Comments on: Minimum wages and inequality

By: Jacques de Molay

Jacques de Molay — Sun, 19 Jul 2009 19:32:50 +0000

“Low-Paid Workers Cheated” (from today’s Advertiser)

http://www.news.com.au/adelaidenow/story/0,22606,25805646-5006301,00.html

By: Phil

Phil — Sun, 19 Jul 2009 03:55:09 +0000

Good point Senex. And countries with the lowest minimum wage rates with the worst mass public transport system not uncoincidentally have the least labour mobility. The US certainly compares poorly today on labour mobility to the other top OECD countries and probably, ironically enough, compares poorly to the labour mobility existing and possible in America a century ago.

By: Senex

Senex — Sun, 19 Jul 2009 02:08:42 +0000

Terje’s proposition for a minimum wage floor designated by region sounds appealing until you realise it denies labour mobility and a freedom of choice to move from one region to another simply because it will always be beyond one’s means.

By: Anthony

Anthony — Sun, 19 Jul 2009 00:58:49 +0000

Terje, what I was pointing out was that neither Australia nor Sweden relies on a single legislated minimum wage, but that both awards and Swedish collective bargains were industry-based (not enterprise based) and set minima for all grades of work within the industry sector. To the extent that the FPC determined rates for the entire pay and classification scale, which was drawn from award rates, it was doing something similar. As of 1 July, industry-based award minima have been reinstated.

The difference is that Swedish sectoral agreements are the outcome of bargaining, whereas modern award rates are not. And any Australian union that tries to bargain a sector-wide agreement (rather than a single enterprise agreement) will usually fall foul of the Labor government’s prohibition on ‘pattern bargaining’. So perhaps we should indeed be a bit more like Sweden.

By: TerjeP (say tay-a)

TerjeP (say tay-a) — Sat, 18 Jul 2009 15:45:35 +0000

Anthony – Setting wage minimums through enterprise bargaining is a heck of a lot more flexible than setting it nationally.

By: BlueHornet

BlueHornet — Fri, 17 Jul 2009 19:55:20 +0000

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By: furious balancing

furious balancing — Fri, 17 Jul 2009 05:48:15 +0000

The higher tax-free threshold is what I’d like to see too. If that were lifted and pay inequity for women were addressed, I think we’d be getting somewhere.

By: TerjeP (say tay-a)

TerjeP (say tay-a) — Fri, 17 Jul 2009 05:01:27 +0000

The low income tax offset (LITO) achieves nothing that couldn’t be done with a higher tax free threshold. LITO is a silly approach that obscures real effective marginal tax rates (EMTR) from the average citizen. It ought to be done away with entirely and a higher tax free threshold put in place instead. Along with the senior Australians tax offset (SATO) and family tax benefits (FTB-a and FTB-b) it is a significant source of tax complexity and obscurity.

By: Ben Eltham

Ben Eltham — Thu, 16 Jul 2009 06:20:43 +0000

LO, yep a lot of people have attacked the Card-Kreuger study. I must admit I didn’t follow the other thread right through the 200-odd comments … anyway I’m not denying there are labour effects of minimum wages, although 0.5 seems high … most of the figures I have seen are between 0.15 and 0.4.
>
I would be interested to know what you think about the “stickyness” of employment, in the sense that employers are generally loathe to lay off workers if they can avoid it, but then after lay offs reluctant to put on staff as business swings up.
>
In the main I think we agree on more than you might think; I am a big fan of the Low Income Tax Offset for example and I agree that much more needs to be done to address high marginal tax rates for those working part-time while on benefits and moving from welfare to work.

By: Anthony

Anthony — Thu, 16 Jul 2009 05:49:59 +0000

Technically, Australia doesn’t have a legislated minimum wage either, in that the parliament doesn’t legislate a dollar amount. As I understand it, Sweden has collective agreements that set minima across sectors for different grades of work, and employees get the benefit of these whether they are members of the unions who are signatorties to the agreement or not. So Australia is – or was – a lot like Sweden. Awards, rather than collective agreements, set minima for different types of work across industries, and employees got the benefit regardless of whether they were members of the union which was party to the award. It’s just that the award (which was usually partly the outcome of baragining and partly the outcome of conciliation and arbitration) gained its legal force from the federal legislation.

Having a Fair Pay Commission changed that a bit, but we still didn’t go down the path of a single, directly legislated minimum wage. Now pay minima are going back into awards and will be set by Fair Work Australia.

Denmark offsets its dismissal regime with very geenrous unemployment benefits and active labour market policies, so the cost of dismissal for a worker is not as great as in Australia. I’m not sure what you mean by saying Denmark has very liberal hiring rules. Aren’t Australian employers allowed to hire pretty much who they choose, or not hire at all, as long as they respect anti-discrimination laws?