Abolish All Minimum Wage Legislation

[Saturn]

Look at the oil patch, the gov't dropped the corporate tax rate and it's booming out there, they set the rule that the tax is to be lower.

Taxes were dropped there long before there was anything going on out there. The oil sands were barely profitable, which is why evil Martin and Chretien gave them subsidies - to keep them afloat. It wasn't the low taxes that produced the boom. The boom was the result of the price of oil quadrupling. If the price of wheat quadrupled, Sask and Man would be swimming in money too. If the price of fish quadrupled and there was any left to fish, the Maritimes would be swimming in money. Without taxes changing the slightest bit.

[White Doors]

So you are doing wonderfully well but you cannot afford to hire anyone. Also, gov't rules help you out in the market but the "free" market is making everyone win. Do you read your own posts?

The ONLY reason that some Canadian farmers are in dire straights and knee-jerk for more subsidies is that the US and EU subsidize their farmers MUCh MUCH more. It is not a FREE market. It's a competion of tax payer apathy. We are at the lowest ebb so a decrease in EU and US farmer subsidies benefit Canada and not to mention AFRICA. It amazes me that the anti-poverty corwds always mention a % GDP solution on third world poverty but not only do not mention, but are seemingly blithley unaware of this unfair trade practice that does more to keep Africa from 'developing' than does their HIV and Muslim issues..

Funny isn't it?

[mcqueen625]

The federal NDP has argued in favour of raising the federal wage to $10 per hour and Quebec solidaire has argued the same in the current Quebec election. I think that in Ontario, the Toronto Star has advocated raising the provincial minimum wage to $10 per hour.

At present, across Canada, State legislation makes it illegal to pay anyone less than around $7 to $8 per hour. Provincial minimum wage laws affect far more people than federal law.

I think governments should simply abolish these laws and not legislate minimum wages at all. This is the case in most Scandinavian countries.

If we are serious about helping people earning low wages, we should do this through other means than minimum wage laws. For example, we should directly help people with children or people with disabilities. Minimum wage legislation is a crude and unfair way to achieve this. Earned income supplements, cuts in payroll taxes (EI, CPP or health premiums) and higher personal tax exemptions are better ways to achieve these goals.

One argument in favour of minimum wage laws is to overcome the supposed weak bargaining power or simple ignorance of some employees. I happen to question this argument. But one solution would be for the Revenue Agency to post on the Internet, if an employee accepts, information about pay rates. In this way, everyone would know what employers are paying their employees. This could be done in a way that does not identify a specific employee.

Governments have an important role to play in an economy. Regulating wages and prices is not one of these roles. Minimum wage laws are not progressive.

That is asinine considering the fact that this is exactly what the corporations are lobbying for. what they are also lobbying for is lower or preferably no corporate taxes whether on income or on payroll. I watched a program on TV and the representative for the corporate sector came right out and said that they felt that they should not have to contribute to any social programs, and if the people want they, they should be the ones to pay for them. When asked who she thought should pay for these social programs, she answered, from government. When they asked her where the government was expected to get this money to pay for social programs, she answered, from the people. In a nut shell, the corporate sector wants to be able to gouge the people through the free-market system that they lobbied for, but they also do not want to pay their share or any share for that matter of the tax burden to keep this country and our people afloat.

As for

Governments have an important role to play in an economy. Regulating wages and prices is not one of these roles. Minimum wage laws are not progressive

Neither is allowing the corporate sector to pay nothing towards the tax burden which all other Canadians reluctantly pay, yet what the corporate sector wants is to pay nothing while being able to dictate to government what it is that they want.

[August1991]

In a "normal free market economy" minimum wages would not be necessary - the market would provide optimum levels of salaries and the market would serve its purpose - to the benefit of society. Minimum wages are necessary because perfectly efficient free markets are fiction. In the real world, many markets aren't very efficient at all - like in that small town (there are plenty of them in Canada btw, you don't have to live in one to know it).

On what basis do you make the claim that the labour market is not "efficient"? And why is it not efficient only at the low end? IOW, if the labour market is inefficient, why doesn't the government intervene and set everyone's wage?

And something else - how does a minimum wage correct for this inefficiency? If market failure there is - as you seem to pretend - how does a government bureaucrat have the wisdom to overcome the failure?

Incidentally, union membership has been steadily declining in North America over the past several decades. It is largely now a phenomenon of the public sector. The implication is that the labour market functions well enough to provide reasonably accurate signals.

As to your argument about small towns, I find it rather strange that Hershey recently announced a plant closing in a small town in Ontario and a meat plant in a small town in Quebec almost clsoed too. According to you, both firms could have easily cut wages to the minimum. Why didn't they?

You mention markets and yet you seem to forget that a market price is determined by both supply and demand. Some auctions are a race to the bottom but others are race to the top.

----

As I stated in the OP, if the purpose is to assist people whose working income is too low, a change in tax policy such as a negative income tax would achieve more than minimum wage laws.

[ClearWest]

Neither of you make much sense at all. In a "normal free market economy" minimum wages would not be necessary - the market would provide optimum levels of salaries and the market would serve its purpose - to the benefit of society. Minimum wages are necessary because perfectly efficient free markets are fiction. In the real world, many markets aren't very efficient at all - like in that small town (there are plenty of them in Canada btw, you don't have to live in one to know it). A market failure does not give your greedy ass or anyone else's a cart blache to exploit that failure to the detriment of society. When a failed market does not serve its purpose, outside intervention is necessary. That's where minimum wages come in.

You keep saying certain legislations are for the benefit of society, or that other actions are to the detriment of society. If the goal of your society is high unemployment, lack of availability of goods and services, and far less private investment - then minimum wage is the way to go.

I like to look at political moves from the standpoint of: "what benefits the individual?" Or "What gives the individual most freedom to benefit?" And I can tell you now that I don't think it is a benefit to the $8/hr worker if you tell them they can't work for less than $10/hr - thus forcing them out of a job.

A free market implies that individuals are free to make voluntary trades without the impositions/coersions from either party involved in the trade or from a third party. Someone wants money, they offer to trade their services, but BANG - gov't steps in telling them they can't trade their services for less than $10/hour. Imagine if the rest of the economy worked that way. "You can't buy bread for less than $10/loaf". It would skewer the economy. That's what minimum wage legislation does.

[Riverwind]

On what basis do you make the claim that the labour market is not "efficient"? And why is it not efficient only at the low end? IOW, if the labour market is inefficient, why doesn't the government intervene and set everyone's wage?

I would say the labour market is inefficient at the high end - salaries for executives having risen way out of proportion to their value to the company because the executives are responsible setting their own salaries.

[blueblood]

Look at the oil patch, the gov't dropped the corporate tax rate and it's booming out there, they set the rule that the tax is to be lower.

Taxes were dropped there long before there was anything going on out there. The oil sands were barely profitable, which is why evil Martin and Chretien gave them subsidies - to keep them afloat. It wasn't the low taxes that produced the boom. The boom was the result of the price of oil quadrupling. If the price of wheat quadrupled, Sask and Man would be swimming in money too. If the price of fish quadrupled and there was any left to fish, the Maritimes would be swimming in money. Without taxes changing the slightest bit.

???? Not all oil comes from the sands, most of it comes from drilling rigs. Oil costs lots, why isn't it developed in NFLD??? In time the price of oil would have been high enough to make the oil sands profitable. Put the corporate tax rate at 10% with low average wages and large unemployment and watch the magic work. It worked in Ireland, why can't it work in eastern Canada.

The ONLY reason that some Canadian farmers are in dire straights and knee-jerk for more subsidies is that the US and EU subsidize their farmers MUCh MUCH more. It is not a FREE market. It's a competion of tax payer apathy. We are at the lowest ebb so a decrease in EU and US farmer subsidies benefit Canada and not to mention AFRICA. It amazes me that the anti-poverty corwds always mention a % GDP solution on third world poverty but not only do not mention, but are seemingly blithley unaware of this unfair trade practice that does more to keep Africa from 'developing' than does their HIV and Muslim issues..

Yup, a true free market is a solution, the dumping will stop and the prices will go up. The US and EU guys will have to respond to markets like we do. The biofuel industry will take care of this and the Africans will be able to start developing their Ag sector which in turn will lead to other things.

[August1991]

I would say the labour market is inefficient at the high end - salaries for executives having risen way out of proportion to their value to the company because the executives are responsible setting their own salaries.

Oh really? The shareholders have nothing to say about this?

Corporate managers face a bottom line. It is politicians who set their own wages. And all they face are indifferent voters every few years.

[Riverwind]

I would say the labour market is inefficient at the high end - salaries for executives having risen way out of proportion to their value to the company because the executives are responsible setting their own salaries.

Oh really? The shareholders have nothing to say about this?

No they don't. The people who sit on the boards of directors are almost all executives in other companies. This means they benefit by handing out huge pay packets because they can then turn around and demand that their own pay be increased. It is cozy club where all of the members quietly help each other pick the pockets of shareholders.

Politicans are directly accountable to the voters and, as a result, are much more responsible when it comes to setting their salaries.

Corporate managers face a bottom line.

Numerous studies have demonstrated that there is zero connection between executive pay and corporate performance. Most corporate executives don't care if they get fired because they negotiate these huge golden handshakes ($200 million for the departing Home Depot exec). It is a scam. The wide spread practice of back dating options it just the latest piece of evidence that illustrates how the people in the executive suite manipulate the system to line their own pockets.

That is why I say there is no efficient free market when it comes to setting the salaries of executives.

[August1991]

The people who sit on the boards of directors are almost all executives in other companies. This means they benefit by handing out huge pay packets because they can then turn around and demand that their own pay be increased. It is cozy club where all of the members quietly help each other pick the pockets of shareholders.

The board of directors is only relevant in that it may influence the shareholders' value. If shareholders are not happy with the return, they can sell and find another share. There are many available.

If corporate managers are overpaid, this will show up as an underperforming firm.

None of these incentives exist in government. A single vote cast once every few years has absolutely no effect on a politician.

----

The issue of "inefficient" markets implies that there are unexploited profit opportunities. Given the greediness of corporate managers, why would they exist?

[Riverwind]

If shareholders are not happy with the return, they can sell and find another share.

But there few are publicly traded companies that don't over pay their executives. People who want to buy shares have no choice.

None of these incentives exist in government. A single vote cast once every few years has absolutely no effect on a politician.

People selling shares in a company has no effect on executive pay. In fact, a company with a falling share price is more likely to pay that executive an inflated severance package and bring in another equally overpriced executive to 'save the day'

The issue of "inefficient" markets implies that there are unexploited profit opportunities. Given the greediness of corporate managers, why would they exist?

Maybe inefficient market is the wrong word - executive pay is a rigged market.

[blueblood]

that's almost getting into the territory of maximum wage, I wonder what the debate would be on that

[madmax]

Yup, a true free market is a solution, the dumping will stop and the prices will go up. The US and EU guys will have to respond to markets like we do. The biofuel industry will take care of this and the Africans will be able to start developing their Ag sector which in turn will lead to other things.

IIRC the US has a very subsidized bio fuel industry. I think you are hanging your hat on a myth. Canada has been the biggest sucker playing into the "free market" hype, while other countries cut deals and continue their protectionist ways.

The current government walked away from the "free market" and our trade agreement, the moment they cut the forestry deal.

The "free market" is topic for Professors locked up in the University making perfect models.

[madmax]

I would say the labour market is inefficient at the high end - salaries for executives having risen way out of proportion to their value to the company because the executives are responsible setting their own salaries.

Oh really? The shareholders have nothing to say about this?

That is correct.

[madmax]

The issue of "inefficient" markets implies that there are unexploited profit opportunities. Given the greediness of corporate managers, why would they exist?

You never work in a corporation? They way you talk, you make it sound like these people are superstars, and that companies are totally efficient. That there are no human characteristics involved, and that no one is trying to stick it to one another within the walls, let alone outside of them.

Why make widgets when I can screw somebody and make a pile of money through leverage and litigation.

[madmax]

The gov't created a market to market our grain in biofuel, something the greenies out east want as well. This market creates jobs and boosts the economy. The gov't can help out businesses other than throwing money at them. Look at the oil patch, the gov't dropped the corporate tax rate and it's booming out there, they set the rule that the tax is to be lower.

The market drives itself. You are talking about government legislation forcing something upon us before the market will do it itself.

[blueblood]

What's wrong with speeding it up. The market was going there anyway. With this in place we can export even more oil. If Government legislation increases our GDP, then we'd be stupid not to go for it. I believe that biofuel will increase our GDP and I believe minimum wage legislation won't.

[August1991]

People selling shares in a company has no effect on executive pay. In fact, a company with a falling share price is more likely to pay that executive an inflated severance package and bring in another equally overpriced executive to 'save the day'.

A company with a falling share price is ripe for takeover or bankruptcy.

Riverwind, of course there is a connection between the future profitability of a company and its current share price.

But there few are publicly traded companies that don't over pay their executives. People who want to buy shares have no choice.

Over pay? On what basis do you arrive at that conclusion?

Is Bill Gates overpaid? (After all, he owns a large chunk of the company so I guess he's overpaying himself.)

To say that corporate managers are "over paid" is about as sensible as to say that the minimum wage should be $10 per hour. How does one justify such precise value judgments?

And what does any of this have to do with helping the working poor?

[Charles Anthony]

And what does any of this have to do with helping the working poor?

Absolutely nothing.

Except, maybe, it sort of helps muddy the waters and give support to a straw-man argument defending government interference in the labor market.

It does well to rally confused members of the electorate to support wage restrictions for the erroneous purpose of fulfilling a perceived need to correct "inefficiency" in the labor market. Hence, any incentive to learn the basic economics as it impacts the lower levels of the pay scale is killed.

[Posit]

CEOs earning over $1 million plus bonuses are not just overpaid but their wages are obscene.

[Riverwind]

On what basis do you arrive at that conclusion?

Because the market is rigged. Executives are the only people that get to set their own salaries. The sums being paid out today are astonomical and have zero connection to the value that an indivudal could possibly bring to an organization.

Is Bill Gates overpaid? (After all, he owns a large chunk of the company so I guess he's overpaying himself.)

I would say no:

As disclosed in its fiscal year 2006 Proxy, the average salary for its top five executives was about $600,000 (and between $350,000 and $500,000 in cash bonus). The compensation (salary plus cash bonuses) for Chairman Bill Gates and CEO Steve Ballmer were $966,667 and $966,667, respectively. Additionally, both men did not receive any long-term compensation (Restricted Stock Units and/or Stock Options).

Gates and Balmer receiving les that $1 million/year for a company the size of Microsoft?

I would say that example demonstrates that any manager making more than a $1 million/year for a smaller company is over paid.

And what does any of this have to do with helping the working poor?

It does not. I was responding to your claim the labour markets are inherently 'efficient'.

[marcinmoka]

Is Bill Gates overpaid?

Hell no. He took a risk starting the company, and is justified, besides, his wealth was linked to his company's stock performance.

And though it has nothing to do with this debate, from a moral standpoint, given his and Buffet's actions, they show even more how success dictated their wealth, not just unjustified greed.

Was Nardelli of Home Depot fame overpaid? ($220 million)

Yes, not because it was a ridiculously high paycheck in itself, but because Home Depot wasn't doing too hot. Sure, you can blame the slowing down of the housing market, but even before. His exit check should've been pegged to overall performance, and not some figure that's hammered out while the company is doing well.

But on the plus side, I think that recent controversy also persuaded shareholders to strive in having more say in how their exec's are compensated. Sadly, we've in a world were too many view the CEO as some superstar (though in the past two years, many have crashed and burned), but eventually will realize that maybe the company performance is equally based on the actions of many other individuals, including mid and high ranking managers as well who's compensation is not nearly as mobile as those at the top.

In this case, I believe the market will solve such issues, it just takes a bit of time.

[Saturn]

On what basis do you make the claim that the labour market is not "efficient"? And why is it not efficient only at the low end? IOW, if the labour market is inefficient, why doesn't the government intervene and set everyone's wage?

Are you deaf or just dumb? Why do you insist on twisting the meaning of my words? When did I say that the labour market is inefficient? "The" labour market is made up of many (thousands) local labour markets across the country. Not all of them are efficient. Minimum wages are legislated so that the 1 or 2 employers in Nowhereretown, Manitoba don't resort to extortion when there is a great shortage of jobs in town and so that otherwise very profitable companies like Walmart don't make billions on the backs of poor workers. Which part of this isn't clear to you? What is your problem? Are you concerned that the Waltons barely make ends meet on $100 billion bucks? You got a billion bucks and you aren't happy that minimum wages are reducing your profits? What is it? Or you're being paid too much? Hell, do you even work?

[Charles Anthony]

Crony, why are you being rude?

Why do you insist on twisting the meaning of my words? When did I say that the labour market is inefficient?

Your post clearly states that your belief is that the labor market is inefficient and you base your "defense" of minimum wage legislation upon that.

Minimum wages are legislated so that the 1 or 2 employers in Nowhereretown, Manitoba don't resort to

No it is not.

Minimum wage legislation is to get votes from selfish simple-minded people who are ignorant of basic economics. It is an easy sell for a politician -- as evidenced by this thread. In several places throughout this thread, the basic injustice of minimum wage has been clarified yet it still has its defenders.

[Saturn]

No it is not. Minimum wage legislation is to get votes from selfish simple-minded people who are ignorant of basic economics. It is an easy sell for a politician -- as evidenced by this thread. In several places throughout this thread, the basic injustice of minimum wage has been clarified yet it still has its defenders.

Two thumbs down! The passionate opposition to minimum wage legislation here just shows ignorance and a thinking process (or lack thereof) limited to reproducing articles from the National Post.