Saturday, 24 September 2011

What minimum wage really does.

The idea behind minimum wage is that nobody earns a real pittance, everyone gets a reasonable chunk of cash.

What really happens is that if your work isn't worth minimum wage, you can't get a job at all. Since it's age-related, every time you pass an age where it goes up, your chances of getting a job go down.

In this story, the employer behaved appallingly. However, the reason she sacked the girl is clear: the employer would have to raise the employee's salary at age 18 whether or not the employee was worth the extra to the business.

It's not an isolated incident, as the comments make clear, although most employers don;t simply pretend their employees have ceased to exist and do provide a warning of what's coming. If you're doing a job an employer is willing to pay the 16-year-old rate to have done, then when you turn 18, that employer might not be willing to pay more to have the same job done. So you're out and the next 16-year-old in line gets your job. Same job done for the same cost - that's business.

If it wasn't for the minimum wage laws, those turning 18 would not face being replaced by 16-year-olds. We used to worry about being replaced by younger staff long ago, but we never expected to see the day when an 18-year-old would have that problem!

So the minimum wage isn't really such a good idea after all. I know there are those who would say 'So you'd work for less than minimum wage?' and my answer is not only 'yes' but that sometimes, even now, I do. If you look at the time spent writing a book and the pittance books bring in, it works out at less than minimum wage by a long way. It's still better than no wage at all. I also gain experience and I have that work out there so maybe, one day, the return will be above minimum wage. That's called 'working your way up'.

You can't do that if you're replaced at 18, can you?


Mark Wadsworth said...


Instead of interfering in private contracts like this, the government could reduce the level of means testing a bit. As things stand, NMW is about £6 an hour, but on average, you lose 80p in benefits withdrawal and PAYE (up to an average sort of wage), so £6 gross is really only with £1.20.

It would make more sense to drop minimum wage to £1.20 and abolish means testing of benefits entirely.

george said...

There must be millions of kids who have lost out on the chance of work experience because employers are obliged to pay them the minimum wage.

Andrew said...

"The idea behind minimum wage is that nobody earns a real pittance, everyone gets a reasonable chunk of cash."

I don't think that's the real idea. That's how the politicians sell it but I'd be willing to bet they know full well what it really does.

I think the real idea behind it is to increase dependency on the state for those whose labour isn't worth the minimum wage, at the same time appearing to be the champion of the 'poor' against the 'evil' that is business.

A double win for the state, and a loss for everyone else.

Anonymous said...

The trouble with getting rid of minimum wages, as Thatcher did, is that companies pay such terrible wages that people require income support and rent allowances, etc.

So the taxpayer pays part of the wages bill of companies like Tesco or McDonald's.

Of course that only applies to people who are unskilled doing pretty dead end jobs. I don't mean that plumbers or dentists would be in that situation.

ftumch said...

"The trouble with getting rid of minimum wages, as Thatcher did".....

Oh my.

george said...


Think tris is slightly mistaken lol

Minimum wage was brought in by Labour when it took power in 1997 despite a vigorous campaign against it by the Tories.

ftumch said...

thanks george, I know.

The minimum wage was brought in in 1999, and was £3.50. I know, because I worked it. And the difference it made to my life? At the time, fuck all, but even then it occured to me that if this was to help low paid workers it was odd... because all low-paid workers would then be paid it, and therefore all costs must rise, therefore hurting low-paid workers... etc

RantinRab said...

Minimum wage is soooo late 20th century.

Public sector employers are now introducing a 'living wage' of nearly eight quid an hour.

Anonymous said...

Oh my, indeed.

Minimum wages existed before Mr Blair had the bright idea.

Different industries had different minimum wages. These were fixed by wages councils. In fact I was incorrect to blame Mrs Thatcher. It was in fact I imagine Mr Major who did away with them in 1993.

I'd refer you to:


There has, in fact been some sort of wage control for 102 years:

As for the minimum wage, it was actually introduced at £3.60p:

Lord T said...

Not an issue. Soon many of us will be working for less than minimum wage when Cameron's back to work programme takes off.

It is simply slave labour.

I also find the volunteer tag funny. You will volunteer or we will stop your benefits.

Many firm will no longer recruit for low paid jobs when they can get a 'volunteer' for nothing. Wyy would they?

Furor Teutonicus said...

Troble with "minimum wage was, it is, in a lot of cases, less than what was being paid anyway.

Bosses, of course, take "minimum" as to mean "maximum".

Second problem. To fight for a wage rise, you are not discussing with Joe Bloggs, taxi firm owner,who may be impressed enough with a 25 year old bottle of Mc Callums, to throw in an extra couple of quid an hour, but you are fighting the "Government", who would not be impressed if you pumped 40,000 bloody volts through them.

John Pickworth said...

The minimum wage is the standard by which all Government folly can be measured.

Anonymous said...

The other downside with the minimum wage is that it has flattened out the bottom end of the jobs market. When it came in, I was working as a petrol pump attendant on £3.00 an hour. I then got a job that paid over double that as it was semi-skilled, required knowledge of how to use certain databases etc. At the time, £7.00 an hour seemed like a lot of money!

But within a few years of the minimum wage coming in it had risen to the point where my old job, and other unskilled jobs like it, was virtually paying the same as my new job, whereas my new job's pay had remained pretty much frozen. Result? I was now doing a job that required more skills and experience than my former job, but my new semi-skilled para-professional post had now become minimum wage.


The bottom end of the job market is now almost totally flat, with a people doing very different job roles for the same money.

Furor Teutonicus said...

XX The bottom end of the job market is now almost totally flat, with a people doing very different job roles for the same money. Xx

And, so, with small steps, they achieve their arsehole communist wet dream.

Anonymous said...

1/ Introduce a National Minimum Wage under the guise of helping those at the bottom of the pay ladder.

2/ Flood the country with unneeded foreign labour to bring down wage rates .

3/ Remove the word Minimum .

4/ Communist utopia.

Furor Teutonicus said...

They do not need to remove the word "minimum". What boss is going to pay more than he can get away with?

That is why the idea that you hear in some places "well go to a better paying firm then", is total bollox.

No firm pays more than a few pence more than any other.

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