why minimum wage law is stupid

[pillowtalk]

We often hear people championing the implementation of minimum wage in Singapore. There are some however, who feel that it is not beneficial to low wage earners.

Why the minimum wage hurts the poor and lower skilled

Reading through some of the articles here in The Real Singapore (TRS), I occasionally come across people calling for a Minimum Wage Law. This stems from ignorance in Economics. So I would like to explain why the Minimum Wage law is a bad idea because it causes unemployment. Also, far from helping people with low skills, it actually harms them. Thus, a minimum wage law will cause the poor remain poor because they won't be able to find a job. This means that there will not be a chance for them to gain working skills and a promotion after they have gained working experience.

It is not possible to improve the people's standard of living by forcing employers to pay a higher salary. At the end of the day, you get paid for what your work is worth. This can only be determined on a voluntary basis between employer and employee.

If your labor is worth $1,500 per month, and there is a minimum wage of $1,600 per month, it means you will be fired. If you are already paid $1,600 or more per month, the minimum wage is not going to help you. So if you are unskilled, you cannot get a job. If you are allowed to work at below the minimum wage, you will gain working experience, making you more valuable as an employee. In the end, your wage will rise. But with the minimum wage, you won't get a chance to put on foot on the bottom rung of the ladder.

If it makes sense to have a minimum wage, why not set it at a very high wage so that all of us will be rich. Set it at say $10,000 per month. No country in the world has done that.

You cannot break the iron law of economics by using force. You cannot raise standard of living by forcing employers to hire you at a higher wage than what your work is worth.

Here is a few youtube links explaining why the Minimum Wage law does not work:

How the Minimum Wage Creates Unemployment - YouTube

Milton Friedman - A Conversation On Minimum Wage - YouTube

Please go through the two links. They can explain it better than I can. The second link is a short talk by Economics Nobel Prize winner Milton Friedman on why the Minimum Wage law is stupid. He mentioned that it would cause the lower skilled workers to get fired. After all, if your work is worth less than the minimum wage, you will lose your job.

Friedman explained that it especially hurt the blacks in America since they generally have lower educational attainments than the whites or Asians. In Singapore, the ethnic group that will suffer most from a Minimum Wage law is the Malay since their educational level is on average lower than the Chinese and Indians.

Despite the fact that the minimum wage law is stupid, most countries have it which goes to show how lousy so many governments are. Those countries without a Minimum Wage law are as follows:

Austria, Brunei, Denmark, Finland, Germany, Hong Kong, Iceland, Italy, Norway, Singapore and Sweden. See link:

Countries without Minimum Wage Law | small-m

Cassidy Owary

Source: https://www.facebook.com/photo.php?...3_625370244172814_69530408_n.png&size=781,445

 

[Scrooball (clone)]

Min wage sounds good in theory only la.

Imagine you are earning $900 now. Then the min wage is set at $1,000. You earn $100 more right?!

Wrong! You are earning less as expenses all around you increase! Companies will need to offset the higher pay with higher prices.

 

[Asterix]

Why Scums in White do not deserve their OUT OF THIS WORLD salaries:

It's no damn use telling us that minimum wage has side effects
Everybody already knows, you're not paid to tell us the obvious
It is like medicine, doctor prescribes this pill to cure your flu
And another pill to control side effects of taking the first pill

Means set of well crafted and co-ordinated policies and measures
To attain the objective of social justice while avoiding or limiting
Unnecessary collateral damage, which means Lim Shit Say and Co
Will have less time to steal toothpicks and more real work to do

Without further ado, let's hear it from
Truly capable Minister and not Ministar
Who speaks proper English
And not Ah Beng Singlish

[video=youtube;gdU_WrsMMnc]http://www.youtube.com/watch?v=gdU_WrsMMnc[/video]

 

[tanwahtiu]

Min wage is to serve a certain industry not asking it is for everyone, you stupid!

Min wage serves as a benchmark for all industries to follow if they want to hire certain type of workers in their establishment or company.

Anything below it they have to ask their wife or children to work for free, get it dumb twit.

Min wage is min wage a slave can earn and is by law to pay this amount to a slave, get it dumb twit.

We often hear people championing the implementation of minimum wage in Singapore. There are some however, who feel that it is not beneficial to low wage earners.

Why the minimum wage hurts the poor and lower skilled

Reading through some of the articles here in The Real Singapore (TRS), I occasionally come across people calling for a Minimum Wage Law. This stems from ignorance in Economics. So I would like to explain why the Minimum Wage law is a bad idea because it causes unemployment. Also, far from helping people with low skills, it actually harms them. Thus, a minimum wage law will cause the poor remain poor because they won't be able to find a job. This means that there will not be a chance for them to gain working skills and a promotion after they have gained working experience.

It is not possible to improve the people's standard of living by forcing employers to pay a higher salary. At the end of the day, you get paid for what your work is worth. This can only be determined on a voluntary basis between employer and employee.

If your labor is worth $1,500 per month, and there is a minimum wage of $1,600 per month, it means you will be fired. If you are already paid $1,600 or more per month, the minimum wage is not going to help you. So if you are unskilled, you cannot get a job. If you are allowed to work at below the minimum wage, you will gain working experience, making you more valuable as an employee. In the end, your wage will rise. But with the minimum wage, you won't get a chance to put on foot on the bottom rung of the ladder.

If it makes sense to have a minimum wage, why not set it at a very high wage so that all of us will be rich. Set it at say $10,000 per month. No country in the world has done that.

You cannot break the iron law of economics by using force. You cannot raise standard of living by forcing employers to hire you at a higher wage than what your work is worth.

Here is a few youtube links explaining why the Minimum Wage law does not work:

How the Minimum Wage Creates Unemployment - YouTube

Milton Friedman - A Conversation On Minimum Wage - YouTube

Please go through the two links. They can explain it better than I can. The second link is a short talk by Economics Nobel Prize winner Milton Friedman on why the Minimum Wage law is stupid. He mentioned that it would cause the lower skilled workers to get fired. After all, if your work is worth less than the minimum wage, you will lose your job.

Friedman explained that it especially hurt the blacks in America since they generally have lower educational attainments than the whites or Asians. In Singapore, the ethnic group that will suffer most from a Minimum Wage law is the Malay since their educational level is on average lower than the Chinese and Indians.

Despite the fact that the minimum wage law is stupid, most countries have it which goes to show how lousy so many governments are. Those countries without a Minimum Wage law are as follows:

Austria, Brunei, Denmark, Finland, Germany, Hong Kong, Iceland, Italy, Norway, Singapore and Sweden. See link:

Countries without Minimum Wage Law | small-m

Cassidy Owary

Source: https://www.facebook.com/photo.php?...3_625370244172814_69530408_n.png&size=781,445

 

[Hans168]

No need for min. wage
Just hv a law stipulating political office holder cannot be paid more than 17 times pay of foodcourt cleaner! Amen.

 

[Leongsam]

You cannot legislate prosperity.

Wages have to depend on productivity.

 

[Asterix]

You cannot legislate prosperity.

Wages have to depend on productivity.

We don't need sound bites
Even an august capitalist publication
Like the Economist admits
Wage floors do more good than harm

The argument in the floor

Evidence is mounting that moderate minimum wages can do more good than harm
Nov 24th 2012

MINIMUM-WAGE laws have a long history and enduring political appeal. New Zealand pioneered the first national pay floor in 1894. America’s federal minimum wage dates from 1938. Most countries now have a statutory pay floor—and the ranks are still swelling. Even Germany, one of the few big countries without, may at last introduce a national one. And in an era of budget austerity and widening inequality, the political temptation to prop up wages at the bottom by fiat may well grow.

Economists have tended to oppose minimum wages on the grounds that they reduce employment, hurting many of those they are supposed to help. Milton Friedman called them a form of discrimination against low-skilled workers. In standard models of competitive markets, anything that artificially raises the price of labour will curb demand for it, and the first to lose their jobs will be the least-skilled workers.

Yet economic theory allows for the possibility that wage floors can boost both employment and pay. If employers have monopsony power as buyers of labour and are able to set wages, for instance, they can keep pay below its competitive rate. Academic supporters of wage floors, mainly economists on the left, appealed to this logic. But most of their colleagues disagreed; and until about 1990, most empirical studies found that higher minimum wages cost jobs, particularly among young workers.

Then a pioneering case study by two noted labour economists, David Card and Alan Krueger, examined the response of fast-food restaurants to a rise in New Jersey’s state minimum wage. It found that this had actually increased employment. The paper spawned a flood of similar “case-study” research, a flurry of revisionist thinking and a heated academic debate. The most prominent critics of the new research were David Neumark of the University of California at Irvine and William Wascher of the Federal Reserve. They disputed Messrs Card and Krueger’s findings for New Jersey and argued that a comparison of different states over time showed that higher minimum wages hurt jobs.

Almost two decades later, the minimum-wage debate has matured, not least because policy changes have brought heaps of new evidence to analyse. Britain introduced a national minimum wage in 1999. America’s states saw numerous adjustments in their minimum wages, and the federal floor was raised by 40% between 2007 and 2009.

America’s academics still do not agree on the employment effects. But both sides have honed their methods and, in some ways, the gap between them has shrunk. Messrs Card and Krueger moved on to other work, but Arindrajit Dube at the University of Massachusetts-Amherst and Michael Reich of the University of California at Berkeley have generalised the case-study approach, comparing restaurant employment across all contiguous counties with different minimum-wage levels between 1990 and 2006. They found no adverse effects on employment from a higher minimum wage. They also argue that if research showed such effects, these mostly reflected other differences between American states and had nothing to do with the minimum wage.

Messrs Neumark and Wascher still demur. They have published stacks of studies (and a book) purporting to show that minimum wages hit jobs. In a forthcoming paper they defend their methods and argue that the evidence still favours their view. But even they are no longer blanket opponents. In a 2011 paper they pointed out that a higher minimum wage along with the Earned Income Tax Credit (which tops up income for poor workers in America) boosted both employment and earnings for single women with children (though it cost less-skilled, minority men jobs).

Britain’s experience offers another set of insights. The country’s national minimum wage was introduced at 46% of the median wage, slightly higher than America’s. A lower floor applied to young people. Both are adjusted annually on the advice of the Low Pay Commission. Before the law took effect, worries about potential damage to employment were widespread. Yet today the consensus is that Britain’s minimum wage has done little or no harm.

The most striking impact of Britain’s minimum wage has been on the spread of wages. Not only has it pushed up pay for the bottom 5% of workers, but it also seems to have boosted earnings further up the income scale—and thus reduced wage inequality. Wage gaps in the bottom half of Britain’s pay scale have shrunk sharply since the late 1990s. A new study by a trio of British labour-market economists (including one at the Low Pay Commission) attributes much of that contraction to the minimum wage. Wage inequality fell more for women (a higher proportion of whom are on the minimum wage) than for men and the effect was most pronounced in low-wage parts of Britain.

The British way versus the American way

This new evidence leaves economists with lots of unanswered questions. What exactly is going on in labour markets if minimum wages do not hurt employment but reduce wage gaps? Are firms cutting costs by squeezing wages elsewhere? Are they improving the productivity of the lowest-wage workers? Some of the newest studies suggest firms employ a variety of strategies to deal with a higher minimum wage, from modestly raising prices to saving money from lower turnover.

Policymakers face practical issues. Bastions of orthodoxy, such as the OECD, a rich-country think-tank, and the International Monetary Fund, now assert that a moderate minimum wage probably does not do much harm and may do some good. Their definition of moderate is 30-40% of the median wage. Britain’s experience suggests it might even be a bit higher. The success of the Low Pay Commission points to the importance of technocrats rather than politicians setting wage floors. Britain’s small, regular changes may be easier for firms to absorb than America’s infrequent but hefty minimum-wage increases. Whatever their flaws, minimum wages are here to stay.

http://www.economist.com/news/finan...-moderate-minimum-wages-can-do-more-good-harm

 

[Leongsam]

We don't need sound bites
Even an august capitalist publication
Like the Economist admits
Wage floors do more good than harm

I have no doubt that they are a useful political tool. However, that does not alter the fact that they are detrimental to any economy. Minimum wages are about winning votes and nothing more.

It is precisely because of the minimum wage and a host of other legislated overheads that all my staff are located in Singapore and not in NZ.

Other NZ companies are doing exactly the same thing for operations that do not require a physical presence in NZ. Examples are call centres, software development, phone tech support, graphic design etc.

 

[Asterix]

I have no doubt that they are a useful political tool. However, that does not alter the fact that they are detrimental to any economy. Minimum wages are about winning votes and nothing more.

I have no doubt that you only see what you want to see. That it is detrimental to those who failed or are incapable of adjusting to it does not mean that minimum wage is detrimental to the whole economy and definitely not any economy. There are developed and undeveloped economies just as there are skilled and unskilled entrepreneurs. Yeah and "free" lift upgrading is not about winning votes! Not only was it about winning votes, it was about misuse of public resources by one political party for its own selfish purposes.

It is precisely because of the minimum wage and a host of other legislated overheads that all my staff are located in Singapore and not in NZ.

Other NZ companies are doing exactly the same thing for operations that do not require a physical presence in NZ. Examples are call centres, software development, phone tech support, graphic design etc.

The economy AS A WHOLE adjusts to minimum wage. Those that refuse to work for cheapskate employers in industries that don’t require a physical presence will move to other industries or trades or services that can accommodate minimum wages. You still have not grasped the difference between MACRO and micro.

 

[Leongsam]

I have no doubt that you only see what you want to see. That it is detrimental to those who failed or are incapable of adjusting to it does not mean that minimum wage is detrimental to the whole economy and definitely not any economy. There are developed and undeveloped economies just as there are skilled and unskilled entrepreneurs. Yeah and "free" lift upgrading is not about winning votes! Not only was it about winning votes, it was about misuse of public resources by one political party for its own selfish purposes.



The economy AS A WHOLE adjusts to minimum wage. Those that refuse to work for cheapskate employers in industries that don’t require a physical presence will move to other industries or trades or services that can accommodate minimum wages. You still have not grasped the difference between MACRO and micro.

The NZ economy has adjusted to the minimum wage policy by being stuck in a chronic 6% ave unemployment rate.

 

[Asterix]

The NZ economy has adjusted to the minimum wage policy by being stuck in a chronic 6% ave unemployment rate.

There will never be 0% unemployment. 6% may well be full employment by NZ standards given the structure of its economy, culture and temperament of its people, et cetera. :p

 

[Leongsam]

There will never be 0% unemployment. 6% may well be full employment by NZ standards given the structure of its economy, culture and temperament of its people, et cetera. :p

You're right on every single count. The minimum wage structure has created a culture whereby the dregs of society will never be hired because they are not worth the minimum wage.

Instead they live off the dole funded by the rest of us.

If the minimum wage and welfare payouts were discarded, they'd be forced to earn a living of some sort or starve to death.

It would also save the taxpayers a shit load of money.

 

[Asterix]

You're right on every single count. The minimum wage structure has created a culture whereby the dregs of society will never be hired because they are not worth the minimum wage.

They live off the dole funded by the rest of us.

To prove that minimum wage could possibly be the culprit, you need to show that before its implementation the average unemployment rate in NZ was significantly lower than its average unemployment rate now, discounting periods of extreme economic doom or boom.
:p

 

[nutbush]

you pay high taxes but you get free healthcare iregardless of any kind of illness, right? in s'pore, you pay high insurance premium and if you get hit with a rare disease or something not in their list, will they still pay you?

 

[Leongsam]

you pay high taxes but you get free healthcare iregardless of any kind of illness, right? in s'pore, you pay high insurance premium and if you get hit with a rare disease or something not in their list, will they still pay you?

The public health system may be free but long waiting lists often mean you'll kick the bucket before you get treated. There is a limit to what you're entitled to in terms of drugs and medication too. Only the most basic drugs are covered.

There are many Singaporeans living in NZ who hop on a plane back to Singapore when they need urgent medical treatment. NZ is way behind in many areas especially oncology.

 

[nutbush]

didn't know your NZ so laid back one...

The public health system may be free but long waiting lists often mean you'll kick the bucket before you get treated. There is a limit to what you're entitled to in terms of drugs and medication too. Only the most basic drugs are covered.

There are many Singaporeans living in NZ who hop on a plane back to Singapore when they need urgent medical treatment. NZ is way behind in many areas especially oncology.

 

[Leongsam]

didn't know your NZ so laid back one...

It's a crap country in many areas. The only thing going for it is the fact that there it has a very low population density and a great outdoor adventure scene.

It's also a great country if your ambition is to milk cows and shear sheep for a living.

 

[nutbush]

no wonder, NZD always 1 tier below AUD...haha...:p

It's a crap country in many areas. The only thing going for it is the fact that there it has a very low population density and a great outdoor adventure scene.

It's also a great country if your ambition is to milk cows and shear sheep for a living.

 

[rushifa666]

there is always a bottom wage. a person simply cannot survive if he is making below a certain sum. add to that loans and insurance that is your SURVIVAL MONEY! so are you telling me you can survive with 900 a month? or a 1000?