FencePost, and I think, Des Moore, have brought up the idea of the government making up the difference between market wages and subsistence for low income people. The problem is that this scheme was tried (and failed) before, in early 19th century England (google 'Speenhamland system'). The taxes to support it were rates at the local parish level rather than federal taxes.

Wages were depressed because the employer knew that the parish would make up the difference between the wages he paid and what the worker needed to survive. Previously independent workers ended up in the system because they were unable to compete with subsidised labour, just as they are now often unable to compete with illegal immigrants or "workfare" clients. Labourers with a bit of property, say a small piece of land, had to sell it and consume the proceeds before they could get help. Social inequality grew.

As more and more people were drawn into the system, the rates went up and benefits were reduced. Eventually, the wages plus benefits were less than the wages alone before Speenhamland. Smaller employers were hurt more by the higher taxes than they were helped by the cheap labour. The real winners were the large scale employers with many employees. Eventually the system simply became unaffordable and collapsed, with the workhouse system being introduced in its place. Why does FencePost think the outcome would be any different now?

Indeed. Why should anyone but the employer pay for the labour from which they obtain a profit.

BruceBruce i think most economists would agree that allowing market forces to determine wage rates would reduce inefficiencies or 'unemployment' (be that equitable or not).

i'm not sure which economists in particular you were referring to but google 'phil lewis minimum wage'. he is one of the economists directly advising the fair pay commission.

Divergence has offered a strong critique of my suggestion that the market should determine wages and Government should make up the difference between the market price and a reasonable income.

I don't know how to respond effectively. I resist the argument that because it once did not work before (as per the historical example) that it could not work now. I mean, it is working now! For the unemployed the wages equal nil, and the minimum income is whatever the government benefits are, and we seem to accept this as viable.

There would certainly need to be some mechanism to prevent any exploitative employers paying less than the market (if that be possible) and relying on government to pick up the burden.

I fair minimum rate of pay is an amount that the average family can live on. People place to much confidence in market forces, do none remember the last two world market crashes. As for the stupid arguement about a $600 or$700 if the business is making so little profit that it could not afford that increase it should go bankrupt as market forces philosophy dictates, as it does not serve a market properly. Tory extremeists always want to force the "slaves" wage down so they can pocket more profit, how about a nice big "wage cut" for Des, I'm sure he'd enjoy that, wouldn't you Des?

Pell

I'm sure googling a patsy for the government will retrieve your desired result, but try replacing the name with 'economist' and add unemployment rate, and you will find some diversifying views.

But, I had digressed, and was referring to workchoices as a whole when I mentioned the unemployment rate, but still, it appears to be a more popular view that lowering the minimum wage would actually have a detrimental affect on not only the unemployment rate, but the siciety as a whole. After all, after a decade of "unprecedented rises in real wages", we still find ourselves with a worsening cost of living ratio. Making the cost of living worse for those at the bottom of the spectrum will create jobs how?

Only businesses with over 100 employees would be able to afford a new employee given a marginal cut in minimum pay, and, given that companies run with only the staff required, they will not hire another simply because the money is there, this would be re-channelled as "profit".