Minimum Wage Debate!

joeemslie · 30-06-09, 05:57 PM

Hello eXceem,

Today i call upon you to ask you the question:

'Should the minimum wage be abolished?'

I have to answer this question for my A-Level Economics coursework, it would be cracking to hear some of your opinions on the matter!

I know some people are Economists on here, or have studied at UNI, so i would love to hear your views and if possible the theory behind Minimum Wage, such as a price floor distorting the market!

Enjoy eXceem,

and THANK YOU!

chigley · 30-06-09, 05:57 PM

What reasons are there for the abolition? Can't think of any myself!

EDIT: Wrong forum too!

Ilikefree · 30-06-09, 06:11 PM

no, some people are already underpaid, so without the minimum wage, they'd make hardly anything!

Jackc£10 · 30-06-09, 06:46 PM

yes min. wages should be abolished as this would reduce the level of unemployment in the economy and also help with economic growth.
i have also just finished my a level economics course and this very question was on my final exam, fingers crossed for a B

joeemslie · 30-06-09, 06:53 PM

Right this is what i have got to start with:

Objectives of the minimum wage:

1.Reduce Poverty. Increasing the wages of the lowest paid these workers will have an increase in income and this will reduce poverty

2.Increase productivity. The minimum efficient wage theory states that higher wages can increase the incentive for people to work harder.
3.Increase the incentives for the unemployed to accept a job. There will be a bigger difference between the level of benefits and the income from employment.
4.Increased Investment. Firms will have an increase incentive to invest and increase labour productivity.

5.Counterbalance the effect of Monopsony employers. If firms have Monopsony power they can drive wages down by employing less workers. However they will be not able to do this, therefore in this case a minimum wage is likely to have a positive effect on employment.

And here are my views to why they are not working - feel free to rip them apart i would love to hear about it!

1.Reduce Poverty – The view that having a minimum wage to reduce poverty is widely accepted, however, through further investigation I have found that although people already working on a low wage will benefit, as they see a rise in their income due to a minimum wage implementation, their is still people who do not benefit and manage to get out of the realms of poverty. The people still affected are the poorest members of society the 1.51 million (9 June 2009) people currently claiming JSA. So although the objective to reduce poverty works on the level, that people already working benefit and can begin to climb out of poverty, however, it does not address the problem of people claiming benefits.
2.Increase Productivity – Although it is accepted that a higher wage makes people work harder, there is a stigma attached to the minimum wage which could bring the opposite effect, many people see the minimum wage as a negative thing so therefore when working on the lowest possible wage, they feel less appreciated. It is similar to diseconomies of scale when people feel undervalued and less appreciated by a company and the usual effects of this are, falling productivity and an increase in average unit costs. If this were to occur because of the stigma attached to minimum wage it would have the complete opposite effects and would loose the company money, possibly leading to unemployment, which ultimately would effect the workers on minimum wage, possibly resulting in job losses.
3.Increase Incentives – Benefits can be more than the minimum wage so although – It does allow unemployed people to get a foot on the working ladder and accept a job, however, the stigma attached again reduces people incentive to accept or even try hard in a job.
4.Fg
5.Counterbalance the effect of Monopsony employers – This objective is achieved as the minimum wage is a law, so therefore, companies cannot choose not to pay minimum wage. However, as mentioned earlier it is a law, so people will always be looking for ways to save money, and this means in some cases breaking the law. This could bring about the introduction of 'back hand' cash, where people are paid off without being registered for tax. This would benefit the company as they would be paying less for the same amount of work, and would have a detrimental effect upon the economy as tax is lost, and tax is a big part of Fiscal Policy. There is another case where the minimum wage can be 'bypassed.' This involves the company paying minimum wage and keeping everything legal with taxes, however, the company can try and recoup its losses which have stemmed from paying a higher minimum wage, by raising prices of its products.

*Sorry for the essay - In case anyone would be doing this can you ask me before you were to use it in Coursework - Just dont want to be accused of plagiarism when its my work!*

Jackc£10 · 30-06-09, 08:05 PM

have you learnt about the phillips curve yet?

joeemslie · 30-06-09, 08:08 PM

Quote:

Originally Posted by Jackc£10

have you learnt about the phillips curve yet?

Nope would that be a good one to get my teeth in to?

Jackc£10 · 30-06-09, 08:33 PM

yeh its basically a concept that the economy has a "natural" rate of unemployment and will always return to this level. Be carefull its not for the faint hearted and was probably the hardest part of my course.

Sachmo_51_6 · 05-07-09, 05:31 PM

I don't view the minimum wage as a problem...surely we should be more concerned about the maximum wage that should be imposed on certain people (MP's, company directors, the Director General of the BBC to name but a few).

There are people out there who are earning insane amounts of money, when merely slightly-crazy amounts should be sufficient for them.

Don't get me wrong, I'm all in favour of paying a good day's pay for a good day's work, but when you hear about people earning hundreds of thousands of pounds, particularly bank managers who's banks have had to ask for money for the government (most of which no doubt goes straight into their salary as opposed to using it to get us out of the current recession), you have to wonder what's gone wrong with the system.

It's mainly a matter of escalation, companies and public sector groups claim that 'in order to employ the best people, you have to pay the best salary', but that's a non-sustainable demand- eventually they would end up paying more money than they actually had (or maybe even existed) just to pay more than their competitors to get 'the best people'.

joewarne · 05-07-09, 05:33 PM

Quote:

Originally Posted by Sachmo_51_6

I don't view the minimum wage as a problem...surely we should be more concerned about the maximum wage that should be imposed on certain people (MP's, company directors, the Director General of the BBC to name but a few).

Let me tell you, what MP's make is in no comparison to what company directors and other high end jobs make

MP's are on a fraction of what they earn

Who does a more important job, footballers or MP's. You would think MP's but some football players get payed more in a week than MP's get a year.

Simon · 05-07-09, 05:46 PM

I think the reasons for having the minimum wage are obvious, and cant think of any reason why it should be abolished other than to make the wealthy wealthier, the lower skilled workers poorer and it won't have a impact on the level of unemployment and will simply bugger the economy even more!

Just had a google to see the latest minimum rates and i never realised there were 3 levels and also how low it actually it is (development rate?!!!)!

Quote:

What are the current rates of the national minimum wage?

There are three levels of minimum wage, and the rates from 1 October 2008 are:

* £5.73 per hour for workers aged 22 years and older
* A development rate of £4.77 per hour for workers aged 18-21 inclusive
* £3.53 per hour for all workers under the age of 18, who are no longer of compulsory school age

Sachmo_51_6 · 05-07-09, 05:58 PM

I should point out that my list was not exhaustive, so football players of course are earning too much as well as the others listed.

Bring back the days when football was an amateur sport and all footballers had a proper job and left football for evenings/weekends.

Also, MP's do get all the perks (or did until recently) of their expenses package.

kevan321 · 05-07-09, 05:59 PM

Quote:

Originally Posted by Sachmo_51_6

I don't view the minimum wage as a problem...surely we should be more concerned about the maximum wage that should be imposed on certain people (MP's, company directors, the Director General of the BBC to name but a few).

I'm surprised you didn't mention sports players, footballers in particular get paid ridiculous wages.

elliotknell · 05-07-09, 10:33 PM

This whole debate is funny to me because in the uk MP means member of parlament, but here in the us it means MILITARY POLICE. Haha. That is funny to me

adammcg · 10-07-09, 11:47 AM

YouTube - Milton Friedman on Minimum Wage A classic video and a fascinating man.

30-06-09, 05:57 PM	#1
joeemslie iPod 30gb Join Date: Dec 2007 Posts: 1,321	Minimum Wage Debate! Hello eXceem, Today i call upon you to ask you the question: 'Should the minimum wage be abolished?' I have to answer this question for my A-Level Economics coursework, it would be cracking to hear some of your opinions on the matter! I know some people are Economists on here, or have studied at UNI, so i would love to hear your views and if possible the theory behind Minimum Wage, such as a price floor distorting the market! Enjoy eXceem, and THANK YOU!

30-06-09, 06:11 PM	#3
Ilikefree Mini Mac Join Date: Jul 2008 Location: London Posts: 5,087	no, some people are already underpaid, so without the minimum wage, they'd make hardly anything! __________________ *Help an old friend wrap up his freebie-ing by signing up for me in a trade on either Apple FJ or PS3 Kudos! £15 per green!* (pm me and I'll set it up in the trade centre)

30-06-09, 05:57 PM	#2
chigley Mini Mac Join Date: Sep 2006 Location: Bolton/London (home/uni.) Posts: 8,415	What reasons are there for the abolition? Can't think of any myself! EDIT: Wrong forum too!

30-06-09, 06:46 PM	#4
Jackc£10 iPod Nano 2GB Join Date: Jun 2009 Location: Northampton Posts: 187	yes min. wages should be abolished as this would reduce the level of unemployment in the economy and also help with economic growth. i have also just finished my a level economics course and this very question was on my final exam, fingers crossed for a B

30-06-09, 06:53 PM	#5
joeemslie iPod 30gb Join Date: Dec 2007 Posts: 1,321	Right this is what i have got to start with: Objectives of the minimum wage: 1.Reduce Poverty. Increasing the wages of the lowest paid these workers will have an increase in income and this will reduce poverty 2.Increase productivity. The minimum efficient wage theory states that higher wages can increase the incentive for people to work harder. 3.Increase the incentives for the unemployed to accept a job. There will be a bigger difference between the level of benefits and the income from employment. 4.Increased Investment. Firms will have an increase incentive to invest and increase labour productivity. 5.Counterbalance the effect of Monopsony employers. If firms have Monopsony power they can drive wages down by employing less workers. However they will be not able to do this, therefore in this case a minimum wage is likely to have a positive effect on employment. And here are my views to why they are not working - feel free to rip them apart i would love to hear about it! 1.Reduce Poverty – The view that having a minimum wage to reduce poverty is widely accepted, however, through further investigation I have found that although people already working on a low wage will benefit, as they see a rise in their income due to a minimum wage implementation, their is still people who do not benefit and manage to get out of the realms of poverty. The people still affected are the poorest members of society the 1.51 million (9 June 2009) people currently claiming JSA. So although the objective to reduce poverty works on the level, that people already working benefit and can begin to climb out of poverty, however, it does not address the problem of people claiming benefits. 2.Increase Productivity – Although it is accepted that a higher wage makes people work harder, there is a stigma attached to the minimum wage which could bring the opposite effect, many people see the minimum wage as a negative thing so therefore when working on the lowest possible wage, they feel less appreciated. It is similar to diseconomies of scale when people feel undervalued and less appreciated by a company and the usual effects of this are, falling productivity and an increase in average unit costs. If this were to occur because of the stigma attached to minimum wage it would have the complete opposite effects and would loose the company money, possibly leading to unemployment, which ultimately would effect the workers on minimum wage, possibly resulting in job losses. 3.Increase Incentives – Benefits can be more than the minimum wage so although – It does allow unemployed people to get a foot on the working ladder and accept a job, however, the stigma attached again reduces people incentive to accept or even try hard in a job. 4.Fg 5.Counterbalance the effect of Monopsony employers – This objective is achieved as the minimum wage is a law, so therefore, companies cannot choose not to pay minimum wage. However, as mentioned earlier it is a law, so people will always be looking for ways to save money, and this means in some cases breaking the law. This could bring about the introduction of 'back hand' cash, where people are paid off without being registered for tax. This would benefit the company as they would be paying less for the same amount of work, and would have a detrimental effect upon the economy as tax is lost, and tax is a big part of Fiscal Policy. There is another case where the minimum wage can be 'bypassed.' This involves the company paying minimum wage and keeping everything legal with taxes, however, the company can try and recoup its losses which have stemmed from paying a higher minimum wage, by raising prices of its products. Sorry for the essay - In case anyone would be doing this can you ask me before you were to use it in Coursework - Just dont want to be accused of plagiarism when its my work!

30-06-09, 08:05 PM	#6
Jackc£10 iPod Nano 2GB Join Date: Jun 2009 Location: Northampton Posts: 187	have you learnt about the phillips curve yet?

30-06-09, 08:33 PM	#8
Jackc£10 iPod Nano 2GB Join Date: Jun 2009 Location: Northampton Posts: 187	yeh its basically a concept that the economy has a "natural" rate of unemployment and will always return to this level. Be carefull its not for the faint hearted and was probably the hardest part of my course.

05-07-09, 05:31 PM	#9
Sachmo_51_6 iPod Nano 2GB Join Date: May 2009 Location: Plymouth/Loughborough Posts: 133	I don't view the minimum wage as a problem...surely we should be more concerned about the maximum wage that should be imposed on certain people (MP's, company directors, the Director General of the BBC to name but a few). There are people out there who are earning insane amounts of money, when merely slightly-crazy amounts should be sufficient for them. Don't get me wrong, I'm all in favour of paying a good day's pay for a good day's work, but when you hear about people earning hundreds of thousands of pounds, particularly bank managers who's banks have had to ask for money for the government (most of which no doubt goes straight into their salary as opposed to using it to get us out of the current recession), you have to wonder what's gone wrong with the system. It's mainly a matter of escalation, companies and public sector groups claim that 'in order to employ the best people, you have to pay the best salary', but that's a non-sustainable demand- eventually they would end up paying more money than they actually had (or maybe even existed) just to pay more than their competitors to get 'the best people'.

05-07-09, 05:58 PM	#12
Sachmo_51_6 iPod Nano 2GB Join Date: May 2009 Location: Plymouth/Loughborough Posts: 133	I should point out that my list was not exhaustive, so football players of course are earning too much as well as the others listed. Bring back the days when football was an amateur sport and all footballers had a proper job and left football for evenings/weekends. Also, MP's do get all the perks (or did until recently) of their expenses package.

05-07-09, 10:33 PM	#14
elliotknell iPod 20gb Join Date: Jul 2009 Location: U.S. Posts: 673	This whole debate is funny to me because in the uk MP means member of parlament, but here in the us it means MILITARY POLICE. Haha. That is funny to me

10-07-09, 11:47 AM	#15
adammcg iPod 30gb Join Date: Mar 2005 Posts: 1,459	YouTube - Milton Friedman on Minimum Wage A classic video and a fascinating man.