The folly of world view thinkers minimum wage obsession.

Most realists are skeptical of liberal and leftist claims that mandatory minimum wage increases have no adverse effect on unemployment for the simple reason that ever since the Speenhamland Poor Relief system in the early ninteenth century drove labourers’ families to the brink of starvation as employers, forced to pay a minimum wage, simply cut hours (while demanding the same amount of work) and shifted the financial burden to taxpayers.

In recent years however, minimum wage legislation has become a sacred cow for liberal and left wing politicians. And of course the usual levels of hypocrisy and double standards we have come to expect from those on the left of the political spectrum are in play.  A recent report by the US Employment Policies Institute showed that 174 of the 184 co-sponsors of a bill to raise the federal minimum wage to $15 an hour hired unpaid interns. In Europe, the European Union’s minimum wage laws has been a contributory factor in the illegal immigration crisis. Those who are in the country illegally cannot claim statutory workers’ rights.

At the national level, while Democrats in the US are promising to pass a $15 an hour minimum wage nationally if the Democrats take control of the House in 2018, and British and European socialists are aiming for the £€ equivalent, loopholes make it easy for bosses to get around the law.

Over the decades since the failure of Speenhamland, many attempts to introduce minimum wage laws have failed just as spectacularly, making life harder for the people they were intended to help.

Increasing the minimum wage across the nation is far more damaging than letting unions negotiate local deals with employers or  letting individuals change jobs to seek they pay level they are prepared to accept. It really comes down to how much the maket will stand, bosses have an idea of what the job is worth, workers know what they need to earn.

In cities like London, New York and Paris the $15, €12 £10 wage is not enough for n individual to live on. A studio apartment with enough space for a bed, a chair, a TV and room to twirl a mouse between thumb and forefinger (no change of keeping a cat – you wouldn’t have anywhere to put its litter tray,) rents for the equivalent of £1500 a month, taxes are through the roof and a cup of coffee costs an hour’s pay,, it can be hard to make ends meet. Workers in low paid occupations are forced to rely on state benefits to get by. And so taxpayers subsidise jobs just as happened in Speenhamland two hundred years ago.

starbucks-oxford-street
Starbucks, Oxford Street, London – a high rent area. (Bing Maps bird’s eye view)

On the other hand, a wage that can only provide a poverty level quality of life in the cities can be a good wage out in the sticks. Rents are low and if you can’t afford them plenty of abandoned properties offer opportunities for squatters. Good coffee and a decent bacon sandwich five days a week at the local greasy spoon can cost less than your crappy-frappe-latte on Broadway,  The Boulevard Haussman or The Strand. And while they might not all be quite so economical, who could resist a visit to the Hartside Top Cafe on the road from Hexham to Penrith, the highest cafe in England.

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Hartside Top Cafe (Image source) On the A686 in Cumbria.

And yet, in spite of these differences the do – gooders want to apply a one-sized-fits-all minimum wage across whole nations? Have you ever bought a one-size-fits-all garment. Chances are if it fitted anywhere near properly, you are some kind of freak.

Out in the sticks a minimum wage would be catastrophic, it would put thousands of low skill workers out of jobs, exacerbate the illegal immigration problem as bosses sub – contracted out work to no-questions-asked gang masters.  Even in large, wealthy cities, the minimum wage offers no panacea, a few weeks ago we reported that because of the threatened $15 dollar minimum wage McDonalds in the USA are installing automated cash points to replace counter staff. And if that works out, you can bet franchiseees in the rest of the world will follow suit.

A study from the University of Washington has demonstrated what every businessman knew; that a new minimum wage law in the US state “…reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent.” Not a disaster for a wealthy city like Seattle, but not good in farming communities. And it’s more proof of what you should expect from basic economic theory. There’s a punchline to this story though, and it reveals how cultural Marxism works. Another study from the University of California Berkeley (where the ethos is so left wing it is more a Maoist ‘re-education camp’ than a true University, showed the Washington State minimum wage had no effect of employment in low paid occupations. The title of Daniel Person’s article on the subject gives away the trik, “The City Knew the Bad Minimum Wage Report Was Coming Out, So It Called Up Berkeley.”

Years ago I did a statistics module in my economics and sociology course. The only thing of value I learned from it is, “If you torture data enough it will give you any answer you want.”

 

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