response was that it wouldn't make any difference, she would just take the money as more profit. The problem in her shopping centre is not the wages paid but sales. Had already costed wages in her business expenses based on x amount of sales. Said if business owners are complaining about wages, they hadn't done their homework.
People are not spending.
Asked the same of a friend who has a coffee shop in same shopping centre and the answer is the same.
Click to expand...



Wouldn't you look at the issue based on a curve for businesses with marginal profits? The marginal and loss making business don't enter the market because of risk reward profiles don't make sense thus the jobs don't exist.

By looking at the issue from this prism, you are also ignoring productivity, participation, cost of living and the social benefits of participating.
 
madmug said:
I think more than anything we need better productivity.

We need some entrepreneurial thinking moving into new ways & means of thinking about our social & productive future. New industries? Certainly new ways of 'paying' people. Managers & CEO's on 200-500 times the wages of workforce. Stupid & unsustainable from both an economic & social perspective.

We have too many bloody economists giving us negative tripe about costs. We dont have enough collaborative thought about the future & the industries & jobs that it will give us.

Too many dumb politicians only concerned about their ability to attack the other side & keep/gain power. Too many narrow minded 'economists' who just worry about 'costs' (just in case you missed that point the first time 'round:p) & not enough consideration of 'benefits', especially social benefits.

Just one thing. The most important input into production is people.

Well trained people, investing in people is the best way forward that I can think of. Teaching people to think. that will raise productivity & improve our future national prospects.

In general we need to be less individualistic. We need to think more socially. Just earning more & more is never enough, it is rarely satisfying. Most 'normal' people derive great benefit from social interaction. Teaching this lesson to kids, that to give & to help in the community you live in, has its own reward of social integration & satisfaction.

That doesnt preclude one from earning a good wage & having a good life.


Financial & individualistic Greed is not good. It is not healthy. It is not normal & is not sustainable.

Broad based 'Quality of life' is a better measure of satisfaction the monetary 'standard' of living we keep looking at.
Click to expand...

Good companies don't pay big salaries for CEOs, rather they align the CEOs interests to the business interests. If that results in a large pay then fine but not just for sitting behind a desk.

CEOs are not entrepreneurs who create the opportunity. They are just glorified workers and benefiting from the inefficiencies of accountability that exists in large companies.

I don't begrudge reward for taking personal risk and effort. Nor do I get concerned with salaries of $250k-750k as a CEOs position isn't a job, it becomes a life. but $7m wages are ridiculous unless they bought stock as part of their package and rewarded through the market.
 
Power Raid said:
Wouldn't you look at the issue based on a curve for businesses with marginal profits? The marginal and loss making business don't enter the market because of risk reward profiles don't make sense thus the jobs don't exist.

By looking at the issue from this prism, you are also ignoring productivity, participation, cost of living and the social benefits of participating.
Click to expand...
Consumer confidence is down, people aren't spending money and concerned about the future, not sure what you are on about.
I was addressing the point that a number of people are making in that if you reduce the minimum wage, will increase jobs.
 
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