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Government Subsidies for businesses needed! watch

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    Amount of 16-24 year olds unemployed is soon to top 1 million, when will dave pull his head out his ass and supply businesses more incentives to take on more young people and provide training? Training being the key point here! Incentives should be offered to firms to provide training!
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    In what form would the subsidy be and how would the government finance it?

    The company I work for finances are so tight we wouldn't be able to keep someone full-time on minimum wage, if the government paid their wage we could probably hire them.
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    Businesses already gets loads of tax breaks, if a business is struggling, the people in charge are not doing their jobs properly and the taxpayer should not give money to incompetents.
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    Nope, a rather stupid idea to provide businesses with a subsidy not to mention it would probably be illegal under the various trade laws.

    However, a better option might be to guarantee a proportion of loans for smaller businesses especially startups.

    An even better option of course would be to provide some tax-holidays or perhaps the government could come up with a scheme to provide employers with some scums on JSA to work on a trial basis.... the trial would be on a 50:50 basis... win-win for the government and employer.
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    Training is not the same as employment.

    The best way to reduce the mortifying youth unemployment figures is to get rid of the minimum wage. That law systematically causes people with low skills, young people, to never get jobs and thus never improve their skills and get higher wages.
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    (Original post by Classical Liberal)
    Training is not the same as employment.

    The best way to reduce the mortifying youth unemployment figures is to get rid of the minimum wage. That law systematically causes people with low skills, young people, to never get jobs and thus never improve their skills and get higher wages.
    Youth unemployment was higher in the 1980s and 1990s than it is today, and the minimum wage was only brought in in 1998. It has only been since the recession hit in 2008 that youth unemployment has been higher again (same as unemployment in general).

    And bear in mind as well that despite the 2008-09 recession being much deeper in terms of loss of output, than the 1980-81 or 1990-91 recessions, the increase in unemployment was lower in this recession than it was in those recessions, under a Tory government which hadn't signed up to the European Social Chapter and didn't have a minimum wage or Labour's working conditions.

    There is no hard evidence showing that the minimum wage or any of Labour's employment reforms, has had an employment effect when separated out from the effect of the recession. There have been plenty of studies on this from the IFS, LSE, UCL etc, loads of pdfs online if you search for them.
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    (Original post by Erich Hartmann)
    or perhaps the government could come up with a scheme to provide employers with some scums on JSA to work on a trial basis....
    And herein lies the biggest problem with youth unemployment, or long term unemployment.

    Lots of people who work in the private sector have two general views

    - people who are long term on the dole should be forced into work by having their dole cut
    - it shouldn't be the government who provides jobs, it should be the private sector that provides the jobs

    But then if you ask those same people....how many long term unemployed youths would they take on in their business, they would balk in horror...."God, no, MY business is ruthless and competitive, I simply can't afford to carry people like that".

    And that is why the private sector doesn't recruit from the pool of long term unemployed.

    To a certain extent it is the same when you are talking about ex public sector staff. A lot of people in the private sector will have the view that there are too many people doing non-jobs in the public sector, who wouldn't last five minutes in the private sector, so the state should cut them off the payroll. But then will the private sector pick them up...? nope. They will just be on the dole.
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    Because government subsidies for unprofitable companies have worked out so well in the past.

    Need I draw your attention to British Coal and Gas? :rolleyes:
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    (Original post by MagicNMedicine)
    There is no hard evidence showing that the minimum wage or any of Labour's employment reforms, has had an employment effect when separated out from the effect of the recession. There have been plenty of studies on this from the IFS, LSE, UCL etc, loads of pdfs online if you search for them.
    There is no hard empirical evidence to prove either of our conjectures. I do not think empirical methods are an appropriate way to approach evaluating the minimum wage. As you say there are other factors which influence the data. How these other factors effect employment and to what extent is still arbitrary judgement to even the most well trained economist.

    As I think empirical approaches are impractical as a way of evaluating the minimum wage we ought to default to theoretical models based on self evident or otherwise proven truth. And when approached with that methodology the minimum wage does not achieve its intended goals and often works directly against them.

    The only goal the mininimum wage does achieve is to protect labour unions. The mininimum wage is not lobbied for by poverty or youth groups. It is lobbied for by trade unions to protect their members from competition. I think that is all the evidence you need to evaluate the minimum wage :rolleyes:

    There have been interesting studies into how racist labour unions in South Africa used the minimum wage to stop black people from competing for jobs. Naturally there were some well intended sponsors of a high minimum wage for black workers. But the real motive was racism and protection.

    In addition almost half of British youth today are out of work. Are you seriously telling me that getting rid of the mininimum wage would not allow some of these people to get back into work? Avoid hysterisis? Gains skills that will allow them to achieve higher wages? And generally improve their lives in the short term and long term?

    The most vulnerable in society are the people most hurt by the minimum wage. Every young person without a job is a tradgedy. There is a simple cure that requires no deficit spending or long term planning. Get rid of the minimum wage and some of that 50% out of work will find jobs.

    Neo-Keynesian economics justifies itself in large part on sticky wages. They rightly argue that if wages do not fall this can lead to a massive waste of resources ( which is what the minimum wage is doing right now in my opinion). However rather than having to artificially stimulate the economy because wages were made rigid (because of laws like the NMW), why not just allow wages to fall to equilibrium levels?
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    Magic Medicine - you're not looking hard enough: there's a ton of literature that has shown there to be a deleterious correlation between the minimum wage & [youth] unemployment. You might want to have a look at the Institute of Economic Affairs or the Adam Smith Institute.

    Having said, you can easily deduce the negative correlation a priori: if your labour is worth only £3.50 for the commodity or service being produced, then it stands to reason that when the minimum amount an employee can receive extends above the maximum value of labour, the employer will not employ that individual. Why would anyone pay someone £5.60 if the net effect is a loss?

    Supply & demand factors considerably in the market setting wages: individuals compete freely in the labour market – one of the most cataclysmic events, insofar as wages are concerned, is mass immigration: immigration deflates the money wage; the wage of an individual fluctuates depending on how many competitors there are in the labour market.
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    (Original post by Alfred_Milner)
    Supply & demand factors considerably in the market setting wages: individuals compete freely in the labour market – one of the most cataclysmic events, insofar as wages are concerned, is mass immigration: immigration deflates the money wage; the wage of an individual fluctuates depending on how many competitors there are in the labour market.
    Not as simple as that. As you get more immigrants the demand for goods and services increases. These immigrants want food, cars, heat, homes ect. This increases the profitability of producing more of these goods and services. And as the demand for labour is derived from the product market. The demand for labour rises and thus wages rise.

    In addition, suppose these immigrants do undercut 'British' workers. This reduces input costs. This puts downward pressure on the prices of goods and services. Thus wages have actually risen relative to prices even though they have fallen in nominal terms.
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    (Original post by Classical Liberal)
    There is no hard empirical evidence to prove either of our conjectures. I do not think empirical methods are an appropriate way to approach evaluating the minimum wage. As you say there are other factors which influence the data. How these other factors effect employment and to what extent is still arbitrary judgement to even the most well trained economist.

    As I think empirical approaches are impractical as a way of evaluating the minimum wage we ought to default to theoretical models based on self evident or otherwise proven truth. And when approached with that methodology the minimum wage does not achieve its intended goals and often works directly against them.

    The only goal the mininimum wage does achieve is to protect labour unions. The mininimum wage is not lobbied for by poverty or youth groups. It is lobbied for by trade unions to protect their members from competition. I think that is all the evidence you need to evaluate the minimum wage :rolleyes:

    There have been interesting studies into how racist labour unions in South Africa used the minimum wage to stop black people from competing for jobs. Naturally there were some well intended sponsors of a high minimum wage for black workers. But the real motive was racism and protection.

    In addition almost half of British youth today are out of work.
    Are you seriously telling me that getting rid of the mininimum wage would not allow some of these people to get back into work? Avoid hysterisis? Gains skills that will allow them to achieve higher wages? And generally improve their lives in the short term and long term?

    The most vulnerable in society are the people most hurt by the minimum wage. Every young person without a job is a tradgedy. There is a simple cure that requires no deficit spending or long term planning. Get rid of the minimum wage and some of that 50% out of work will find jobs.

    Neo-Keynesian economics justifies itself in large part on sticky wages. They rightly argue that if wages do not fall this can lead to a massive waste of resources ( which is what the minimum wage is doing right now in my opinion). However rather than having to artificially stimulate the economy because wages were made rigid (because of laws like the NMW), why not just allow wages to fall to equilibrium levels?
    Where is the evidence that almost half of British youth are out of work?

    The minimum wage makes up very small % of the economy makes very little difference to how the economy performs.

    Most people working for minimum wages are concentrated in the service industry with the majority in retail, hospitality and hairdressing. If the MW was abolished, you might get a few more jobs in these sectors but not in the jobs that add more to the economy like manufacturing and other high value jobs.

    You might also see an increase in unemployment if wages go so low that people find they are better off on benefits and won't take up the jobs.
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    (Original post by Classical Liberal)
    Not as simple as that. As you get more immigrants the demand for goods and services increases. These immigrants want food, cars, heat, homes ect. This increases the profitability of producing more of these goods and services. And as the demand for labour is derived from the product market. The demand for labour rises and thus wages rise.

    In addition, suppose these immigrants do undercut 'British' workers. This reduces input costs. This puts downward pressure on the prices of goods and services. Thus wages have actually risen relative to prices even though they have fallen in nominal terms.
    This is correct.

    Although technically the right answer is "you cannot say", it depends which effect dominates the other....wages MAY actually rise relative to prices or they may fall relative to prices, it depends on whether the undercutting of wages has a stronger effect than the reduction on prices.
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    (Original post by Classical Liberal)
    There is no hard empirical evidence to prove either of our conjectures. I do not think empirical methods are an appropriate way to approach evaluating the minimum wage. As you say there are other factors which influence the data. How these other factors effect employment and to what extent is still arbitrary judgement to even the most well trained economist.
    You can't just have abstract theory alone, you need the empirical evidence to tell you what is going on, so you can readjust the theory. And it is the job of the economist to separate out what effect one variable has on the dependent variable by controlling for others, this is what econometrics is.
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    (Original post by Classical Liberal)
    Not as simple as that. As you get more immigrants the demand for goods and services increases. These immigrants want food, cars, heat, homes ect. This increases the profitability of producing more of these goods and services. And as the demand for labour is derived from the product market. The demand for labour rises and thus wages rise.

    In addition, suppose these immigrants do undercut 'British' workers. This reduces input costs. This puts downward pressure on the prices of goods and services. Thus wages have actually risen relative to prices even though they have fallen in nominal terms.
    Mass immigration has a depressive effect on low skilled / unskilled money wages - that is incontrovertible. The list you gave is a jumbled mix of chief articles - like food - fixed asset & largely illiquid assets - property - and luxury commodities (cars). Pressure on scarce assets like property is of no benefit at all regardless of relative skill level, but is especially pronounced for low skilled / low money wage earners.

    Increased demand for a commodity doesn't mean that commodity is more profitable: the markup remains the same; if more people are buying that commodity the only thing that happens is the revenue for that company increases, that doesn't mean they're demanding more labour. Unless there's a boom in employment against population growth money wages will not increase for low skilled / unskilled workers.
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    But the free market is your friend. It would never hurt you.
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    (Original post by Alfred_Milner)
    Mass immigration has a depressive effect on low skilled / unskilled money wages - that is incontrovertible. The list you gave is a jumbled mix of chief articles - like food - fixed asset & largely illiquid assets - property - and luxury commodities (cars). Pressure on scarce assets like property is of no benefit at all regardless of relative skill level, but is especially pronounced for low skilled / low money wage earners.

    Increased demand for a commodity doesn't mean that commodity is more profitable: the markup remains the same; if more people are buying that commodity the only thing that happens is the revenue for that company increases, that doesn't mean they're demanding more labour. Unless there's a boom in employment against population growth money wages will not increase for low skilled / unskilled workers.
    If demand for a commodity rises, then the producer should also increase his prices because people will pay it. If he doesn't, he is stupid and will not be in business for very long.
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    (Original post by MagicNMedicine)
    This is correct.

    Although technically the right answer is "you cannot say", it depends which effect dominates the other....wages MAY actually rise relative to prices or they may fall relative to prices, it depends on whether the undercutting of wages has a stronger effect than the reduction on prices.
    Hold on there - if wages are increasing it is because there is a supply deficiency in the labour market, if that's the case, the money wage - cost of labour - will not rise above the exchange value of the commodity: why would I pay £5 for labour to sell a product for £4? Increases in money wages means the additional cost to business is usually passed off onto the consumer, hence when they say that companies should impose a 'living wage' it means that the additional £2 per hour = £7 x 10 [labour force] =£70 increased cost of direct labour [factor of production] per hour, that increase would more than likely be passed off onto the consumer (in plain English means an increase in price).
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    (Original post by Maker)
    If demand for a commodity rises, then the producer should also increase his prices because people will pay it. If he doesn't, he is stupid and will not be in business for very long.
    Okay, so the company increase the price to better his bottom line - except you've forgotten a very important variable: market competition.
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    (Original post by Maker)
    Where is the evidence that almost half of British youth are out of work?

    The minimum wage makes up very small % of the economy makes very little difference to how the economy performs.
    21.3% of youth are unemployed. And around 50% are not in employment. This tells me that there are a lot of people who have given up on finding a job or have gone into education (which has actually fallen this year). The statistics do not show people who have been disenfranchised from the job market.

    The minimum wage does make up a small part of the economy. However it does a lot of damage to people with low skills. It hurts the most vulnerable in society. Young people have less skills and thus their productivity is often less than the minimum wage. Therefore many young people do not have a job. You could lose the generation forever if they do not find work.

    In addition if you do not get a job you are not likely to improve your skill set, and infact you will probably lose human capital, and thus you will never get a job paying more than NMW. It is just an awful law.


    You might also see an increase in unemployment if wages go so low that people find they are better off on benefits and won't take up the jobs.
    If people do not want jobs, then they are not unemployed. Not having a job is not the same as being unemployed. To be unemployed you must want a job at the going the going wage.

    And wages will not go that low because if what you supposed could happen, actually happened, there would be upward pressure on wages as employers try to actract workers.
 
 
 
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