Theoretically this seems to have some merit but is there really any evidence that lowering the minimum wage really does lower unemployment levels amongst poorly skilled workers? What are the unemployment figures for such workers in the US, the UK and New Zealand?

I don't know the answer to this, but a quick google search has brought up a book from David Howell published in 2005 claiming 'low skilled workers in the United States fare the worst in terms of both relative earnings and the probability of being unemployed'. ttp://books.google.com/books?id=BR1VrJ50A90C&pg=PA50&lpg=PA50&dq=low+skilled+unemployment+figures+us&source=web&ots=3or9ZPb06X&sig=hUOFtVMGBqMLjlJRFnpXBbSD9q4

(Sorry about the long url)

I repeat the same point I put to Peter Saunders on 25 August 2005, that is two and a half years ago, in response to his article "Defining poverty":

http://forum.onlineopinion.com.au/thread.asp?article=3737#12294
There is ample evidence that poverty - and not just poverty
in a relative sense - is real from Australian journalist
Elisabeth Wynhausen's "Dirt Cheap" and, before that,
American journalist Barbara Ehrenreich's "Nickel and Dimed",
neither of which Peter Saunders has responded to either in
"Australia's Welfare Habit" nor in any of the essays that I
have read.

Peter Saunders must be familiar with these works, given his field of expertise. So, why won't he tell us where they are wrong?

---

I recently saw a documentary on the rapacious predatory US retail company Wal-Mart which pays its employees so little that many of its employees don't eat enough to buy lunch. Interviewees attested to the fact that they witnessed employees sitting in the Wal-Mart meal rooms doing nothing during their lunch break, not even eating.

Wal-Mart employees pay so little taxes that US taxpayers actually subsidise Wal-Mart's profits together with their destruction of local community businesses.

No doubt the Australian equivalents of Wal-Mart contribute generously tax-deductibly to the Centre For Independent Studies so that Peter Saunders can go churning out material like this to advance their interests.

---

James Sinnamon
Independent candidate for Lord Mayor of Brisbane
http://candobetter.org/SweepOutCityHal

Peter Saunders article seeks to justify repetition of the employment practices used in Centro Lavington for shopping trolley collectors.

The trolley collectors used to be intellectually disabled adults who had grown up in the locality, they knew where to find the trolleys, had a job they could do and could remain at home.

The trolley collection contract was outsourced to another company who fired the existing collectors and bought in Somalis from Melbourne. The new collectors were as black as pitch, don't speak English, don't know there way around. St Vincents De Paul had to find them accommodation, find furniture and clothing as the new trolley collectors were earning less than the old collectors which was way below the minimum wage. Meanwhile the local intellectually disabled people have to jump through Centrelink hoops

Employers need to be held responsible for ensuring their workers earn a wage that allows them to live in frugal comfort, and if you can't afford to pay a decent wage perhaps you shouldn't be in business. This country is full of unsustainable microbusinesses started by people who couldn't work for someone else - often no demand for their labour as large employers lay off staff

"With a bit of ingenuity, he could cut the minimum wage"
Well that is what Rudd and the trade union officials intend to do, just as they have done in the past. Such as taking wage indexation off workers back in 1985 under the ALP and ACTU accord. And then sabotaging every struggle of workers for a liveable wage. Of course, they did offer a couple of percent which was not a rise. Whilst rents, housing and all prices including petrol have gone up substantially. And the CEO's have had some 400 substantial rises. Rudd in Queensland was known as "doctor death" for his cutting essential services. In todays Financial Review Rudd assures the profiteers there will be no additional funding for public medical/hospitals system.

The idiocy of this position "to cut the minimum wage" is repeated globally and leads to a race to the bottom. What they are not doing this in the US, China and other countries? Of course, those who float this right wing reactionary position of "cutting the basic wage" are usually doing very well, thank you.

Peter Saunders: Piffle!

1) The assumption that all people who are out of jobs are unskilled or low skilled, if it was once true, is no longer valid

2) Publishing a list of countries where the minimum wage is lower is pointless without corresponding cost of living evaluation. Medical and education costs, for example, are not incurred in some countries where the minimum wage may be a few cents lower

3)The "high" minimum wage is offset by the low working hours. Even if the minimum wage were triple current rates it would not help workers who are considered full time employees yet are only given a couple of days a week work.

4) As for the high dropout rate of "courses". The multitude of reasons for this would become clear if Mr. Saunders himself entered into one of these training programmes. There would be enough material there to enable him to write many more articles. All with more validity than this one.

Cutting the minimum wage while the costs of living are spiralling would seem a reckless and unfair policy and would only add to the growing numbers of working poor and the greater divide between the haves and have nots.

Shouldn't we be about creating equal access to opportunities for success for all not just those with temporary niche' skills who have bargaining power.

To argue that minimum wage workers are generally the 'second income' in a family so they are not poor is ludicrous. Are we now to advocate discrimination to the mix as well considering that women are usually the perceived 'second income'.

What about those who are not in that situation? Are they to eat cake?

Cutting the minimum wage by 20% but giving low-paid workers a tax break so that they don't lose any actual income sounds somewhat plausible at first but if the aim is to boost employment in low paid sectors it could end up being little more than wishfull thinking.

Some employers may simply decide that 20% cheaper labour costs makes it more economical and practical to make a few staff redundant and increase the now-cheaper working hours of others. Employers will not hire more people than they can use simply because they are a bit cheaper. The effect on unemployment at the bottom end may be insignificant or even negative.

Furthermore, with the government more or less "subsidising employment" in this manner, many employers may decide to use cheaper labour as a personal windfall. Nearly everyone wants more money in their own pocket and employers are certainly no exception. Much of the cost saving may end up being spent on bigger home theatre units and more expensive bathroom fittings in employers homes. Thus, the government may end up not increasing employment but instead subsidising the lifestyles of the better off, something they already do to an unforgivable degree. It could just increase the gap between the haves and have-nots.

I am sceptical of probablity of this significantly reducing unemployment and fear that it may simply work as a blunt tool to transfer more wealth from the poorer to the richer.

What Peter Saunders is proposing, using the welfare system to subsidise inadequate wages, was tried (and failed) in early 19th century Britain (google Speenhamland system). In this case the taxes to support inadequate wages were levied at the local parish level. Market wages promptly fell, as Fozz predicts, because the employers knew that the parish would make up the difference between the wages they paid and what the workers needed to survive. Previously independent workers were drawn into the system because they could not compete with subsidised labour, much as modern workers have trouble competing with 'workfare' clients or illegal immigrants. Social inequality grew, because labourers with a bit of property were forced to sell it and live on the proceeds before they were eligible for the subsidy.

As more and more people were drawn into the system, it became unaffordable. Rates on property were increased to pay for it, while benefits fell. Eventually the wages plus the benefits were worth less than the wages alone before Speenhamland. Small employers were actually worse off, because the cheap labour did not make up for the higher taxes. The only real winners were large scale employers of unskilled labour. Eventually Speenhamland had to be abandoned.

Peter Saunders does have a case so far as the tax system is concerned. There a ridiculously low tax threshold, the lowest rate is high by international standards, and Parliament refuses to consider family responsibilities when taxes are levied. Lower income people are often left with too little income to survive. The government then gives them back some of their own money in the form of a welfare payment - which can be quickly snatched back if they earn a bit more. Effectively, confiscatory taxation is being imposed in the guise of withdrawing a welfare payment.