Wonks for higher unemployment
In this case the ippr, which thinks that Londoners should have a higher minimum wage, mainly it would seem because:
Now why might average pay in London be higher than in the rest of the country? Let me count the ways... London weighting in the public sector and in large corporations, the City, the headquarters of most professional services organisations, the media etc etc. Comparatively little agricultural work, far fewer unskilled jobs outside the catering / hospitality sectors and so on. All remarkably obvious, frankly. A burger flipper in London is highly unlikely to be any more skilled than one in Skelmersdale, and the core economic message sent to that burger flipper is that he or she would be better off flipping burgers in Skem than Kensington because of wage relative to the cost of living, or perhaps he or she should seek to get better educated / trained and do something more remunerative.
The ippr manages a particularly good peppering of its foot with buckshot with this comment:
Folk on lower incomes are disproportionately likely to be spending at businesses that employ low skill / wage employees - retailers, fast food joints etc etc - and any increase in the cost of employing these people will be passed on to consumers. A director at Goldman Sachs is unlikely to wince at a rise in the price of basic foodstuffs, whereas a few pence here or there is rather more significant for the office cleaner. Note also the second sentence, this being a frank admission that the benefits system acts as an incentive not to work, a truism over which I thought the Left was still in denial.
And another cute aside:
There we have it - 'social justice' is just as good if Procrustes cuts off the extremities of those too tall for his bed as if he stretches those too short. As I have noted before, 'social justice' is envy soft soaped into a higher virtue.
Lest anyone doesn't 'get' the headline, I cannot hope to do better than quote Milton & Rose Friedman:
"The minimum wage law requires employers to discriminate against persons with low skills. No one describes it that way, but that is in fact what it is. Take a poorly educated teenager with little skill whose services are worth, say, only $2.00 an hour. He or she might he eager to work for that wage in order to acquire greater skills that would permit a better job. The law says that such a person may be hired only if the employer is willing to pay him or her (in 1979) $2.90 an hour. Unless an employer is willing to add 90 cents in charity to the $2.00 that the person's services are worth, the teenager will not be employed. It has always been a mystery, to us why a young person is better off unemployed from a job that would pay $2.90 an hour than employed at a job that does pay $2.00 an hour". 'Free to Choose', Avon 1979, page 227
"ippr’s (yup, they refuse to capitalise the 'i' even at the start of a sentence) research shows that a minimum wage worker in London earns just a third of the average wage of the capital. But the average UK worker on minimum wage earns more than half the national average pay".
Now why might average pay in London be higher than in the rest of the country? Let me count the ways... London weighting in the public sector and in large corporations, the City, the headquarters of most professional services organisations, the media etc etc. Comparatively little agricultural work, far fewer unskilled jobs outside the catering / hospitality sectors and so on. All remarkably obvious, frankly. A burger flipper in London is highly unlikely to be any more skilled than one in Skelmersdale, and the core economic message sent to that burger flipper is that he or she would be better off flipping burgers in Skem than Kensington because of wage relative to the cost of living, or perhaps he or she should seek to get better educated / trained and do something more remunerative.
The ippr manages a particularly good peppering of its foot with buckshot with this comment:
"ippr analysis shows that the ‘purchasing power’ of the minimum wage in London is weaker than anywhere else in the UK. ippr (see, they really hate capital lettters) argues that a higher minimum wage would also make work more attractive to London’s unemployed".
Folk on lower incomes are disproportionately likely to be spending at businesses that employ low skill / wage employees - retailers, fast food joints etc etc - and any increase in the cost of employing these people will be passed on to consumers. A director at Goldman Sachs is unlikely to wince at a rise in the price of basic foodstuffs, whereas a few pence here or there is rather more significant for the office cleaner. Note also the second sentence, this being a frank admission that the benefits system acts as an incentive not to work, a truism over which I thought the Left was still in denial.
And another cute aside:
"“If the Government is serious about tackling the gap between rich and poor but reluctant to tax higher earners, a higher minimum wage in London – where average wages and living costs are significantly higher than across the rest of the country - must be part of the solution.”
There we have it - 'social justice' is just as good if Procrustes cuts off the extremities of those too tall for his bed as if he stretches those too short. As I have noted before, 'social justice' is envy soft soaped into a higher virtue.
Lest anyone doesn't 'get' the headline, I cannot hope to do better than quote Milton & Rose Friedman:
"The minimum wage law requires employers to discriminate against persons with low skills. No one describes it that way, but that is in fact what it is. Take a poorly educated teenager with little skill whose services are worth, say, only $2.00 an hour. He or she might he eager to work for that wage in order to acquire greater skills that would permit a better job. The law says that such a person may be hired only if the employer is willing to pay him or her (in 1979) $2.90 an hour. Unless an employer is willing to add 90 cents in charity to the $2.00 that the person's services are worth, the teenager will not be employed. It has always been a mystery, to us why a young person is better off unemployed from a job that would pay $2.90 an hour than employed at a job that does pay $2.00 an hour". 'Free to Choose', Avon 1979, page 227
Labels: Common sense? What's that?, Sane economics, Wonks, Workplace
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on Monday, September 03, 2007 at 7:14 am.
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It's really odd, whenever I see the word "wonks" my brain mis-reads it. For some reason in my mind the "o" is replaced by another vowel and two extra letters are added towards the end.
I suspect that whoever coined the word hoped that that confusion would arise....
I work in Birmingham. I have to live in Wolverhampton because of the high house prices (£50k extra for a 3 bed semi) where I live.
I know people who work in the north east. They can't afford to buy in Newcastle, Durham etc.
Try buying a house if you are a low wage earner from a rural area.
High cost of living is everywhere now, not just London, so ippr have lost the plot -again.
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