Youth Rates

March 20th, 2013 at 7:03 am by David Farrar

Audrey Young in the NZ Herald wrote:

The temperature in Parliament is sure to rocket when the law “reinstating” is debated this week.

It happens every time the emotive issue is debated, as it did last week when the bill to bring them back passed its second reading. …

The new youth rates will be called the Starting Out Wage.

Labour says youth rates will be reinstated, suggesting that they were previously abolished.

But Labour did not support the bill of former Green MP Sue Bradford to abolish youth rates. It opted instead for a dilution of her bill but which limited the amount of time that a new young worker could remain on youth rates to 200 hours or three months.

National went to the last election campaigning for a change to that regime, saying the move had contributed to a significant rise in youth unemployment.

The change is in fact quite modest. It is not full youth rates. The starting out rate will only apply:

  • To a 16 or 17 year old with a new employer, for the first six months
  • To an 18 or 19 year old who has been on a benefit for more than six months

The $13.50 will be raised to $13.75 on April 1. From May 1 the Starting Out Wage would be 80 per cent of that, or $11.

Act leader John Banks said his party believed 80 per cent was too high as a minimum. In Britain the rate was 60 per cent for 16-year-olds and in Australia it was 48 per cent for 16-year-olds.

He compared the Starting Out Wage to the dole, paid to 40,000 young people every fortnight between 15 and 19 – equivalent to $4.50 an hour. He said they desperately needed the “dignity of work and a job opportunity”.

I believe getting a young person their first job is incredibly important and making it illegal for a 16 year old to work for less than $13.75 an hour is incredibly stupid.

We see the impact of this stupidity by the fact that the unemployment rate is currently 30.9% for under 20s.

Labour MP Darien Fenton compared the move to discrimination against women and Maori who at one time were paid less because some people said they were worth less. No one would tolerate that type of discrimination today.

You are remain female or Maori for ever. You do not remain 16 for ever. Also minimum wages are not maximum wages.

It would then also be acceptable, she said, to discriminate against older workers.

We don’t allow a 16 year old to vote, yet allow 70 year olds to vote so the comparison is invalid.

“It perpetuates its stereotype of young workers being unreliable and incapable, and it ignores the fact that many young workers have already had considerable work experience at the age of 16.”

if they have had work experience at 16, it can only be because they were employed under the age of 16 – when there is no minimum wage.

One of the strongest submissions against the bill came from the Human Rights Commission. It said unequivocally that the discrimination could not be justified.

“In New Zealand, the age at which children and young people are deemed to be adult is considerably younger than 20 in many critical areas of life.

“The minimum age of criminal prosecution is 14 for most offences, 12 for serious offences and 10 for murder and manslaughter.

“Children in New Zealand are legally able to marry at 16 (with parental consent if either party is 16 or 17) and drive at 16.

“Children can enlist in the military at 17 and be deployed at 18.

“Yet they are not considered to be sufficiently adult enough to be protected by the minimum wage.”

I agree you gain you rights of adulthood at before 20. I actually support 18 and 19 year olds getting the adult minimum wage.

But I think there is no justification for having the minimum wage start at 16 instead of 15 or 17 or 14. 16 is arbitrary and capacious.

18 is when you are generally deemed an adult who can vote, marry without permission etc. It is also when most people finish school and leave home.

So what I would do is simple.

  • No minimum wage at all for 16 and 17 year olds (like it is for 14 and 15 year olds). Getting a job is far more important than what it pays, especially when almost everyone at that age is still living at home. 
  • Full minimum wage at age 18
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85 Responses to “Youth Rates”

  1. Nigel Kearney (1,012 comments) says:

    The people saying is it age discrimination have a pretty strong case, especially for 18-19 year olds. It’s just as important to help a 30 year old off a benefit as an 18 year old, and 30 year olds on benefits are arguably less employable. When governments abandon principle and start trying to make ad hoc tweaks all over the place, these contradictions are bound to keep coming up.

    The minimum wage should be much lower, the same for everyone, and tied to the unemployment benefit so that it’s always, for example, 50% higher than the UB. And sickness and invalids restricted to people who are actually sick or disabled, so the others have a reason to find work.

    [DPF: Note I did not say I support youth rates for 18 and 19 year olds]

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  2. Mobile Michael (451 comments) says:

    And all those lefties will scream that this will mean 18th birthdays will be the day you get fired – ignoring all the training and time invested in the employee that would be lost.

    A friend of mine owns a tire shop and car repair shop. He starts all his apprentices in the tire shop, those that turn up on time and treat the customers right move on to fixing cars. Those that don’t get left in the shop – its a horrid, dirty job – until they quit. Not surprisingly, his car repair shop is really good.

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  3. SPC (5,619 comments) says:

    Simply introduce the concept of a training wage (at whatever age) – too many people gain qualifications (and student debt) and then cannot get jobs because they lack experience and or on the job training. We need to return to more training being while people are in work and on the job.

    In any case, 16 and 17 year olds should be in education or on the job training, not competing for unskilled work by offering themselves at a lower wage. Having young people at this age leave school to do unskilled work just leaves them vulnerable to remaining low paid or dependent on benefits.

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  4. wreck1080 (3,906 comments) says:

    As a school kid i did the worlds worst paper delivery run , for well under minimum wage.

    It was slave labour and I’m not sure I gained too much from it.

    The next after-school job was at woolworths night-fill — far better — wages were low but not at slave levels.

    But, after-school jobs should not intefere with school – education is more important.

    I had a neighbour friend whose parents made him do every after-school job available and his education suffered greatly. And, ended up doing mainly low-skilled jobs most of his life to date.

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  5. Cato (1,095 comments) says:

    I pay taxes to the government, the government pays the Human Rights Commission, the HRC lobbies the government to adopt a policy I disagree with, the government levies taxes against me to pay for the HRC’s troubles.

    Talk about a revolving door.

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  6. Morgy (172 comments) says:

    Who is this James Sleep fella. Just watched him on Firstline. Appears to be only one thought in his head; National = bad.

    Can I guess he is a Labour Party List MP in waiting?

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  7. Colville (2,268 comments) says:

    In any case, 16 and 17 year olds should be in education or on the job training, not competing for unskilled work by offering themselves at a lower wage. Having young people at this age leave school to do unskilled work just leaves them vulnerable to remaining low paid or dependent on benefits

    Bollocks.

    There are heads of perfectly fine “unskilled” jobs for young people that HATE school. Forestry and farm labouring are a couple that teach a work ethic that will never be learned sitting in the back row of class. A work ethic is what is missing from most youth and another piece of useless paper from a school isnt going to fix that.

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  8. KiwiGreg (3,255 comments) says:

    Minimum wage laws are the government making illegal the employment of people at wages they are prepared to work for by people prepared to pay those wages.

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  9. Adele Keys (39 comments) says:

    Need to look at the other side which is people who do not qualify for the starting wage and thus cannot not compete for jobs as they are precluded from competing on price.

    Minimum wages create dead weight loss and involuntary unemployment, it’s a simple fact.

    That being said I agree that there is a need to bring inexperienced workers into the workforce and can understand the diffuculty where everywhere wants experience so there is no where to gain the experience.

    People should be treated on their merits though and I think the current system that accomodates a lower wage for thoses without experience is acceptable. This way, essentially, businesses are getting what they pay for and they will not discriminate against older workers as they will be getting more experience for their buck.

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  10. Sonny Blount (1,782 comments) says:

    No need to discriminate based on age.

    Remove or lower the minimum wage for all workers.

    The minimum wage law discriminates against low skill workers. Predominantly the young, maori, polynesian, ex prisoners, and ex beneficiaries. It is the most egregious form of discrimination those groups face.

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  11. scrubone (3,099 comments) says:

    Who is this James Sleep fella. Just watched him on Firstline. Appears to be only one thought in his head; National = bad.

    Pretty much.

    He made his mark on the blogosphere telling the world breathlessly that DPF had ties to the National party. Seriously. I’m not kidding.

    Later he was seen jumping out in front of an MPs car to highlight to pensioners how bad the 90’s reforms were (reforms he never experienced of course). Again, not kidding.

    Last I heard, he was front and center in a student union meeting in Wellington, trying to silence a democratic vote who’s result he disagreed with. But that was a few years ago. I have no idea what he’s up to now.

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  12. scrubone (3,099 comments) says:

    The problem with this law change is that it isn’t possible to raise a family of 30 on the wages that are being proposed. This will of course lead to families dying on the street without medical care. This is no way to treat experienced workers who are the backbone of our economy.

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  13. Kleva Kiwi (289 comments) says:

    All the PC B*****t about discrimination is exactly that, B*****t! New Zealand has one of the higher minimum wages in the world and it is the main reason we have such terrible youth employment.
    It is creating a society dole bludgers and no hopers that will never have the opportunity to develop skills and develop a career, simply because the rose tinted glasses cant see past the end of their noses.
    The minimum wage should be 60% for 16-17, 80% for 18-19, and not hit 100% until 20. This is the minimum. There is nothing stopping them being paid more – if they are worth it -

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  14. Sonny Blount (1,782 comments) says:

    It should be zero Kleva.

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  15. itstricky (1,830 comments) says:

    Although there may be some limited justifications for youth rates, job opportunity is not one. If it were, perhaps we should introduce ‘aged rates’ to help over 55’s who can’t get a job because of impending retirement. Let the oldies have ‘the dignity of employment’ as loopy shodster Banks gleefully rabbits. Same logic. Flawed.

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  16. Weihana (4,537 comments) says:

    DPF,

    But I think there is no justification for having the minimum wage start at 16 instead of 15 or 17 or 14. 16 is arbitrary and capacious.

    18 is when you are generally deemed an adult who can vote, marry without permission etc. It is also when most people finish school and leave home.

    How does that make it not arbitrary? If we group a bunch of arbitrary standards do they collectively become not arbitrary? Age 18 is no less an arbitrary line in the sand than 16 is, or 20 is, or 21.

    [DPF: All age based policies are arbitrary but necessary. If you are consistent on the age, they are more justified.

    Unless you suggest there should be no age at which you can go to school, be left alone, have sex, vote, marry etc]

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  17. Sonny Blount (1,782 comments) says:

    itsticky.

    The logic is there should be no minimum wage.

    But because idiots exist it is probably not going away so we should make it as low as possible. And because politically the possibility of youth wages exist, we should do them the favour of implementing them.

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  18. Weihana (4,537 comments) says:

    DPF,

    I believe getting a young person their first job is incredibly important and making it illegal for a 16 year old to work for less than $13.75 an hour is incredibly stupid.

    We see the impact of this stupidity by the fact that the unemployment rate is currently 30.9% for under 20s.

    But is it really a solution to simply replace unemployed young people with unemployed 50 year olds? In my view this policy is shortsighted. Jobs for unskilled labour are only going to diminish and in my view faster than people think. The economy of the coming decades is going to be increasingly dominated by creative knowledge-based industries in areas where humans still outperform machines. Working at the supermarket checkout isn’t going to be particularly useful in that context.

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  19. Weihana (4,537 comments) says:

    KiwiGreg (2,734) Says:
    March 20th, 2013 at 8:29 am

    Minimum wage laws are the government making illegal the employment of people at wages they are prepared to work for by people prepared to pay those wages.

    Of course people are prepared to work for low wages. People like to eat.

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  20. Weihana (4,537 comments) says:

    [DPF: All age based policies are arbitrary but necessary. If you are consistent on the age, they are more justified.

    Unless you suggest there should be no age at which you can go to school, be left alone, have sex, vote, marry etc]

    I disagree that consistency makes it more justified. Age regulations are implemented for different purposes and so an appropriate age should be determined primarily by reference to the purpose(s) for which it is implemented, not necessarily by reference to a different age restriction implemented for different purposes. Indeed the age restrictions you cite represent a variety of different ages: left alone (14), sex (16), vote (18) etc.

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  21. Weihana (4,537 comments) says:

    DPF,

    Further to the previous point on age consistency, given that the issue of youth rates is about economic factors such as unemployment and the ability of young people to gain work experience, then if one believe youth rates a good idea then surely it should be implemented for 18-19 year olds as much as 16-17 year olds since both groups arguably experience similar economic effects and are consequently denied this supposed important work experience.

    The fact that at age 18 you are mature enough to vote and drink would seem to have no relevance in this context.

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  22. JeffW (326 comments) says:

    Why does the Government impede job creation by having any minimum wage rates at all? If financial assistance is needed, it should be by in work tax credits as per WFF, rather than stopping job creation and then paying outsiders the dole. If we took this approach, I think we might find that crime went down, including child abuse.

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  23. Sonny Blount (1,782 comments) says:

    Weihana,

    If you think you know the future of the economy Weihana make it happen, do it yourself. Create the jobs you think you can. You will have to settle for a perhaps more humble goal but it is far healthier and more productive than applying your ideas forcefully across society.

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  24. Sonny Blount (1,782 comments) says:

    Of course people are prepared to work for low wages. People like to eat.

    If you think the issue of minimum wages is about eating or not eating then you would also be in favour of doubling the unemployment benefit right seeing as it is half of the minimum wage?

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  25. Weihana (4,537 comments) says:

    Sonny Blount (1,717) Says:
    March 20th, 2013 at 8:36 am

    The minimum wage law discriminates against low skill workers. Predominantly the young, maori, polynesian, ex prisoners, and ex beneficiaries. It is the most egregious form of discrimination those groups face.

    Based on the standard neoclassical model this is surely true. Is the model accurate though? Economists don’t appear to agree on this point.

    http://www.igmchicago.org/igm-economic-experts-panel/poll-results?SurveyID=SV_br0IEq5a9E77NMV

    Personally I think the minimum wage, like any price control, is a blunt instrument and not preferred. But if there is no minimum wage there should be a basic guaranteed minimum income IMHO.

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  26. Sonny Blount (1,782 comments) says:

    Overall, studies show that increasing minimum wages increases unemployment.

    I also agree with forms of top ups for income below a certain level. But it has to be smarter than just unemployment benefits.

    The top ups have to be time limited and reducing, one to incentivise people to get off them, and two to prevent employers relying on them as a subsidy.

    They should also be tied to economic conditions if unemployment increases they should be decreased.

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  27. wat dabney (3,756 comments) says:

    Of course people are prepared to work for low wages. People like to eat.

    Yet you propose to deprive them of that choice and that job.

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  28. Weihana (4,537 comments) says:

    Sonny Blount (1,719) Says:
    March 20th, 2013 at 9:46 am

    Weihana,

    If you think you know the future of the economy Weihana make it happen, do it yourself.

    Red herring. I believe certain technological advancements have followed, and will continue to follow, predictable improvements in price-performance. This has nothing to do with “making it happen” or “doing it yourself”. Indeed the exponential improvement of information technologies occurs without anyone necessarily knowing in advance where those particular improvements will come from. Just as a gas particle takes a “random walk”, so too do individuals within the economy. Nevertheless macroscopic properties of a large number of such particles, or a large number of individuals in an economy, can be predictable and one of the most noticeable areas in which this predictability is apparent is in computation and artificial intelligence which is the basis of automation and the replacement of humans with machines, something we are already seeing and which is accelerating now at an unprecedented pace. This will have profound implications for the role of future workers, workers which are being educated now. These people need to be prepared for the areas in which humans will remain competitive with machines. Low-skilled manual labour is not going to be one of them.

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  29. Weihana (4,537 comments) says:

    wat dabney (2,531) Says:
    March 20th, 2013 at 10:11 am

    Yet you propose to deprive them of that choice and that job.

    I don’t believe that is strictly true. Floors still need to be mopped. Shelves still need to be stacked. I’m not denying the potential negative effects on employment but I think the neoclassical model is a very simplistic version of reality.

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  30. labrator (1,850 comments) says:

    It would then also be acceptable, she said, to discriminate against older workers.

    Using that logic, let’s can the retirement age. Work ’til you’re dead because retirement is out and out age discrimination.

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  31. Viking2 (11,467 comments) says:

    Minimum wages were imposed upon us by the communists of the Green party aided and abetted by the same in Labour. That the National Party have continued with this and are now about to tinker with it tells us they are not that far removed from being communist themselves.

    Either that or the Catholic cabal that runs the National Party has yet to relinquish its mindset over young people and still think they should be in work houses or not allowed to work at all.

    Fucking mindless stupid people.

    Que all those that support National being a socialist/communist party will be here tearing their hair out about this rather than tell their MP’s to fix the problem and stop interfering in things they are incapable of understanding.

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  32. Sonny Blount (1,782 comments) says:

    Red herring. I believe certain technological advancements have followed, and will continue to follow, predictable improvements in price-performance. This has nothing to do with “making it happen” or “doing it yourself”. Indeed the exponential improvement of information technologies occurs without anyone necessarily knowing in advance where those particular improvements will come from. Just as a gas particle takes a “random walk”, so too do individuals within the economy. Nevertheless macroscopic properties of a large number of such particles, or a large number of individuals in an economy, can be predictable and one of the most noticeable areas in which this predictability is apparent is in computation and artificial intelligence which is the basis of automation and the replacement of humans with machines, something we are already seeing and which is accelerating now at an unprecedented pace. This will have profound implications for the role of future workers, workers which are being educated now. These people need to be prepared for the areas in which humans will remain competitive with machines. Low-skilled manual labour is not going to be one of them.

    Irrelevant waffle.

    You don’t know what jobs people will be doing in the future.

    And a supermarket job is not merely low-skilled manual labour. Major life understanding fail, you don’t know what a job is.

    To a dull person that may be all you are doing. But an interesting person is interested. They will take note of the goals associated with any task, they will learn how to achieve those goals, they will experience success and what it takes to achieve it.

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  33. Sonny Blount (1,782 comments) says:

    I don’t believe that is strictly true. Floors still need to be mopped. Shelves still need to be stacked. I’m not denying the potential negative effects on employment but I think the neoclassical model is a very simplistic version of reality.

    You’re wrong.

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  34. Mark (496 comments) says:

    James Sleep obvious was asleep in the first week of econ 101, which explains why minimum wage laws create unemployment. He basically lied on National TV about basic economics.

    This guy is serious dumb.

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  35. Shunda barunda (2,983 comments) says:

    In my business, part of it involves producing a high number of low value product units. I was having trouble getting people motivated because it is quite a menial task.

    So what I did is pay by the unit.

    That ensures my costs are consistent and pricing is accurate, it also ensures that the worker gets paid exactly what they are worth.

    If one is prepared to work quickly an efficiently, an effective rate of over $20.00 an hr is easily and consistently achievable.

    I talked to WINZ staff about the idea and no go I am afraid, I still had to guarantee a minimum hourly rate which effectively removed the incentive for me, because pissing around was still a valid option for the worker. As a small business owner I simply can’t take certain risks.

    The ideological approach to minimum wage is clearly not working, but because evil bastards like me are around I guess we still have to have it? :)

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  36. Weihana (4,537 comments) says:

    Sonny Blount (1,722) Says:
    March 20th, 2013 at 10:30 am

    You don’t know what jobs people will be doing in the future.

    I never said what jobs people will be doing in the future. I said what they won’t be doing.

    And a supermarket job is not merely low-skilled manual labour. Major life understanding fail, you don’t know what a job is.

    I never said a supermarket job was merely low-skilled manual labour. However, I have worked in a supermarket in an entry level position and those jobs are low skilled manual labour.

    To a dull person that may be all you are doing. But an interesting person is interested. They will take note of the goals associated with any task, they will learn how to achieve those goals, they will experience success and what it takes to achieve it.

    Oh please. Stacking fruit and veges is a menial task. Even managerial positions in supermarkets are coordinated to a large degree by a central office. A supermarket is the same in Auckland as it is in Wellington as it is in Chirstchurch. The same is true for vast numbers of other establishments. The room for automation is considerable. Of course I acknowledge there are aspects of human ability (creativity, initiative etc.) that will be more resistant to automation but what does this have to do with young people in menial roles?

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  37. Sonny Blount (1,782 comments) says:

    Weihana,

    I used to dig holes at university. I learned some of my most powerful lessons about teamwork and consequences there.

    In running my own business, my most powerful resource was the role models given to me by contrasting managers I had while shifting tonnes of tin a night in a bakery. Also observing and learning about the other workers stories was invaluable.

    Because you were a mong in your jobs and unconscious of the influences occuring does not provide a good reason to remove the opportunity of working from other people.

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  38. Sonny Blount (1,782 comments) says:

    Oh please. Stacking fruit and veges is a menial task. Even managerial positions in supermarkets are coordinated to a large degree by a central office. A supermarket is the same in Auckland as it is in Wellington as it is in Chirstchurch. The same is true for vast numbers of other establishments. The room for automation is considerable. Of course I acknowledge there are aspects of human ability (creativity, initiative etc.) that will be more resistant to automation but what does this have to do with young people in menial roles?

    Let them eat cake right?

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  39. KiwiGreg (3,255 comments) says:

    I was going to respond Weihana but wat dabney did it for me.

    My 2 eldest daughters both started working at countdown for minimum wages before moving up; they are both at Uni now and working part time. You can of course get the government to legislate them out of the job market but you need to ask yourself why you would do that.

    People do like to eat; they want to work (many); deny them that and you are forcing them to “rely on the kindness of strangers”. Just because YOU think the work is demeaning or the pay too low doesn’t make it so.

    I just wish this so-called National government had a philosophical bone in its body.

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  40. KiwiGreg (3,255 comments) says:

    oh and what Sonny said

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  41. Weihana (4,537 comments) says:

    Sonny Blount (1,724) Says:
    March 20th, 2013 at 1:03 pm

    Weihana,

    I used to dig holes at university. I learned some of my most powerful lessons about teamwork and consequences there.

    In running my own business, my most powerful resource was the role models given to me by contrasting managers I had while shifting tonnes of tin a night in a bakery. Also observing and learning about the other workers stories was invaluable.

    Because you were a mong in your jobs and unconscious of the influences occuring does not provide a good reason to remove the opportunity of working from other people.

    I agree that employment for young people can provide valuable lessons in work ethic. I never suggested otherwise. But what I am suggesting is that we would simply replace one lot of unemployed with another.

    Moreover, regardless of how valuable menial work might be to teaching a person values and good work ethics, the reality is that these opportunities will decline. Machines are already being developed to replace manual labour in smaller scale manufacturing (e.g. “Baxter”). These robots will only get more sophisticated with each new generation and will continue to narrow the field in which only humans can compete. Perhaps life’s lessons will have to be learned somewhere other than in unskilled menial labour employment roles.

    Of course maybe I’m wrong. Perhaps technological advancement has reached its peak and will go no further. :)

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  42. Akld Commercial Lawyer (165 comments) says:

    I also worried about James Sleep (when I wasn’t worrying about deposit insurance / deposit guarantees as the “solution” for a problem that our banking system currently doesn’t have – we have prudential supervision by the the Aussies to thanks for that). My worry was how someone so young and articulate could get it so wrong.

    Quality jobs don’t come out of thin air – they are not created by government. At most, government creates a stable platform for business to do what it does best.

    In the meantime, low skilled jobs are with us until such time as the drudge work becomes automated. Today, we have a problem with people leaving school (the leaving age is 16 by the by) with few useful qualifications – and requiring (mostly) the private sector to rescue them by upskilling them on the job.

    Others in this thread have hit the nail on the head about the issues that poses for employers at the coalface. Perhaps I am an eternal optimist, but I don’t see most clients who employ youth workers as exploitative. Many I talk to have been there and understand the issues only too well. But they also have a business to run and want to keep their longstanding, trained and loyal staff happy too. Having done some of those jobs (starting with the ubiquitous paper round, labouring jobs and so on as a school and university student) there is definite value in starting at the basement – even if it is to remind you that its not where you want to finish.

    Structural shifts are brutal and the impact on middle aged folk should not be dismissed lightly – but if we don’t get young people into the workforce early it will be very hard to rescue them later in life without some of the life skills that employment on the bottom rung brings.

    Ultimately, the James Sleep’s of this world treat an entire economy as being guilty of the sins of a very small minority. Its a bit like exploiting migrant workers which sickens and angers me and most other Kiwis – there are ways of weeding these folk out and dealing with them – without making every employer’s life a nightmare or frightening them off employing the young people that (in most cases) they are all too keen to help.

    (And I can assure your readers that piecework is permitted, and works well and can be structured to comply with the minimum wage hurdles. Ask your lawyer for details – as it can be structured to work for employer and employee alike. A true win-win outcome).

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  43. Weihana (4,537 comments) says:

    KiwiGreg (2,737) Says:
    March 20th, 2013 at 1:33 pm

    Just because YOU think the work is demeaning or the pay too low doesn’t make it so.

    I don’t think whether it is demeaning has anything to do with it. Nor do I think the arguments over “discrimination” are relevant. I agree with those who say that if the government doesn’t discriminate employers will, and they will choose those with experience over those without for the same pay-rate.

    But I’m not sure I see the economic value in substituting one lot of unemployed with another lot and in my view it is shortsighted to not start thinking about preparing young people for an economy where manual labour is of such little value that people in the third world cannot compete.

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  44. KiwiGreg (3,255 comments) says:

    “But I’m not sure I see the economic value in substituting one lot of unemployed with another ”

    That’s probably because you subscribe to the “lump of labour” fallacy.

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  45. wat dabney (3,756 comments) says:

    Weihana,

    I’m not denying the potential negative effects on employment but I think the neoclassical model is a very simplistic version of reality.

    That’s really just a bullshit way of saying you don’t want to face the fact that people – the most vulnerable – most certainly are priced out of work by minimum wage legislation.

    Look at this chart and see how clearly youth unemployment jumps after youth rates were abolished by Labour:

    http://www.nbr.co.nz/sites/default/files/images/ericgraph_0.png

    For some, the inability to get work and gain some skills while young will affect their earning-potential and happiness for the rest of their lives. Yet Labour and the Greens throw them under the bus in order to score political points, knowing that only rarely is it possible for job-seekers to specifically identify this legislation as the problem.

    So who benefits from minimum wage laws if not those under the prescribed level?

    Union Members, Not Minimum-Wage Earners, Benefit When the Minimum Wage Rises

    http://www.heritage.org/research/reports/2007/02/union-members-not-minimum-wage-earners-benefit-when-the-minimum-wage-rises

    So, no surprise that Labour seeks to force through such laws, since its owners – the state-sector unions – are the beneficiaries. And fuck the poor who aren’t in their corrupt self-serving cartels.

    And finally, the impact is felt hardest by minorities, since minimum wage laws remove the cost of discrimination. As Milton Friedman said, ‘the most anti-black law on the books of the land is the minimum wage law.’

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  46. Weihana (4,537 comments) says:

    wat dabney (2,532) Says:
    March 20th, 2013 at 3:09 pm

    That’s really just a bullshit way of saying you don’t want to face the fact that people – the most vulnerable – most certainly are priced out of work by minimum wage legislation.

    Look at this chart and see how clearly youth unemployment jumps after youth rates were abolished by Labour:

    http://www.nbr.co.nz/sites/default/files/images/ericgraph_0.png

    Look at this graph of US unemployment:

    http://www.tradingeconomics.com/united-states/unemployment-rate

    (adjust dates to encompass same time period)

    Is the US unemployment rate caused by youth rates in NZ? Obviously not. Clearly correlation does not imply causation.

    I do agree that in this case youth rates are a cause of that unemployment but it is telling that during a period of recession and minimal growth afterwards, the brunt of unemployment appears to have been endured by youth which lends support to my position that there is a tradeoff and that reducing unemployment amongst youth with youth rates would see corresponding rises in unemployment amongst older folk.

    Now, are 16 and 17 year old’s really the most vulnerable? Or are adults who have more responsibilities (children etc.) more vulnerable? When I was a teenager I worked for $4-6 per hour. None of that went towards paying for my cost of living.

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  47. Sonny Blount (1,782 comments) says:

    Moreover, regardless of how valuable menial work might be to teaching a person values and good work ethics, the reality is that these opportunities will decline. Machines are already being developed to replace manual labour in smaller scale manufacturing (e.g. “Baxter”). These robots will only get more sophisticated with each new generation and will continue to narrow the field in which only humans can compete. Perhaps life’s lessons will have to be learned somewhere other than in unskilled menial labour employment roles.

    Of course maybe I’m wrong. Perhaps technological advancement has reached its peak and will go no further.

    You are wrong to think you know what the labour market will look like and to desire to legislate to make it in your vision.

    The changes in labour will happen naturally, let them occur. We have no idea what new jobs will arise in the future.

    Has a futurist ever been useful? Its hard to think of a more pathetic activity if taken out of the realm of entertainment.

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  48. krazykiwi (9,186 comments) says:

    Shunda 10:52 am. Good stuff. Smart business’s find a way to measure outputs, not inputs. The most simplistic unit of input is hours – easy to measure but (mostly) a poor indication of value contributed to a business.

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  49. Sonny Blount (1,782 comments) says:

    Now, are 16 and 17 year old’s really the most vulnerable? Or are adults who have more responsibilities (children etc.) more vulnerable? When I was a teenager I worked for $4-6 per hour. None of that went towards paying for my cost of living.

    Remove all minimum wage laws. Stop picking winners.

    But if we can reduce the misery for any sub group far better to do so.

    By extension your logic suggests that no one should be allowed to accept a job as it takes that job away from everybody else.

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  50. wat dabney (3,756 comments) says:

    Is the US unemployment rate caused by youth rates in NZ? Obviously not. Clearly correlation does not imply causation.

    Sorry, but that’s just stupidity.

    Youth unemployment and minimum wage rates in the States:

    http://2.bp.blogspot.com/_otfwl2zc6Qc/TAWl86mLw9I/AAAAAAAANls/UXGzX9gCIE0/s1600/minwage.jpg

    Now, are 16 and 17 year old’s really the most vulnerable? Or are adults who have more responsibilities (children etc.)

    That point was about minium wage levels in general rather than youth rates: those with no skills, who have been in prison, are from a particular ethnic minority etc are effectively locked out of the labour market. The only winners are politicians who have no morals, and labour cartels who also have no morals.

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  51. Weihana (4,537 comments) says:

    Sonny Blount (1,726) Says:
    March 20th, 2013 at 3:38 pm

    Has a futurist ever been useful? Its hard to think of a more pathetic activity if taken out of the realm of entertainment.

    Everyone is a futurist to some extent. You stockpile food for the winter so you don’t starve, you see a lion in the distance you walk the other way so you don’t get eaten. The brain functions as a predictive machine and its ability to understand the world and to predict how the future will play out and how we can modify our behaviour to account for that is, in a general sense, the very basis of our dominance over all other animals in the world.

    But more specifically are future projections of technological progress useful? Absolutely. Moore’s law has been the guiding principle underlying Intel’s research, development and production schedule.

    Noted futurist Ray Kurzweil has recently been hired by Google as director of engineering to work on machine learning and language processing. Yeah I’d say his knowledge and understanding is pretty useful.

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  52. Weihana (4,537 comments) says:

    wat dabney (2,533) Says:
    March 20th, 2013 at 4:07 pm

    Sorry, but that’s just stupidity.

    That was the point.

    Youth unemployment and minimum wage rates in the States:

    Which just happens to coincide with a major recession. Not unexpectedly inexperienced youth are hardest hit. What does this prove?

    The point is that if the young were given a competitive advantage with lower minimum wage rates, their increased employment would likely correspond with lower employment for people who are older.

    Your analysis assumes that the jobs of older people would be unaffected. But if one replaces an older worker with a cheaper younger worker, the older worker isn’t needed anymore and it’s difficult to see how such a marginal benefit will translate into a whole new job which would keep the older more expensive worker employed.

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  53. Weihana (4,537 comments) says:

    wat dabney (2,533) Says:
    March 20th, 2013 at 4:07 pm

    That point was about minium wage levels in general rather than youth rates: those with no skills, who have been in prison, are from a particular ethnic minority etc are effectively locked out of the labour market. The only winners are politicians who have no morals, and labour cartels who also have no morals.

    No morals? This sort of argument sounds more like a religion than something based on empirical evidence. I’m all for removing the minimum wage and replacing it with a guaranteed minimum income. IIRC Milton Friedman was also in favour of something like this. But I think it’s worth noting that the economics community is hardly speaking with one voice on this issue. Perhaps nothing to do with morals but because both sides are arguable.

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  54. SPC (5,619 comments) says:

    Minimum wages do not cause unemployment, so having no or a very low (as in the USA) minimum wage does not end unemployment.

    And youth rate unemployment is only high when unemployment is high. Because new job seekers cannot find work the level of youth unemployment then grows.

    If youth rate unemployment was high when unemployment was low that would demonstrate a problem of having no youth rate or youth lacking opportunities for training.

    These are the OECD statistics on youth unemployment.

    http://www.oecd-ilibrary.org/sites/unemp-yth-table-2012-1-en/index.html?contentType=/ns/Table,/ns/KeyTableEdition,/ns/StatisticalPublication&itemId=/content/table/unemp-yth-table-2012-1-en&containerItemId=/content/table/20752342-table2&accessItemIds=/content/tablecollection/20752342&mimeType=text/html

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  55. The Scorned (719 comments) says:

    Right SPC…..and a higher prices don’t cause comsumers to purchase less of an item…..

    A wage IS a price …a price for labour….and the more you have to pay for it the less of it you use…

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  56. Weihana (4,537 comments) says:

    The scorned,

    Guess what else causes people to purchase less of an item… Having a very low income.

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  57. itstricky (1,830 comments) says:

    Wow Sonny – you live in a world where no employer rips off an employee just because they can. This is the real world and just as likely as an employee taking the piss out of an employer. Other solutions may exist but at present a minimum wage is necessary evil. Or just necessary but not evil. Just like any other contractual requirement in favour of either party in an employment relationship.

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  58. itstricky (1,830 comments) says:

    Spc – note how the stats from NBR say “minimum wage bad” (no surprise there) and the quotes from a nonprofit say “minimum wage good” (no surprise there) so we have a black hole of cancellation. But you get the downvotes. Naturally. The blinkered-ness is boring me already.

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  59. wat dabney (3,756 comments) says:

    But I think it’s worth noting that the economics community is hardly speaking with one voice on this issue.

    The state raises the cost of cigarettes with the undisputed expectation that it will reduce consumption.

    It raises the cost of alcohol with the undisputed expectation that it will reduce consumption.

    Yet when when it comes to the price of labour we are suddenly expected to dismiss exactly the same economic principle?

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  60. wat dabney (3,756 comments) says:

    Guess what else causes people to purchase less of an item… Having a very low income.

    And when they have no income?

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  61. Sonny Blount (1,782 comments) says:

    Wow Sonny – you live in a world where no employer rips off an employee just because they can. This is the real world and just as likely as an employee taking the piss out of an employer. Other solutions may exist but at present a minimum wage is necessary evil. Or just necessary but not evil. Just like any other contractual requirement in favour of either party in an employment relationship.

    Please translate from gibberish to English.

    Are you trying to correlate voluntarily accepting a job with ripping someone off? How are you making your point?

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  62. itstricky (1,830 comments) says:

    > Please translate from gibberish to English.

    The minimum wage exists can not be zero because it exists to protect employees from dodgy employers. It doesn’t exist to annoy employers, destory the economy or say everyone should have a “living wage”. This is just the same way as there are available conditions for the employer (e.g. trial periods, summary dismissal) to protect them from dodgy employees.

    There may be other solutions. But it is all there is at present, and suggesting that it should be zero doesn’t address the core problem of dodgy employers (just like dodgy employees)

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  63. Sonny Blount (1,782 comments) says:

    I need to add my customary minimum wage maths I think.

    50hrs x $13.75ph = $685pw
    less 17.5% tax = $565pw

    $100pw rent
    $140pw food
    $50pw power/tv/net/ph
    $70pw expenses

    $565-$360=$205pw saved

    start work at 15 until 40=25 years x 50 weeks pa= 1250 weeks

    $205 x 1250 weeks = $255,000 saved

    plus compound interest of 2% over 25 years is $330,000

    then buy yr own home at 40 earning minimum wage. get a second minimum wager with $300,000 saved to move in and start a family.

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  64. Sonny Blount (1,782 comments) says:

    The minimum wage exists can not be zero because it exists to protect employees from dodgy employers

    What does this mean?

    What does a ‘dodgy’ employer do?

    A job is a voluntary act. You choose to accept it, you can choose to leave it.

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  65. Sonny Blount (1,782 comments) says:

    But more specifically are future projections of technological progress useful? Absolutely. Moore’s law has been the guiding principle underlying Intel’s research, development and production schedule.

    Noted futurist Ray Kurzweil has recently been hired by Google as director of engineering to work on machine learning and language processing. Yeah I’d say his knowledge and understanding is pretty useful.

    Private companies. So they are doing what I told you to do.

    Amusing that you would state getting a job as an achievement for a futurist.

    Applied to public policy? I can think of a someone that once thought he knew how the future of labour would work and so mobilised his people to that vision. Mao Zedong. He killed 40-70 million people.

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  66. Scott (1,797 comments) says:

    Totally agree with Sonny Blount and Wat Dabney. The abolition of youth rates has been a disaster for youth. Over 30% of youth now unemployed. I see it now our town all the time. Young fellows who could be working but are priced out of the job market at $13.50 an hour. As others have said if you want to sell more of something then lower the price. If you want more young people employed then allow them to work at a lower rate.
    It’s good to see a National government actually do right wing things! All power to them on this one.

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  67. itstricky (1,830 comments) says:

    > A job is a voluntary act. You choose to accept it, you can choose to leave it.

    And you may be forced to take it. To eat, and stay alive.

    And a ‘dodgy’ employer may look at you, and go, well I can get away with paying him $1 an hour and he won’t complain because he’s desperate. And there’s nothing he can do about it.

    These people exist. And you know it. I don’t know why you’re playing dumb but I sure there’s a reason – go on, out with it. I imagine you’re going to hit me with the revelation – ‘well you don’t have to take the job, you could look for another’ next. Yes, theoritically you are right – but ethically and morally completely wrong. That’s not the way it works in the ‘real world’ – or at least one where humans inhabit with some sort of social conscience.

    Uh oh, mentioned the word ‘social’ – here come the down votes

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  68. Viking2 (11,467 comments) says:

    Except Scott they are not. They are tinkering around the edges.
    As with everything they do its a half cocked effort that avoids dealing properly with the issue.

    A descent effort would star at $8.00 for 16 and under and raise that by $1.50 evey six months, remembering this is a minimum and can be raised by the employer once the learner has learnt. Cause that’s what young people are “learners”.

    If we did this then young people would get a chance and some of us old buggers could quit working so hard and others could retire.
    Can’t be much wrong with that.

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  69. Viking2 (11,467 comments) says:

    Weihana (3,002) Says:
    March 20th, 2013 at 5:18 pm

    The scorned,

    Guess what else causes people to purchase less of an item… Having a very low income.
    ——–
    As in the dole at $4.50 cf

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  70. Scott (1,797 comments) says:

    Couldn’t agree with you more Viking 2. It’s a step in the right direction. But yes agreed, a very timid step. National governments just seem to be afraid to make real change. They have very little actual conviction. Only on the left is their conviction. ” The best of them lack all conviction while the worst are full of passionate intensity”.

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  71. Sonny Blount (1,782 comments) says:

    > A job is a voluntary act. You choose to accept it, you can choose to leave it.

    And you may be forced to take it. To eat, and stay alive.

    And a ‘dodgy’ employer may look at you, and go, well I can get away with paying him $1 an hour and he won’t complain because he’s desperate. And there’s nothing he can do about it.

    These people exist. And you know it. I don’t know why you’re playing dumb but I sure there’s a reason – go on, out with it.

    You are advocating abolishing the unemployment benefit?

    Personally I would open a business near this employer and pay $3 an hour. He would be quickly out of business. Then I would just have to worry about the $5 an hour guy that moves in.

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  72. SPC (5,619 comments) says:

    Paying below equal pay for equal work is exploitation.

    Unskilled work jobs don’t require training, youth rates mean exploitation.

    Unless there is training – then pay a training wage for this time at whatever age the worker is.

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  73. SPC (5,619 comments) says:

    The Scorned

    In the real world an employer does not hire more workers if they are cheaper, he just makes a higher profit.

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  74. SPC (5,619 comments) says:

    “No minimum wage at all for 16 and 17 year olds (like it is for 14 and 15 year olds). Getting a job is far more important than what it pays, especially when almost everyone at that age is still living at home.”

    The idea of paying people less because they might still be living at home (not all 16 and 17 year olds do), is a remnant of the old days when women were paid less because they were not the main income earner.

    We have AS and WFF tax credits to cover housing cost and support for others.

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  75. Sonny Blount (1,782 comments) says:

    In the real world an employer does not hire more workers if they are cheaper, he just makes a higher profit.

    Fail. Yes they do.

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  76. SPC (5,619 comments) says:

    In the real world the employer who holds down wages by freezing pay levels is not doing so to increase the number of jobs, usually the employer is also reducing the number of people employed.

    Lower wage costs is an employer aspiration, it is not directly linked to then hiring more staff, nor ever will be.

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  77. Sonny Blount (1,782 comments) says:

    SPC,

    I have been an employer in the real world for 8 years from 2003 when the minimum youth rate was $6ph. When I could get them cheaper I would hire more people to do the same thing, it would give the customer better service and give the business more flexibility with staff coming and going. As the Labour party ramped up the minimum wage my business changed slightly and I had to hire less people at a higher rate and demand more of them. My jobs became higher stress for the staff as the minimum wage went up.

    As an employer I always aspired to pay the highest wages I could. It made the business perform better.

    You clearly know nothing of the real world and have obviously had nothing to do with hiring and firing within a business.

    Also, intent is irrelevant. Employers and employees acting in their own self interest will create benefits for all.

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  78. Weihana (4,537 comments) says:

    Sonny Blount (1,733) Says:
    March 20th, 2013 at 8:40 pm

    Private companies. So they are doing what I told you to do.

    I note you struggle to address the arguments at hand and instead rely more on attacking the individual advancing the concepts you disagree with. The argument was that technological progress was to some extent predictable. Intel is used as an example of this. You telling me to do something because you believe I suffer from some sort of personal flaw is entirely irrelevant.

    Amusing that you would state getting a job as an achievement for a futurist.

    Amusing that you belittle people who are widely recognized for their talents and contributions to society. An example of arrogance.

    Applied to public policy? I can think of a someone that once thought he knew how the future of labour would work and so mobilised his people to that vision. Mao Zedong. He killed 40-70 million people.

    Right, because this is the standard argument of every conservative these days: anything they disagree with is Mao Zedong or Joseph Stalin etc. etc. Nothing is ever nuanced or complex, it is ALWAYS very simple: everything is either Galt’s Gulch or Communist Hell.

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  79. Weihana (4,537 comments) says:

    wat dabney (2,539) Says:
    March 20th, 2013 at 7:11 pm

    “ But I think it’s worth noting that the economics community is hardly speaking with one voice on this issue. ”

    The state raises the cost of cigarettes with the undisputed expectation that it will reduce consumption.

    It raises the cost of alcohol with the undisputed expectation that it will reduce consumption.

    Yet when when it comes to the price of labour we are suddenly expected to dismiss exactly the same economic principle?

    So if drug prohibition causes the price of drugs to rise then why is drug use still a major problem? Indeed during various epidemics it has grown despite massive efforts to curb use.

    The problem with these debates is everyone wants a simple rule to fit economic behavior ignoring that it is human behavior we are talking about.

    Moreover in any particular situation there are thresholds and limits. Ignoring the potential irrationality of human behavior, even if we are perfectly rational our choices do not necessarily vary linearly with a change in circumstance. If wages go up you may reduce staff to reduce costs. But there comes a point where certain tasks need to be done. Floors still need to be mopped, shelves still need to be stacked etc..

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  80. wat dabney (3,756 comments) says:

    So if drug prohibition causes the price of drugs to rise then why is drug use still a major problem? Indeed during various epidemics it has grown despite massive efforts to curb use.

    The key word here is “if.”

    Despite billions spent on measures from spraying coca fields high in the Andes to jailing local dealers in Miami or Washington, a gram of cocaine cost about 16 percent less last year than it did in 2001. The drop is similar for heroin and methamphetamine. The only drug that has not experienced a significant fall in price is marijuana.

    http://www.nytimes.com/2012/07/04/business/in-rethinking-the-war-on-drugs-start-with-the-numbers.html?pagewanted=all&_r=0

    Secondly, it is reasonable to assume that drugs, alcohol and cigarettes have considerably less price elasticity than the creation of jobs, which is a purely rational process: simply put, if the value of the work a person does is less than the hourly rate then there is no point or benefit in employing them. Potential employers are not junkies, hooked on the need to pay people to do stuff.

    The problem with these debates is everyone wants a simple rule to fit economic behavior ignoring that it is human behavior we are talking about.

    No, the only problem is that you don’t want to acknowledge basic facts. To all intents and purposes the demand-curve always slopes downwards. As prices go up, demand goes down.
    You would price a number of young and unskilled people out of work. The real question is how big is that number, and that of course depends on how reckless you are with your artificial wage level.

    If wages go up you may reduce staff to reduce costs. But there comes a point where certain tasks need to be done. Floors still need to be mopped, shelves still need to be stacked etc.

    That may be true to a certain extent, although hours will be reduced and more technology introduced. But you are still focussing just on those lucky enough to find or retain a job. What about all the others chucked on the scrap-heap?

    The only issue for debate here is how many people you are willing to throw under the bus by taking away their freedom to negotiate for themselves in their own best interest.

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  81. Weihana (4,537 comments) says:

    wat dabney (2,540) Says:
    March 21st, 2013 at 11:32 am

    The key word here is “if.”

    “Despite billions spent on measures from spraying coca fields high in the Andes to jailing local dealers in Miami or Washington, a gram of cocaine cost about 16 percent less last year than it did in 2001. The drop is similar for heroin and methamphetamine. The only drug that has not experienced a significant fall in price is marijuana.”

    And so if the price has dropped usage goes up? Yet it hasn’t:

    The 2009 Monitoring the Future survey, which annually surveys teen attitudes and drug use, reports a significant decline in the 30-day prevalence of powder cocaine use among 8th-, 10th-, and 12th-graders from its peak use in the late 1990s, as well as significant declines in past-month use among 10th- and 12th-graders from 2008-2009.

    http://www.drugabuse.gov/publications/research-reports/cocaine-abuse-addiction/what-scope-cocaine-use-in-united-states

    It would therefore appear that it is human behaviour that is driving down the price as a consequence of falling demand, rather than a falling price spurring increased demand.

    There really is no “if” when it comes to drug prohibition. The general price of illegal drugs is considerably inflated due to prohibition. Drugs which cost very little to produce are worth millions by the time they hit western markets. Despite this illicit drug use is as prevalent (if not more so) than it ever has been.

    Secondly, it is reasonable to assume that drugs, alcohol and cigarettes have considerably less price elasticity than the creation of jobs, which is a purely rational process: simply put, if the value of the work a person does is less than the hourly rate then there is no point or benefit in employing them. Potential employers are not junkies, hooked on the need to pay people to do stuff.

    Except they DO need to pay people to do stuff. It is not practicable to neglect the menial tasks associated with running an office, a shop, a warehouse, a factory etc. etc. However, clearly there is a limit and you cannot just arbitrarily pick any wage (say $20) and expect that businesses will be able to pay it. But the fact that a regulated minimum price might exist above the market price does not necessarily imply that it is unaffordable.

    No, the only problem is that you don’t want to acknowledge basic facts. To all intents and purposes the demand-curve always slopes downwards. As prices go up, demand goes down.

    And yet drug use shows that to be a fallacy. I agree as prices go up, demand tends to go down. Which is like saying as CO2 rises in the atmosphere, temperature tends to go up. But reality is more dynamic than such simplistic relationships.

    That may be true to a certain extent, although hours will be reduced and more technology introduced.

    Yet if hours could be reduced they probably already would be. If the floor is already mopped why employ them to stand around for another hour? I’m not suggesting there is definitely no room for reductions and cutbacks but these measures are also subject to limits and thresholds.

    As for technology I agree this is an option. So far the applications of technology don’t quite appear ready to tackle a lot of the low wage jobs. Simple tasks like waiting tables is a difficult task for a machine to handle. Of course once they can do it then wages could not be reduced enough to keep people employed.

    What about all the others chucked on the scrap-heap?

    That is the danger I agree, but the assumption that it is an automatic and necessary consequence of any minimum wage for labour, or that the benefits do not outweigh such negatives, is debatable.

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  82. SPC (5,619 comments) says:

    Gotta love the cognitive dissonance on this issue

    One the one hand Joyce says we have to improve productitivty to get higher wages and on the other people say we have people complaining that a high minimum wage encourages investment in labour productivity that results in less jobs.

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  83. SPC (5,619 comments) says:

    And gotta love that the truth about this hypocrisy bites hard.

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  84. itstricky (1,830 comments) says:

    Yep. Astounding “logic”

    Sonny, not sure how you’re going to be opening a business making profit paying your employees $3 an hour when the guy next to you is doing the same at $1 an hour, keeping his employees under the thumb, playing on their naivety and lack of knowledge of the law. Greed. Drives the world. But hey, I’m not an employer, you are and you sound like a good one so good on you.

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  85. SPC (5,619 comments) says:

    In the real world the employer who competes by driving down wage costs undercuts his competitors and wins the contracts.

    The only thing preventing this being done to extreme levels is minimum wage rules.

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