Monday, August 19, 2019
EDITOR, The Tribune,
Some faulty economic thinking is predictably creeping into the narrative of the debate for increasing the minimum wage and it has the potential for undermining support for the increase at this time, especially among those not fully committed to it in the first place.
When an increase in the minimum wage is viewed mainly from the perspective of an increase in the cost of living and as a potential drag on economic performance, it is clear that the full picture is being missed and, in point of fact, a false story is being told.
When one considers that the proposed increase in the minimum wage is, by definition, directed at the lowest levels of economic welfare, where spending on welfare is demonstrably insufficient, it should be reasonably obvious that an increase in income at this level of society is more likely than not to lead immediately to higher levels of spending.
In fact, a curious irony in this debate is that those economic agents complaining most about a reduction in economic performance as a consequence of increasing the minimum wage are likely to include the principal beneficiaries from this additional spending by the poor.
The recipients of this largesse literally cannot wait to spend it. It will not likely become savings, not even as provision for a “rainy day”.
It is likely also true that those responsible for payment of this increase in benefit to the poor cannot wait in their effort to find ways to pass it on to consumers.
Remember, though, we are all basically consumers and there are times when an increase somewhere in our economic arrangements should correctly lead to a “realignment” within those arrangements.
The rationale for a minimum wage rests squarely on the assumption that there should be a minimum living standard within a society, and our economic arrangements should be adequate to accommodate that.
COMMON SENSE
Nassau,
August 18, 2019
Comments
joeblow says...
All sensible employers (businesspersons) will make concessions and pay more to keep good productive staff. It is the scarcity of good workers that will keep the minimum wage low or encourage layoffs to minimize losses to businesses.
Posted 20 August 2019, 8:49 a.m. Suggest removal
Porcupine says...
I think you're missing the point of the letter writer. If consumption increases, there is more money available to attract a "better" worker. There is an adage, you get what you pay for. The multiplier effect in money spent on the lowest wages is far higher than the money put into an owners, or shareholders pocket. As most academics and honest economists point out, it is income disparity that warps any possibility for a workable market. The income disparities in the modern world today far exceed any in historical times. If a person is only, if only meeting their rent food and light bill, what contribution can they make to a consumer driven market? Little to none.
Posted 20 August 2019, 9:15 a.m. Suggest removal
momoyama says...
Thank you, Porcupine, for clarifying my Dad's sensible point. By the way, I lost your number. Can you text it to me again?
Posted 20 August 2019, 1:33 p.m. Suggest removal
DDK says...
How much of increased minimum wages would go straight to the numbers houses? Why are many speaking as though it's a done deal? Why should greedy union bosses reign supreme?
Posted 20 August 2019, 2:40 p.m. Suggest removal
Porcupine says...
DDK,
I understand where you are coming from. However, please read the history of labor unions in the US. They were formative in bringing so many workers into the middle class. I have been on both sides of the issue. Unions have sold out and the union leaders are anything but. I agree. The numbers houses, in my opinion, are merely a symptom of a dysfunctional economy. I don't gamble, but I try to empathize with those who work hard, and still don't make enough to pay their bills and feel they need to take the chance to hit a number. Real world big finance is gambling, the difference being that those taking the risks are doing so with other people's money and they happen to wear suits. Insurance companies are gamblers. And, when the banks and other financial institutions make bad bets, the rest of us bail them out. This is the truth from which we turn our heads.
Posted 20 August 2019, 3:13 p.m. Suggest removal
hrysippus says...
A minimum wage mandated by law distorts the working of the Invisible Hand postulated by Adam Smith. This slight increase will only have a small effect as most business entities pay far more than the minimum anyway due o supply and demand of the productive part of the labour force.The only results will be very slightly higher prices for all goods and services to cover this extra expense and the greatly challenged individuals seeking a job will find it a little harder to get a position in a business willing to hire him or her.
Posted 21 August 2019, 1:47 p.m. Suggest removal
momoyama says...
I hope you are joking my friend. Nobody could be ignorant enough to believe that debunked, neoliberal garbage, especially in the Bahamian context.
Posted 21 August 2019, 6:59 p.m. Suggest removal
Porcupine says...
You are right in both the debunked, and neoliberal garbage.
Posted 22 August 2019, 6:38 a.m. Suggest removal
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