Tuesday, 1 October 2013

Turton's Fantasy Minimum Wage Claim

Problems, problems, problems. I had to spend the whole weekend with only intermittent connection from my aging laptop to the web; the engineer finally came today to do some re-wiring (I make an "appointment" with Chunghua engineer: he arrives at an entirely different time and day). I'm now way behind schedule with work and might have to pull an all-nighter tonight to catch up. n the meantime... Turton. This is how the turn always plays out with him...

Turton: "Some bullshit".

Me: "Call".

Turton: "Uh, ah that thread is closed."

Typical. His two latest claims are (a) that minimum wages are set low by governments because they have the effect of pulling down other wages "across the board", and (b) that this is therefore a transfer from the poor to the rich. Note that the second claim depends on the first claim, so if the first claim is false then the second one must also be false.

And the first claim is obviously false; the number of people in minimum wage jobs tends to be a very small percentage of overall employment, so any effect the minimum wage rate might have on other wages via reducing demand for labour at slightly higher rates (never mind much higher rates) is likely to be negligible. Secondly, nominal wages are famously sticky anyway, but over the long-term must change in accordance with changes in supply and demand. Now there is no shortage of government policies and interventions that affect supply and demand for labour at different wage rates, but that's quite a different thing. The idea that a low minimum wage is some kind of plot by "the rich" to hold down wage rates "across the board" is just risible. I mean, he might as well just come right out and accuse the KMT of controlling the weather...

And yet... attentive readers will also note that he hasn't said a single word about the IPCC's 5th Assessment Report yet. Neither has the Timid Times, which will no doubt continue to publish scaremongering articles about impending climate catastrophe to explain why we must fork over cash to companies that the editors families and certain DPP people no doubt have bought stocks in.


  1. This is my favorite comment on that thread: "The function of tips, Readin, is to enable employers to get away with paying poverty wages."

    Saying nothing about offering incentives for good service. Often, I blame the rather poor service I encounter at Taiwanese restaurants to the fact that they have no incentive, beyond a low hourly wage and an across-the-board service charge, to perform tasks well. But hey, as one commentator posted below, I must be a big baby, too. I'd pay extra for good service; must be because I'm a slave driver. I should serve myself, evidently--saying nothing about how that would eliminate employment opportunities. Heaven forbid folks get paid for actually working and performing their tasks well.

  2. There is also a corollary to this: if a customer does not leave a tip due to bad service, does that make the customer "greedy"? He/She still paid for his/her meal, but the service was awful, so he/she did not tip the server.

    Moreover, there are many places in the States, speaking from experience, at which the manager (directed by the owner, and sometimes the manager and the owner are the same person) will ask a customer, if he/she did not leave a tip, why he/she did not do so. It is often an informal rule, and sometimes a formal one, that one ought leave at least a certain percentage of what one paid for one's meal as a tip. Doesn't sound like the ownership is deliberately attempting to screw the service folks in such cases. But evidently because the owner him-/herself does not directly foot the bill, it is some form of exploitation. Of course, however, places with high service charges are often prohibitively expensive for many folks, cutting down on both the number of meals to be served and servers to be tipped--an indirect cost to both owner and server. None of these situations seem to go through the noggins of the "screw the help" crowd, though. Here's a job, now let me screw you--that's their baseless explanation of how things work; but if the place wouldn't offer employment, there would be fewer employment opportunities and the same rats would complain anyway about places not hiring and letting "the poor" starve while they cut costs--or, as the "screw the help" crowd call it, maximize profit. It's never really based on a reasonable argument.

  3. Yes, I agree with all of that.

  4. i guess a problem both you have is defining minimum wage. i know places where know one takes a minimum wage job. one will simply get no responses.(not in tw...lol) i also know places were some people are lucky if they get the minimum (in tw).

    i think there are more factors at play here than the one's mentioned. but that's just me. i do lean to the side that many capitalists would only be too happy to have their workers pay the boss to be allowed to work...which is nasty side of human behavior.

  5. Phillippe,

    That isn't a definitional problem, since we are talking about the minimum wage-rate as specified by legislation (NT$115 per hour I think) not the lowest possible wage that some poor sod might be earning illegally. The fact that these lower, illegal wages exist might reflect either (a) that whoever is running the business is desperately cutting costs in order to keep the concern afloat, or (b) that whoever is running the business is a bit of a sadist. But if the answer is (b), then a low wage-rate might be the least of the employees worries.

    The other thing about these cases of illegally low wage-rates is unemployment. Why would anyone take a job at a wage-rate lower than the legal minimum if not because they fear unemployment and lack of income? So all you accomplish with a minimum wage is to raise the marginal costs of some employers so you can very slightly raise the income of some employees at the cost of some unemployment - there will always be some businesses who cannot afford to pay minimum wage for a given number of employees and will therefore hire fewer people.

    "i do lean to the side that many capitalists would only be too happy to have their workers pay the boss to be allowed to work..."

    "Many"? I don't think so. There will always be some number of sadistic or otherwise monstrous people, but I suspect they are far more likely to be found in one of the various branches of the State's welfare system, e.g. long-term welfare claimants, old people's homes, orphanages, prisons and other dark places most of us prefer not to think about. People who run businesses are subject first and foremost to market competition (unless they are running a monopoly).

  6. i think people take low wage rates not just because of unemployment. poverty is not just lack of money issue. it has a knowledge component as well which influences one's choices socially and culturally...often leading into deeper poverty. i personally know some Chinese/aboriginal taiwanese who always have access to money, but the choices they make with the money they have and gain leave them in perpetual destitution. in a way, taking the job is driven by a need for money, but it is normative as well because that is the life they grew up in.

    "many" i think is subjective...but if i've seen 10's examples of this personally and i don't have that large of a network.

    to suggest "far likely" to be found in welfare systems....is ahistorical, is it not? where and when has there been an economy that didn't have these types in significant numbers?...even tribal one's have had them...in the modern sense, were these exploiters not one of the influences for the attractiveness of the welfare systems? it's just a continuation...

    i dont think it has to be a monopoly for this to happen, either. markets are also affected by cooperation. not just competition...which does not necessarily mean cartels or monopolies.


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