The Minimum Wage & Further Implications
Published Sunday, December 11, 2005 by Michael Larkin | E-mail this post
It would probably be better to hang on until the whole comments thing is sorted before we start posting again, but - with our below-par technological ability - that may be quite some time. In the unlikely event that you feel the need to contact me about this post, feel free.
The minimum wage is in the forefront of a lot of people's thinking at the moment. Irish Ferries are up to some tricks to avoid paying it to their employees, and many people are unhappy about the fact. So it seems an opportune time to discuss the subject in some depth. At this stage in my political development, I couldn't be arsed in the slightest to learn about, or discuss, the details of the minimum wage, whether it should be raised, lowered, whatever. But I do have some interest in the concept of a minimum wage. It's taken almost as a given that, in a developed society, there should be a minimum wage. Of course, lefties will want it higher and righties will want it lower, but few question its very existence. Given this acceptance, it's perhaps surprising that it was in relation to this issue that I first began questioning my own socialist ideology. Consider this scenario.
Joe just lost his job as a mechanic. He lives alone, so he doesn't have many expenses, but since he lost his job he has significant and growing trouble making ends meet. Gregory, a friend of his, has just started a business, selling bicycles. He could use a handy man like Joe about the place, but doesn't have much seed capital, and doesn't expect business to pick up for a while. All he can afford to pay Joe, at least for the first few months, is €5 an hour. Hopefully, with Joe's expertise, the business would quickly start earning some money and Joe's pay would rise, but that's all he can give at the beginning. Joe, of course, is more than happy to take the job at this pay rate, as he's having trouble getting employment anywhere else, and the money would keep him going. He trusts Gregory to raise his pay when he can, so all is well. Only problem, the minimum wage is €7.85. Joe is left unemployed, and Greg's business will struggle to get off the ground.
Now, obviously, this is an artificial scenario, and is surely rather rare in a society like Ireland. But it is still a somewhat realistic one, and the principle is well worth dealing with. If two adults agree to a rate of pay, then why should they not be allowed to draw up a contract, simply because the government has decided, arbitrarily, that one person cannot employ another if he doesn't pay that person a given wage?
The most common - and most convincing, to the layman - arguments against the minimum wage are the economic ones; the ones with scary words like "inflation", "Laffer Curve" and "Robert Nozick". Basically, the argument goes, the higher the minimum wage, the fewer low-wage workers can be hired by your average business, and the higher the unemployment (hurting the poorest in society). In addition, the higher the minimum wage, the higher the wage costs to the firm, the lower the profit margins, and the higher the prices for the consumer, hurting everyone. But with the more-or-less (okay, more wouldn't really make sense) full employment we enjoy in Ireland, this argument seems to be somewhat discredited. Perhaps prices might be slightly higher, but with all the redistribution of wealth going on already, a few more cents on your burger in exchange for a few more euro on your average low wage worker's payslip seems a decent compromise. I'm sure there is a comeback, but I certainly don't have the economic education to make it, so there the economic argument goes down in flames, glorious flames.
That, however, doesn't deal with the problems raised by our little scenario. Why is a coercion-free agreement between two adults of sound mind, with positive affects for both of them and no adverse affects for others, not permitted? If there is one person in the country that is experiencing a similar dilemma (and there must be), then that is unjust. Indeed, the very fact that our laws have the potential to give rise to such a scenario is an injustice, is it not? Some will say, arguably with good reason, that the benefits of the minimum wage far outweigh that one minor flaw. Those benefits, however - if indeed they do exist (a question for economists, in the end) - come at the price of a small erosion of liberty. Does it matter? The question is a fundamental one, and extends far beyond this issue. Do we balance liberty with practical gain, or should liberty be absolute? Does a government even have the right to erode our liberty?
The minimum wage, unemployment benefits, government pensions, progressive tax rates, et al. are consistently justified on the basis of compassion, but rarely is the inherent intrusion on liberty mentioned by leftists, with good reason, I suppose. Lefties often turn into passionate defenders of liberty when it comes to questionable measures in response to terrorism, for example, but I have yet to see the issue dealt with satisfactorally by anyone on the left, ever. This question goes deeper than anti-terror laws or the Patriot Act, it is the fundamental unanswered question of western society, and I'm still waiting for an answer.
The minimum wage is in the forefront of a lot of people's thinking at the moment. Irish Ferries are up to some tricks to avoid paying it to their employees, and many people are unhappy about the fact. So it seems an opportune time to discuss the subject in some depth. At this stage in my political development, I couldn't be arsed in the slightest to learn about, or discuss, the details of the minimum wage, whether it should be raised, lowered, whatever. But I do have some interest in the concept of a minimum wage. It's taken almost as a given that, in a developed society, there should be a minimum wage. Of course, lefties will want it higher and righties will want it lower, but few question its very existence. Given this acceptance, it's perhaps surprising that it was in relation to this issue that I first began questioning my own socialist ideology. Consider this scenario.
Joe just lost his job as a mechanic. He lives alone, so he doesn't have many expenses, but since he lost his job he has significant and growing trouble making ends meet. Gregory, a friend of his, has just started a business, selling bicycles. He could use a handy man like Joe about the place, but doesn't have much seed capital, and doesn't expect business to pick up for a while. All he can afford to pay Joe, at least for the first few months, is €5 an hour. Hopefully, with Joe's expertise, the business would quickly start earning some money and Joe's pay would rise, but that's all he can give at the beginning. Joe, of course, is more than happy to take the job at this pay rate, as he's having trouble getting employment anywhere else, and the money would keep him going. He trusts Gregory to raise his pay when he can, so all is well. Only problem, the minimum wage is €7.85. Joe is left unemployed, and Greg's business will struggle to get off the ground.
Now, obviously, this is an artificial scenario, and is surely rather rare in a society like Ireland. But it is still a somewhat realistic one, and the principle is well worth dealing with. If two adults agree to a rate of pay, then why should they not be allowed to draw up a contract, simply because the government has decided, arbitrarily, that one person cannot employ another if he doesn't pay that person a given wage?
The most common - and most convincing, to the layman - arguments against the minimum wage are the economic ones; the ones with scary words like "inflation", "Laffer Curve" and "Robert Nozick". Basically, the argument goes, the higher the minimum wage, the fewer low-wage workers can be hired by your average business, and the higher the unemployment (hurting the poorest in society). In addition, the higher the minimum wage, the higher the wage costs to the firm, the lower the profit margins, and the higher the prices for the consumer, hurting everyone. But with the more-or-less (okay, more wouldn't really make sense) full employment we enjoy in Ireland, this argument seems to be somewhat discredited. Perhaps prices might be slightly higher, but with all the redistribution of wealth going on already, a few more cents on your burger in exchange for a few more euro on your average low wage worker's payslip seems a decent compromise. I'm sure there is a comeback, but I certainly don't have the economic education to make it, so there the economic argument goes down in flames, glorious flames.
That, however, doesn't deal with the problems raised by our little scenario. Why is a coercion-free agreement between two adults of sound mind, with positive affects for both of them and no adverse affects for others, not permitted? If there is one person in the country that is experiencing a similar dilemma (and there must be), then that is unjust. Indeed, the very fact that our laws have the potential to give rise to such a scenario is an injustice, is it not? Some will say, arguably with good reason, that the benefits of the minimum wage far outweigh that one minor flaw. Those benefits, however - if indeed they do exist (a question for economists, in the end) - come at the price of a small erosion of liberty. Does it matter? The question is a fundamental one, and extends far beyond this issue. Do we balance liberty with practical gain, or should liberty be absolute? Does a government even have the right to erode our liberty?
The minimum wage, unemployment benefits, government pensions, progressive tax rates, et al. are consistently justified on the basis of compassion, but rarely is the inherent intrusion on liberty mentioned by leftists, with good reason, I suppose. Lefties often turn into passionate defenders of liberty when it comes to questionable measures in response to terrorism, for example, but I have yet to see the issue dealt with satisfactorally by anyone on the left, ever. This question goes deeper than anti-terror laws or the Patriot Act, it is the fundamental unanswered question of western society, and I'm still waiting for an answer.
Top reviews:
DVD player
Digital Camera
Portable MP3 player
Travel
Product search: |
E-mail Kevin: blast_portmarnockREMOVE@yahoo.com
Email Michael: mickonline2REMOVE@yahoo.com
Previous posts
Archives
Latest Comments
Irish Blogs
-
Analogue
An Unrepentant Communist
Blue Birds Are So Natural
Cedar Lounge Revolution
Ciaran O'Kelly
Crabling Otter
Damien Mulley
Eoin Purcell
Fustar
Lord Byron's Pistol Club
Midnight Court
Most Sincerely Folks
Poetbloggs
Robert Donohoe
Shock
Twenty Major
A special place in my heart
'Proper' Journalism etc.
The Wireless
BBC Radio
4RTE Radio 1
