Thursday, 18 January 2007

Does business need Wellington to manage wages

A lot of tosh has been talked about the the ten percent increase in NZ's minimum wage from April next year, much of it by those who had been active in pursuit of that increase as a way of radicalising new activists for their socialist agenda. (Look for even more mechanisation of unskilled jobs beginning in about April next year.)

Does business need Wellington to manage wages? That question is powerfully argued in the negative at the Mises Daily (just read "Wellington" for "Washington") in a response to arguments by Clinton's former Labor Secretary Robert Reich in favour of the Democrats' plan to hike the minimum wage by $2.0/hour.

Reich offers all the usual wrong arguments, all soundly dismissed.
  1. "Businesses can pass the hike along to consumers." Not true. Consumers may simply stop buying the hiked stuff altogether.
  2. "The minimum wage increase wouldn't be a minimum wage increase ... [since] the new proposed minimum is more like an inflation adjustment than a real increase." Not true: "To "adjust" the regulation for inflation will simply force businesses to lay off some of those marginal workers and to restrict the quality of their products, not to mention hiking prices."
  3. "The minimum wage increase would actually help small businesses." Yep, Reich even tries that line of 'argument.' The Mises Blog summarises: "First, Reich argued that the minimum wage hike wouldn't hurt businesses because the damage would be passed on to another group. Then, Reich denied that the hike would be a hike. Now, in his third argument, Reich is claiming that the non-hike hike, the harm of which could be shunted to others, is actually not harmful. OK?"
Okay? Got that. It's really worth reading the Mises Daily's whole demolition of Reich's fatuous fart on minimum wages. Enjoy.

LINK: Does business need Washington to manage wages - Robert Murphy, Mises Daily

RELATED: Minimum Wage, Economics


  1. Can I point out the obvious: that minimum wages are not set for the benefit of business.

  2. I'll point out the even more obvious: The workers suffer just as much from this as the businesses.

  3. This year EPMU action resulted in 5% pay rise for Posties.
    Since then NZ Post has increased the price of its hold/redirection service.
    It has also installed more machines to sort mail.
    Mail numbers are decreasing as more people use other cheaper forms of communication.
    Because the pay rise was not related to increased productivity or supply/demand of labour the epmu's action has made workers jobs less secure and the product they supply less attractive to customers.

  4. Anon, what exactly is your point? That all strikes are bad or just that one was?

  5. Ahhh Kane,...? I believe his point is that State forced wage rises are bad for workers long term employment prospects.


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