I have always wondered whether increasing the minimum wage would cause massive job losses as employer groups have claimed.

As a contrast, given the huge payments to CEO's both when they are successful and when they totally stuff up, what ramifications have their generous incomes had on the job market?

I mean if CEO's didn't get paid so much then surely there'd be more available for the lower end of the wage scale. And I don't buy the 'pay peanuts get monkeys' 'coz I've worked for more than a few over paid monkeys. Besides a decent living wage would provide a lot more incentive for workers - I know it works for me.

Very "too" wordy article. Coming from an employment law background, just who funded you to write what is so der.. anyway. Or dug out an old assignment? Fund yourself to explore the squillions of dollars for CEO payouts in Aust. which more than surpasses any minimum wage increase potential disasters as Xena so rightly points out. That would be less tired. The reason why tips in the US hospitality industry are almost mandatory is because their minimum wage is below the poverty line in a trailer park. Overseas where minimum wages have to do with what the big fat factory (ie Nike) are prepared to pay to the govt in question - not the workers mind, which is precisely why we in Aust have a shortage of skilled workers, manufacturers moving off shore and cheap imports that we can still afford in Oz on Centrelink payments. A minimum wage increase in Indonesia (with workers probably having to go on strike to get to $2.50 an hour minimum) would most likely threaten the offshore company (likes of Nike) enough to pack up and move to Korea where they have negotiated the labour with that govt. for $1.69 per hour. Everybody benefits but the worker - that's why we as a country have to have a safety net. Driven by the market, we'd all be pieceworking for 50 cents a garment. All very well if your rent is $2.50 a week.
Give me minimum wages or give me poverty! (which is nearly the same now) Stop disecting the small end of town and go after the big guys - author!

A business needs a certain number of employees to run efficiently, you still need this number regardless of what you must pay them. Most businesses in this country work with the bare minimum of staff as it is and couldn’t afford to make jobs redundant, this is particularly so in the small business sector. I wouldn’t expect an increase in the minimum wage to adversely effect employment figures.

Any wage increases must, by necessity, be passed onto the consumer. Has a study been done on whether an increase in minimum wages has an effect on the inflation rate?

Lets put the minimum wage up to $80 per hour so we can all drink more booze after 5 o'clock. Then everybody will be prospereous and happy. Oh and tell Santa I would like a red bike this year.

Of course regulating minimum wages puts pressure on employment. It makes alternatives to labour more appealing and viable over time. The straw that broke the camels back did not do so immediately. The camel did try and stand a while longer just so the statisticians could gather some more data

So terje, you think that the minimum wage should remain unliveable? You have nothing to say about the squillions paid out to the top end?

There really is enough money for a liveable income if the over wealthy were just a little less greedy. I know I will be attacked for such radical 'socialist' views, but no one on this planet is worth millions per annum, where as with out the 'coal face' worker our economy would collapse.

Just think if overnight, every CEO, leader, director, polly vanished from the face of the earth. Electricity would still flow, gas would still be supplied, planes, trains and automobiles would still run - sure the stock market would go into a panic being the abstraction it is. But we would still have a workable world.

Now I'm not suggesting we don't need our esteemed leaders, just that they are not as big a part of the equation as they like to believe. Wage disparity is the culprit here.

And terje, $80 per hour is unrealistic for all - I know you were just trying to make a point, but it was rather ham fisted.

The reason that the lower end is always pilloried is simply because it can be - lower levels don't have the ears of parliament or big business.

Terje, your comment is a nonsense. Of course one has to have balance in wages but as Xena so rightly points out, the big end of town get paid obsene amounts of money with no accountability, yet everytime the living wage comes around, we have the govt and employers screaming about how it's going to ruin the economy and send us all broke. Yet the govt has no qualms about quietly giving themselves pay rises and perks. Whilst we are stuck living in a capitalist society, we do have some socialist responsibilities such as ensuring workers are not paid below a poverty line, which is constantly upping itself thanks to introductions of more taxes and levies ad nauseum. The Harvester Case is still relevant!

Di,

The government steals $5700 per year in income tax from a person earning $30,000 per year. Work towards eliminating this abomination.

The Biblical teaching on Industrial Relations:

"You shall not muzzle an ox, as it is treading out the grain"

There are 2 major obcenities in the Australian work context, as mentioned above, the HUGE payouts to CEO's is one, and the blatant power mongering and extortion carried out by militant Unions is the other.

Only when we see the meaning of the proverb/verse above, in its wonderful simplicity, and apply those values to our work places and work relations, will be have true justice.

Why don't you 'muzzle' an ox treading grain ? simple, it EATS some grain while treading. But the HUGE CEO payouts resemble to me the idea of the farmer muzzling the poor ox just to get more 'sharecropper value' out of its work. Unfortunately when u dont allow a working ox to benefit from its work, one tends to wonder about its loyalty and committment to the treading process.

Then, an ox which spent most of the time eating and getting fat, with not much treading, would soon end up as sunday's roast. So, there is a line between "Lazy opportunistic worker gluttony" and "Exploitative greedy management" where justice lies.

What bothers me most about the minimum wage idea, and constantly trying to advance it, is that the advancing momentum seems to come more from a motive of 'staying relevant' by rapidly fading Unions, than true worker benefit.

When a manufacturer costs his product, he factors in Labor as a cost.
When that 'cost' becomes such that he loses his competitiveness, there are 2 choices "go broke" or "Source off shore"

Many local manufacturers are now becoming 'importers/distributors' and the people who worked for them are now redundant. This is because people further down the supply chain towards the final product, are automatically factoring in "Chinese Pricing".

So, the concept of 'minimum wage' should be changed to 'realistic wage in a competitive global environment'

Boaz, industrial relations and economics is just so not your forte. Stick to the good book and kill a calf and avoid the GST by not barbequing him and setting up a stall outside your cottage selling beef kebabs. The public liability insurance would be so outside the temple and the kebabs wouldn't pay the premium. But then again, try the whole enterprise with loaves and fishes, and then you may get Tony Abbot as your 2IC!

I can’t understand why urban people are complaining.
Their wages have gone up, as per govt regulation, equal to the GST.
Sounds good to me, having you income regulated up with the GST.
My income is derived from world commodity pricing, that has had very little change in over 30 years, yet inflation has been about 15 times.
Talk about the spoilt brat syndrome, get a gift, but want more.

Ceo's get a payout, well so do the coal face workers of the market, so what’s good for the gander, happens to work better for the goose.
Maybe the problem is the fact that Ceo’s wages rise at a much faster rate than the coal face workers.

Maybe we should spend some time finding out why this is happening?

A question to the supporters of minium wage's

Who pays for it?

The employer has higher costs
He adds his margin to the higher cost of production, giving him increased profits as a result of the increased sale price.
We have inflation, a round of wage rises occurs, with the top end of town getting a larger increase than the bottom end of town.

No-one has yet had a reduction in the ability to consume, so minium wage has yet to be payed for.

Only people left out of this equation is the rural sector that sell onto the world market to the factory workers of the world, (they have to eat as well, with limited income)

Seems as though the people paying for this policy are those without a minium wage that is based on world markets, and not the domestic market like the labour market in Australia.

To say that “productivity improvements" pay for it is akin to stealing the lower sale prices that would result from all members of the community, particularly those on lower wages.

Ian Watson’s article was excellent. It reinforced materials distributed by the ACTU some time ago from the British Low Pay Commission. Watson’s approach to Card and Kruger was significantly more advanced than Andrew Leigh’s earlier contribution. Faced with Card and Kruger’s hard evidence, Leigh, following American paradigms, discovered that increasing West Australian minimum wages by 1% caused 0.13% job loss. Leigh’s position was selective and appears not to have considered the opposite findings from New Zealand (referred to by Watson).

Clearly, in some circumstances you can find insignificant job losses, in other circumstances, zero impacts, and in others ‘positive employment responses’. Which evidence you choose to proffer is more an ideological position than an objective, economic one.

The real economic test that should be applied is whether increasing wages has a greater negative employment effect than does increasing commercial margins. There seems to be a strong relationship between cutting labour costs and boosting profits. This probably impacts on wages/employment patterns. But commentators seem to be politically disinclined to make such inquiry.

Politically inspired, unnatural fixations on exaggerated threats to employment (0.13%!) by wages hikes is an old canard. As Adam Smith observed;

“Our merchants and master-manufacturers complain much of the bad effect of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains”. [Smith, Wealth….., Book 1, Ch IX]

Unfortunately once Australia has been exposed to free-trade, wages and all other conditions must fall. Companies can easily move their capital to low wage countries where workers with the same level of productivity, training, and equipment can easily out perform Australian workers. I know this is suggestive of an Australian economic wasteland, but it is the wasteland we have had bequeathed to us by Paul Keating, Bob Hawke, and the ALP and Democrat parliamentarians who have allowed practically every whim of the globalisers to get through parliament. Free-trade for Australia equals falling wages. The weakest get hit first.

Some question’s Chris, it seems you do not like free trade.

How would we protect the exporters from the lower world market production costs?

As I see it, they get lumbered with the higher local production costs, but are not able to claim it back from their consumers.

Surely if you can claim your higher production costs back from your consumer’s, you end up at a position that is the same as before you started, but with a devalued currency?

The minimum wage debate; do they take in to account the poorer terms of trade that is inflicted on some sections of the economy as a result of increased production costs from the regulated minimum wage?