Orsino, on 19 March 2012 - 12:53 PM, said:
That makes no sense. Despite the predictions, the introduction of the minimum wage did not crash the economy, and it works perfectly well in other European countries too. What is clearly wrong is that some benefits are too high - particularly related to housing. For work to pay, it's benefits that need to be cut, not wages.
It makes perfect sense. All the minimum wage has done has reduce productivity. Without a minimum wage you're rewarded according to productivity with minimum wage the reward for outstanding production is removed hence productivity drops to a consistent low level; what was the film - was it I'm All right Jack?
All you do is remove any expected production excess (as per Pareto) from the capable as there is no incentive for them to produce excess.
Whilst the economy may not have crashed, I would say we're in a long decline.Empirically I would say we have been in recession since about 2003 - we've just been bringing future earnings forward by borrowing. Contrast that with Germany that has reduced wages (per unit) by increasing productivity in excess of wages if not by actually reducing wages (and also by manipulating a number of south European currencies out of direct competition).
OnlyMe, on 19 March 2012 - 01:17 PM, said:
Any company that cannot pay at least £5 a hour given the current cost of living should not be in business. They are either utterly inefficient or basically making a profit out of screwing people.
There are plenty of people out there that fail to produce beyond what they cost. There are those that are unproductive at £3 an hour let alone £6+ an hour - ultimately it's why we outsource about 80% of what we do here. I'll let somebody else worry about productivity; I prefer fixed costs. You can legislate a minimum wage but you can't legislate minimum productivity - it's incredibly difficult to get rid of a slacker.
The underlying problem (or for most people the elephant in the room - clearly not those on this site) is the cost of living, the majority of which is likely to be due to housing costs though of course the size and profligacy of the state is both part of the problem via housing subsidies, benefit subsidies and other channels (just noticed today on Guido that parliament has a resident lifestyle coach).
Quite how you unravel it all though is beyond me; I guess piece by piece in the same way that it was unrolled in the first place.