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Between Labour and Tories, who do you trust for finding you a job? Watch

  • View Poll Results: Who do you think will be the best at preventing unemployment?
    Labour
    46.25%
    Conservative
    31.25%
    Both as bad as each other
    21.25%
    Both as good as each other!
    1.25%

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    (Original post by jacketpotato)
    Opponents of the minimum wage tend to insist on completely ignoring the economic data. You can't do this - of course economic data is important, particularly as unemployment figures follow general trends and do not tend to spike over short periods. There are problems with using economic data, but you have massively exaggurated them. Furthermore, the fact that opponents of the NMW don't have any significant evidence from this country to support their thesis is telling: the right has no problem using economic data elsewhere!!!
    This is precisely the kind of attitude that makes economics a worthless subject; there is simply no way to work out what is going on 'from the data' because, like I said, firstly economics is not a laboratory set up where you can perform repeatable, controllable, measurable experiments, and secondly, because any look at the data must inevitably be in the context of a pre-existing theory if it is to be minimally meaningful. Why you need evidence 'from this country' is absolutely beyond me - we know that the introduction of a minimum wage above the clearing level increases unemployment beyond what it would have been had the minimum wage not been introduced; that is an economic fact, whether you like it or not. If you want evidence, there have been literally dozens of studies which demonstrate it. Economic reality is economic reality, there is no such thing as an economic truth which holds in this country only. We know what the direction of the effect is, the only question is the magnitude. Now, it might be the case that the minimum wage is set so low that it has no effect, or little effect. But arguing that the effect on employment is positive is like arguing that 2+2=5.

    It any of the above about £3 or £4 jobs was true, we would expect to see a sudden spike in unemployment figures. Didn't happen. Whilst this isn't totally reliable, we would also expect to see leading business figures saying that they had to lay off staff. Didn't happen either. There isn't even significant anecdotal evidence to support your position.
    People have already explained why it didn't happen - we were in the middle of an economic upswing, the legal situation in this country makes it difficult and costly for employers to sack someone, all of which means that the increase in unemployment would be more likely to manifest itself in less taking on of new staff rather than the sacking of old staff. For instance, some of the surveys done in the wake of Card and Krueger showed that once this was taken into effect in New Jersey, employment was reduced by 4%. As theory tell us.

    The underlying theoretical apparatus isn't one-sided. The only economic arguments being put forward thus far assume somewhat of a perfect competition and model the commodity markets: economics at its most basic. The labour market is not like that. Particularly for unskilled workers, it resembles a monopsony:

    The employer maximises profit where MFC = MRP. In effect, by restraining the number it employs it can keep wages down. If a NMW is set at Wmin, it can no longer do that. It will hire until the costs at which people will provide their labour equals what the labour is worth: where S meets MRP. In short, a NMW has actually caused that firm to hire MORE workers.

    Obviously this makes as many assumptions as commodity market supply/demand analyses do. In the real world, the supply of labour is pretty flat and thus a sensibly set NMW has negligible impact.
    What evidence do you have for saying that employment of unskilled labour resembles a monopsony? I mean, this is a very, very strong thing to be saying - the market resembles one in which there is only a single buyer? No it doesn't - pretty clearly from thinking about it for one second. Anecdotal evidence suggests that this is entirely false, as does a lot of real evidence: the graph below is not something we'd see if the labour market was monopsonistic.

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    (Original post by PoliceStory)
    That large employer being the government, about 60% of the North Easts jobs are public sector.
    29% in Wales, 31% in rural areas.
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    (Original post by PoliceStory)
    That large employer being the government, about 60% of the North Easts jobs are public sector.
    Yes, but the same analysis applies for the private sector.

    (Original post by sconzey)
    I guess what you've got to do is ask yourself what problem you're trying to solve with the Minimum Wage. Are you trying to raise wage levels? Are you trying to prevent people being paid for menial tasks (i.e. tasks that would attract a pay below minimum wage) ?

    Then you ask yourself if a national minimum wage achieves these goals. With respect to raising wage levels, I would argue that the wage rises noted with respect to the introduction of the UK NMW were insignificant in comparison to the wage rises brought about by economic growth over the past ten years.

    With respect to preventing people being employed at low-wage levels, I would argue that those employed in such tasks have always been criminals and illegal immigrants, and so remain unaffected by the minimum wage. Indeed, much of the factory work that used to provide a great deal of employment in the UK (albeit at low wage levels) has now been exported to other countries where governments are corrupt and the Rule of Law is weaker.
    I'm trying to achieve higher wage levels for the poorest in society. I think the NMW does this rather well, though obviously its only a tiny part of the solution, and can't be relied on as fundamentally the growth and productivity needs to be there.

    (Original post by DrunkHamster)
    ...
    There are difficulties with economic data because stuff changes. But saying that economics is a worthless subject is going too far - you are literally saying that we should never use unemployment figures, growth figures or any other figures.

    Employment figures are not volatile over the short-term - of course employment figures are useful. You can easily see the impact that, for example, French employment laws have on their unemployment figures. I note that you were very happy to link to youth unemployment figures on a topic discussing French unemployment laws awhile back, when the evidence supported you!!!

    The idea that it is difficult to fire people is a myth. Minimum notice periods in this country are short and statutory redundancy payments are tiny. For an average employee who has worked for his employer for 4years, the minimum notice is 4weeks; it never exceeds 12. An employer can sack people for almost any reason if he gives that period of notice - this is not France.

    If there really were a bunch of jobs worth only £3 or £4 to their employer, we would expect them to be lost after the NMW was introduced. This would have an effect on unemployment figures over and above changes in the trends. Yes there are other factors at work, but to not see anything in the figures something very significant would need to have changed, unnoticed by anybody, which almost exactly cancelled out the effect of the NMW. This is not believable. We would also expect to see business leaders to cite the NMW as a reason for cutting jobs. Didn't happen either.

    With regards to other countries, you can't directly apply the experience of other countries to ours because it all depends on the NMW level. If you set a NMW at £10 p.h., that would cause massive unemployment. At £5, this isn't the case. You need to look at a particular NMW.

    I don't argue that the effect is positive, I argue that economic theory isn't particularly helpful. On the theoretical level, I do not think that the labour market is a monopsony. But it certainly doesn't fit a perfectly competitive commodity market supply/demand analysis either. In reality, the supply of labour is relatively fixed, and employers do have a lot of market power and a lot of leeway in what they pay their employees. If you want to argue that this is wrong, you are going to need to do more than just assert that "its an economic fact".

    From my perspective, its hard to resist the temptation that many have decided that they don't like the NMW and make up the evidence to fit...
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    (Original post by jacketpotato)
    Yes, but the same analysis applies for the private sector.
    Not really. You have a panolopy of private sector employers, all competing for labour, and then there's the State, a monolithic employer with massive buying power. If there's a Monopsony, there's only one place we can point the finger.

    (Original post by jacketpotato)
    I'm trying to achieve higher wage levels for the poorest in society. I think the NMW does this rather well, though obviously its only a tiny part of the solution, and can't be relied on as fundamentally the growth and productivity needs to be there.
    I contest that if you actually look at the evidence, the wage-improvement co-incident with the introduction of the NMW was miniscule, trivial, and barely statistically significant, when contrasted by the year-on-year wage increases -- caused by technological development and economic growth -- that we've seen for the past 200 years.

    If you want to enrich the poorest in society, you want to be encouraging economic growth by cutting some of the red tape surrounding small businesses and the self-employed -- where most of the workforce and nearly all of society's poorest find employment -- allowing them to expand, develop and innovate, creating jobs and raising wages, and enriching society's poorest with skills and opportunities.
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    (Original post by sconzey)
    29% in Wales, 31% in rural areas.
    It was something to do with GDP I think, I really can't remember. :o:
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    (Original post by sconzey)
    I contest that if you actually look at the evidence, the wage-improvement co-incident with the introduction of the NMW was miniscule, trivial, and barely statistically significant, when contrasted by the year-on-year wage increases -- caused by technological development and economic growth -- that we've seen for the past 200 years.
    Well, yes, but I don't quite see what the point you are trying to make is. If the NMW increases the money earnt by the poorest in society, without causing more than negligible unemployment, then its got to be a good thing.

    If you want to enrich the poorest in society, you want to be encouraging economic growth by cutting some of the red tape surrounding small businesses and the self-employed -- where most of the workforce and nearly all of society's poorest find employment -- allowing them to expand, develop and innovate, creating jobs and raising wages, and enriching society's poorest with skills and opportunities.
    Yes, I totally agree, but none of that is incompatible with a NMW.
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    To the person who negged me, rather than call it absolute rubbish, could someone tell me what cameron's policies are?
 
 
 
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