I have a rebuttal:
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Check out Andrew Coyne article in todays Nat'l. Post on minimum wage - he's commenting on Ont. boosting .25 per hour to $8.00 in 2007.- He' right!
Posted at 2007-01-10 10:28:23 [PermaLink]No, Adrian - what you have is not a rebuttal, it is a plea for an increase in the minimum wage based on the position that the increase is less than the rate of inflation and the implicit assertion that the minimum wage should increase at a rate approximating inflation. A rebuttal would require you to consider the evidence in the original piece: the expected impact on employment levels in the minimum wage segment of the working population. A rebuttal would require you to produce a counter-observation; a study or historical observation that indicated no net loss of employment in that group following an increase in the minimum wage, or an analysis of the study cited that showed methodological errors or confounding factors that invalidate the conclusions reached. A rebuttal would require you , if you were unable to demonstrate the falsity of Jon N's conclusion, to accept that conclusion, but to indicate why reduced employment in this wage group is an acceptable consequence of a minimum wage increase, or how the aggregate welfare will be increased despite the lower level of employment.
You have done none of these things. What you have advanced is not a rebuttal, but at best a (weak) counter argument.
I am not convinced that 45 cents will break any banks. Is that a more concise answer?
Posted at 2007-01-10 16:12:01 [PermaLink]That's nice, Adrian. At the same time, someone whose opinions actually *count* in this discussion is convinced otherwise:
"He estimates that for every 10% increase in the minimum wage, there is a 3% increase in the unemployment rate, mostly impacting youth employment."
A 45 increase is slightly over 6%, and according to Gunderson, that translates into about a 2% increase in unemployment. Faced with that analysis you can:
> Identify a reason that Gunderson's figure is wrong - poor methodology, failure to control for confounding variables, different labour market structure, etc, or cite contrary analyses that do the same thing.
> Accept his conclusion, but explain that a 2% increase in unemployment is still an acceptable trade-off in exchange for the increase in wages to those who remain employed at the (new, higher) minimum wage. You could go through the door Jon N left open, and suggest "government programs" of whatever kind that would mitigate this impact on those who are left unemployed, although that leaves you in the position of defending the assumption that the posited program would actually achieve the ends you set out for it.
> Assert that he is simply wrong, based on unstated reasons with no evident research to back up the claim except your own lack of conviction that it is correct.
> Accept that the actual impact of the increase in minimum wage on the people you are purporting to assist is unimportant, and that other factors should predominate in the decision, such as matching minimum wage increases to the rate of general inflation, or (although it is not clear in your "rebuttal") that increasing the minimum wage is a way to "stick it to the Man" in the person of "these poor corporate HR executives."
The first option would be a good rebuttal, the second would be a possible counter-argument, the third is stamping your feet and waving your hands, and the fourth is simply running away from rational discussion of policy in favour of emotional appeal. So far, you have presented a mix of option three and four.
I'll consider your points and consider replying.
For now, let me say that I'm not altogether impressed or inspired by your patronizing tone. You aren't my Polysci teacher and I aint in school any more...
Adrian:
My apologies. Although I did not intend to be, on re-reading my posts I was condescending. Let me say that I am open to any rebuttal to Jon N's point that you care to make, and I look forward to discussing it further.
I'm always surprised when people who vaunt the strengths of a free enterprise systeme suddenly invoke the dangerous repercussions an increase, however slight, in the minimum wage presents to our "robust" private sector.
45 friggin' cents is less than chump-change. An employer whose business can't absorb a 45 cent increase in wages should really find another line of work.
So a few potential jobs will have to be surpressed to pay for this *extravagance*?
That could be good news for the country, but bad news for a handful of cheap-skates
The fewer the available cheap-labour jobs, the less attractive the country becomes for oportunistic illegals.
Do rural Nova Scotians really want more "refugees" washing up their shores in the middle of the night?
One other thing, by limiting the availability of cheap-labour, and by making even that cheap-labout more expensive, employers will be more apt to invest in automation and new technologies. Endless supplies of cheap third-world hands, while profitable in the short term, can become a kind of addiction stiffling creativity and innovation over the long run.
You want cheap-labour? You want the lowest common wage denominator as measuring-stick, as standard?
Then move your dog-and-pony show to mainland China.
You see, North America could forgo minimum wage increases for the next two centuries, yet still not be wage competitive with East Asia.
45 cents.....
The "thin blue line" between boisterous prosperity and devastating bankruptcy?
John - that is a valid response to the issue. If I may summarize, it's "tough shit if you're unemployed (or unemployable) because the minimum wage is higher than the value of your marginal productivity." While *I* can happily live with that, I doubt that most of those arguing for an increase in the minimum wage can.
I don't think artificially reducing the number of low-wage jobs is the answer, though. While it will lead to greater capital investment so the lowest-wage (ie minimum wage) worker can produce enough at the margin to justify his wage, that is a misallocation of capital since it is being applied to "fix" a non-existent problem; the lack of workers who can add value at the lowest prevailing wage. I doubt this will change the attractiveness of the country to immigration (legal or illegal), which in any event is better addressed by immigration policy than minimum wage policies. At the same time, the same pool of under-skilled workers is still there (whether native-born or immigrants) - but now they are on welfare, and not developing some of the habits (of punctuality, responsibility, and cooperation) that might lead them to become more valuable employees over time, nor are the exposed to the benefits of increasing their skills or the opportunities to do so through formal or informal training provided by their employer.
By the way, note that the 3% unemployment change / 10% minimum wage change estimated by Gunderson is not a "a few potential jobs" - it is a huge number of jobs, and any finance minister would give his left testicle to bring down unemployment by an equivalent amount. It becomes even more problematic if, as Gunderson notes, the effect is concentrated in young workers or the least-skilled, particularly if that will affect labour-force participation rates or economic success well into the future.
Dcardno, I'll level with ya, I'm an economic "illiterate". However, that illiteracy is somewhat offset by the fact my job (gov't) has allowed me an interesting overview of the work conditions that exist in an important area of economic activity; food production.
Everyone has to eat.
Having had both union and non-union plants placed under my supervision, I've had some opportunities to compare.
One thing is most striking; non-union plants rely on massive numbers of imported, poorly educated labourers for methods of production that could best be described as "flintstone". Productivity problemes? Just add more labourers. There is no innovation, no creativity and very little investment in equipement and machinery.....the latter often second-hand in origin. What's more, these jobs offer virtually no opportunities to upgrade skills as everything is done by hand.
Profits come quick, but their duration is often short-lived.
Union plants, or rather the managers of unionised plants, haven't access to the escape clause know as *cheap imported labour*. They are forced to think creatively. Investments in machinery and new technologies form, as a result, a large part of their business strategy. Employees are of much greater value, as well, as their tasks are often bound up with techniques and/or equipment that requires some intelligence and training. Opportunities for skills upgrades abound.
Profits in this case may take time, but their duration and sustainablitiy more than makes up for any lag or delay.
There's one other observation I'd like to make which, though not at all scientific, makes for interesting anecdotal evidence.
Company parking lots!
One notices how the gap in price between vehicles belonging to bosses as opposed to workers is much less in unionised shops - perhaps $15,000 at most - than in those plants based on minimum-wage labour. In the latter case...assuming some employees even own cars... the gap is twice as much.
One other thing, if refusing to increase the minimum wage improves unemployment stats, then wouldn't lowering the minimum wage to, say, half its present level eliminate unemployment altogether?
Everyone would be employed, but the revenue from that employment would be insufficient to even live.....the whole purpose of having a job.
Like I said, I work for Gov't and have never owned or operated a business. My "lament", thus, for the working class would most certainly be tested were I ever to become an entrepreneur.
In fact, I'd wager I'd deliver my motivational pep-talks while brandishing a sturdy two-by-four.......
John - I haven't seen the sorts of non-union businesses that rely on cheap labour that you have. I'm not saying they aren't out there - just that I haven't seen them: my direct experience has either been as part of management in unionized businesses or in businesses that deploy *lots* of capital per worker - and therefore have an incentive to improve employee skills to maximize the return on that capital.
My indirect experience is through my son and his friends - high school kids that are going through the same sorts of jobs that high school kids always do: busboys, retail clerks, kitchen staff, sports instructors, recreation supervisors, etc, both in union and non-union operations. All of these kids make above minimum wage (not a *lot* above minimum, but a buck or so), and in all cases -even the busboys- they have had opportunities to improve their skill and level of employment, moving from busboy to dishwasher (or the other way 'round, I can't remember) and then to the cooking line. The differences may reflect regional factors, or just be the luck of the draw, but undoubtedly they affect how we view the question and the appropriate response.
I agree that it is a problem if we are importing cheap unskilled labour - but I think the remedy is in immigration laws, policy, and enforcement. If we still have lots of available hands for "flintsone" production (nice term, btw) then the economicaly rational thing to do is to use that labour where it can contribute, not to artificially price the labour above where it makes sense to use it; the alternative is to let it sit idle, while you and I pay into the welfare system to support those now-unemployed workers. The Executive Summary to the study referred to (Gunderson) notes that 2/3rds of minimum wage earners live with parents or other family members, and that over half had had their jobs for less than a year. To me, that indicates that these jobs are predominantly filled by someone who is not the primary breadwinner for the family, and that they are being used as entry-level and training positions. While I see the danger of trying to build a low-wage, low-skill economy, it doesn't seem to me that we are doing that...
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If every owner and corporate board member making over $100,000 was murdered in their sleep and their assets and money redistributed to those making less, then everything would be just fine.
Posted at 2007-01-11 13:26:40 [PermaLink]DCardno, I tend to agree with your assertion that most minimum wage earners are not the chief breadwinners.
The observations in my previous post only concerned food-producing establishments located in Montreal's inner city neighbourhoods.
If you're in the suburbs, then most minimum wage employees are usually high-school or university students. However, the situation in older areas of Canada's major cities is another story.
That said, I take an interest in recently arrived immigrants( they've many interesting stories to tell) and have asked countless numbers of them over the years just what they think. Generally they are very, VERY glad to have the work. They see their situation as temporary, and many express great optimism for the medium and long-term future. All are very motivated.
And just for the record, ALL non-unionised food plants I've either supervised or audited pay at least two to three bucks above the minimum. They're not sweat-shops by any stretch, but neither conditions nor salaries can even start to compare with unionised establishments. It's the lack of technical innovation and even the incentive for technical innovation that bothers me most about these places.
As for the minimum wage increase in Nova Scotia? Economics be damned, I'm still in favour of it.
By the way, thanks for the link.
Have any of you considered that, due the the migration of unskilled workers out west, there are more and more unfilled openings in the service and restaurant industry? Look out your windows people, there's no danger of unemployment for people earning min. wage.
Posted at 2007-10-18 18:58:31 [PermaLink]