Rebutting Tan Kin Lian's call for a minimum wage

[lockeliberal]

Dear Radio

As stated I believe that the min wage policy is the wrong means to an end. I believe that you and I agree on the end, its just that we disagree about the means. I take your point about having your cake and eat it, however I am against the high tax environment which pays for generous unemployment and health care subsidies and combining it with a min wage/

Locke

 

[kakowi]

who is Radio

 

[Goh Meng Seng]

Dear Radio

As stated I believe that the min wage policy is the wrong means to an end. I believe that you and I agree on the end, its just that we disagree about the means. I take your point about having your cake and eat it, however I am against the high tax environment which pays for both a min wage and for generous unemployment and health care subsidies

Locke

Dear Locke,

Sorry, I lost you. Minimum wage IS NOT A TAX, MAID LEVY IS A TAX. period.

To me, the initial period is this, waive that Levy, convert it into wage and set the minimum wage as it is.. i.e. $590.

Goh Meng Seng

 

[kakowi]

don't mean to butt in to your conversation

that sounds more reasonable but it will mean forgoing tax revenue

until we know what the government is doing with all those surplus, we will not know if they will find it acceptable...as a guess, they won't

 

[lockeliberal]

Dear Madcow

At $590 a month min wage for all in Singapore including maids. One is just increasing the costs of maids for the middle class and not doing anything to create a decent living wage for lower income families.

My point to Radio was very simple, the min wage is a bad policy to create a certain objective that is raising the living standards of lower income families. I am all for another set of policies which do not involve the min wage in any form but which have almost the same effect. I am also all for higher taxes to support paying for that support though not to the extent of the European Social or American Welfare model.




Locke

 

[kakowi]

Next thing we know, someone else will be replying, "Dear Blockh" :p




GMS,

(1) The issue of minimum wages will result in a structural barrier in the labour market so that the demand and supply curves will be truncated at that price point.

When that happens, the way to achieve equilibrium is to create a shift in the supply curve.

And that will give rise to another set of considerations.



(2) The current labour structure is quite elegant.

A market for transients is created with singapore as a magnet for such labour in the region. Besides buffering the unemployment figures, it also keeps business costs down.

For singaporeans who had moved into this sector of the market and thus encountered wages which cannot sustain their livelihood, the government had offered subsidies and other benefits.

The value of these subsidies are: (1) it allows this sector of the labour market to find its own equilibrium (2) the payout is to specific individuals and thus meet the social needs more effectively than a general fixed wage.

The issue here is whether these subsidies are sufficient. There are two aspects: the first is to increase the handout. The second is to give the subsidies and incentives for retraining to make the labour force more relevant to business needs. The government opted for the latter which i feel creates lesser costs for society as a whole. And lesser need for taxation.

 

[ArtBoon]

We don't want minimum wage, because it will increase cost of our domestic helpers, because we don't want to pay higher for foreign construction workers/waitresses.

How about this:

Don't hire maids.
Don't get into business that rely on cheap labour.

 

[kakowi]

People hire maids because their own parents may not want or able to look after grandchildren full-time or they have infirm adults in their household and the alternative of nursing care is just too expensive

All businesses need such types of labour

 

[The_Latest_H]

Dear Radio

As stated I believe that the min wage policy is the wrong means to an end. I believe that you and I agree on the end, its just that we disagree about the means. I take your point about having your cake and eat it, however I am against the high tax environment which pays for generous unemployment and health care subsidies and combining it with a min wage/

Locke

I'd rather have a honest government that taxes income and corporate sources openly than a government who says our income and corporate taxes remains low, whilst acronyms created by them have spiraled costs for S'poreans, inflating the value of almost everything because of that.

And besides, any tax increase on reasonable rates will fall mainly on those who are rich, or those who are spending more. I mean those who have a bigger car, say a huge SUV, and a landed property above S$1.5m has to pay more in taxes than a family of 5 in a 4 room HDB flat with a 5 year old 4 seater Toyota.

That's reasonable logic. If you earn more, you pay more. So the lifestyle you choose does affect the amount you pay- which is the rule in Australia and the US. In Singapore, the middle class and the poor pay more in hidden charges than the rich. The logic has been flipped completely and skewered.

 

[ArtBoon]

How about

Husband works and wife stays home to look after kids (or the other way round if wife earns more)
Close down business that relies on cheap labour (I am talking about the type of business that cannot afford to employ people at min wage)

People hire maids because their own parents may not want or able to look after grandchildren full-time or they have infirm adults in their household and the alternative of nursing care is just too expensive

All businesses need such types of labour

 

[kakowi]

(1) the moment there is a minimum wage, people will find ways to reduce their needs and your examples show how these can be done

(2) all businesses relies on inputs from other businesses; if businesses have their costs increased, they will seek to pass those costs to other businesses; and so on down the line; thus even if a business reduces their need for such labour, it cannot avoid the rise in the cost of raw materials from other businesses;

also there are certain services which all businesses must have, eg toilet cleaning, sweeping the floors, clearing the dustbins, washing the windows, cleaning the telephones. Such are normally outsourced. The company providing such services will have their costs increased. In turn they will pass it to their customers (other businesses).

(3) economic policies can only go to a certain level of details; cannot take care of every exception and there will be exceptions; also politically speaking, not good to give people only one out

 

[ArtBoon]

agree. that's why i think there is no straight yes or no to min wage. in fact, i'll look at min wage in the context of an overall solution. eg, small biz that need to hire min wage fellow (ie the subcontractors to big guys) must dare to pass the cost to the big guys who can afford to absorb this type of cost. otherwise, tell the big guys to waste their own time to do "low value" job.

(1) the moment there is a minimum wage, people will find ways to reduce their needs and your examples show how these can be done

(2) all businesses relies on inputs from other businesses; if businesses have their costs increased, they will seek to pass those costs to other businesses; and so on down the line; thus even if a business reduces their need for such labour, it cannot avoid the rise in the cost of raw materials from other businesses;

also there are certain services which all businesses must have, eg toilet cleaning, sweeping the floors, clearing the dustbins, washing the windows, cleaning the telephones. Such are normally outsourced. The company providing such services will have their costs increased. In turn they will pass it to their customers (other businesses).

(3) economic policies can only go to a certain level of details; cannot take care of every exception and there will be exceptions; also politically speaking, not good to give people only one out

 

[Zombie]

The issue of minimum wages will result in a structural barrier in the labour market so that the demand and supply curves will be truncated at that price point.

When that happens, the way to achieve equilibrium is to create a shift in the supply curve.

And that will give rise to another set of considerations.

Sshhh, I tell you a little secret. Don't let GMS knows.

There is already minimum wage amount set to protect the interests of the foreign maids working in Singapore and elsewhere.

 

[jixiaolan]

Criticism of minimum wages among economists

According to Linda Gorman, a senior fellow at the Independence Institute, a free-market think tank, there is a broad consensus among economists in opposition to minimum wage laws: "Most economists believe that minimum wage laws cause unnecessary hardship for the very people they are supposed to help."[1]

Princeton economist David F. Bradford writes, “The minimum wage law can be described as saying to the potential worker: ‘Unless you can find a job paying at least the minimum wage, you may not accept employment.’”[2]

MIT economist and Nobel laureate Paul A. Samuelson wrote in 1973, “What good does it do a black youth to know that an employer must pay him $2.00 per hour if the fact that he must be paid that amount is what keeps him from getting a job?”[3]

In a 1997 response to a request from the Irish National Minimum Wage Commission, economists for the Organization for Economic Cooperation and Development (OECD) summarized economic research results on the minimum wage: “If the wage floor set by statutory minimum wages is too high, this may have detrimental effects on employment, especially among young people.”[4]

This agreement over the general detrimental effect of minimum wages seems to be long-standing: According to a 1978 article in American Economic Review, 90 percent of the economists surveyed agreed that the minimum wage increases unemployment among low-skilled workers.[5]

References
1 http://www.econlib.org/library/Enc/MinimumWages.html

2 “Minimum Wage vs. Supply and Demand,” Wall Street Journal, April 24, 1996.

3 Paul Samuelson, Economics, 9th ed. (New York: McGraw-Hill, 1973), pp. 393–394.

4 Organization for Economic Cooperation and Development, OECD Submission to the Irish National Minimum Wage Commission, Labour Market and Social Policy Occasional Papers no. 28, 1997, p. 15.

5 Kearl, J. R., et al., “A Confusion of Economists?” American Economic Review 69 (1979): 28–37.

 

[jixiaolan]

In recent years, there have been calls for the government to impose a minimum wage to help the low income workers who have seen their take home pay remaining stagnant for for over a decade, the latest coming from Mr Tan Kin Lian in a speech made at Hong Lim Park last Saturday.

A minimum wage is the lowest daily, hourly or monthly wage that employers may legally pay to employees or workers. Equivalently, it is the lowest wage at which workers may sell their labor.

Supporters of the minimum wage claim that it increases the workers’ earning power and protects them against exploitation by the employers. They argue that the widening income disparity between the rich and the poor in Singapore merits a relook at the minimum wage to prevent the low-income workers from being trapped in a vicious cycle of poverty.

Read full article here:

http://wayangparty.com/2008/12/09/a...-more-pain-than-relief-to-low-income-workers/

Mr Tan Kin Lian did mentioned abt the need to impose minimum wages but he placed his emphasis more on living wages. A minimum wage which cannot keep pace with the basis living expense does not serve a purpose to enhance the well being of this under privileged social class.

If our government is compassionate enough to lower the cost of basic living and keeping them in check, why would we even need to toy around with the idea of minimal wage?

 

[ArtBoon]

I am ignorant... care to share...?

Sshhh, I tell you a little secret. Don't let GMS knows.

There is already minimum wage amount set to protect the interests of the foreign maids working in Singapore and elsewhere.

 

[Goh Meng Seng]

Dear Kakowi,

I know all the text book answers to this minimum wage issue.

But reality is very different from text book answers. Text book answers are based on a very simple but very important assumptions. i.e. there are equal powers distributed between the employers and employees. But the truth is, where minimum wages are concerned, those people who are among the "vulnerable group" have less bargaining powers than those who will most probably not be bothered by minimum wage workers...eg. professionals and white collar workers.

And I still cannot understand why one would consider minimum wage as a market distortion rather than government levies!

The truth is, the market equilibrium has already been achieved, even with government levies on maids and foreign workers. If the total amount of money that employers are paying to both the government as well as their workers are converted into minimum wage, there is no issue of "re-distortion" of market conditions and there is no EXTRA COST to employers. Yes, our government's pockets will be hurt but these levies collected are not used specifically to help local workers any way!

Goh Meng Seng

Next thing we know, someone else will be replying, "Dear Blockh" :p




GMS,

(1) The issue of minimum wages will result in a structural barrier in the labour market so that the demand and supply curves will be truncated at that price point.

When that happens, the way to achieve equilibrium is to create a shift in the supply curve.

And that will give rise to another set of considerations.



(2) The current labour structure is quite elegant.

A market for transients is created with singapore as a magnet for such labour in the region. Besides buffering the unemployment figures, it also keeps business costs down.

For singaporeans who had moved into this sector of the market and thus encountered wages which cannot sustain their livelihood, the government had offered subsidies and other benefits.

The value of these subsidies are: (1) it allows this sector of the labour market to find its own equilibrium (2) the payout is to specific individuals and thus meet the social needs more effectively than a general fixed wage.

The issue here is whether these subsidies are sufficient. There are two aspects: the first is to increase the handout. The second is to give the subsidies and incentives for retraining to make the labour force more relevant to business needs. The government opted for the latter which i feel creates lesser costs for society as a whole. And lesser need for taxation.

 

[Goh Meng Seng]

Sshhh, I tell you a little secret. Don't let GMS knows.

There is already minimum wage amount set to protect the interests of the foreign maids working in Singapore and elsewhere.

Dear Zombie,

If you are referring to the standard wage stated on the employment contract for foreign maids, yes, there seems to be a "standardization" but IT IS NOT POLICY, NOT LAW. And that wage, in my opinion, is shamefully low.

Minimum wage applies to BOTH local and foreign workers.

Besides, Singaporeans as maid employers are suckers right now. What they have paid in total (Govt levies plus wages) could have given them much better quality, experienced maids, instead of some green and inexperienced maids.

If they could use the same amount of money to employ better quality and experienced maids, why not? Even if it means implementing the minimum wage policy and at the same time, waive that govt levies?

Goh Meng Seng

 

[yellow_people]

MIT economist and Nobel laureate Paul A. Samuelson wrote in 1973, “What good does it do a black youth to know that an employer must pay him $2.00 per hour if the fact that he must be paid that amount is what keeps him from getting a job?”[3]

Great post. We have too many morons who are simply looking for someone to blame for their woes or just to vent frustration. One to many demagogue tongued politicians from the Wannabe PAP or Wayang Party (WP) party and one ex WP member who are using this as a cover to advance their own political agenda. This WP party's own leader's contribution has been to call CSJ a mad dog in the state owned press. What else has this arsehole done?? Be wary of these motherfuckers.

I'll just highlight the above quote as it says quite clearly how minimum wage can be used as a pretext to discriminate against race. Actually for that matter it can be used as a pretext for all forms of job discrimination. One just have to name it.

But let's not start a thread on that as its been done before and we all know where these losers and WP demagogues stand on this.

 

[Goh Meng Seng]

Dear Madcow

At $590 a month min wage for all in Singapore including maids. One is just increasing the costs of maids for the middle class and not doing anything to create a decent living wage for lower income families.

My point to Radio was very simple, the min wage is a bad policy to create a certain objective that is raising the living standards of lower income families. I am all for another set of policies which do not involve the min wage in any form but which have almost the same effect. I am also all for higher taxes to support paying for that support though not to the extent of the European Social or American Welfare model.




Locke

Dear Locke,

How could the cost of living increase when the middle class is paying the same for BETTER MAIDS, while govt levies are cut?

For example, the same $590 employers paid will get BETTER and EXPERIENCED maids. Why not? It is an increase in quality of life. \

Similarly, workers' levies are waived, but minimum wage set at the same total cost employers are paying. What increase in cost of living are you talking about?

I could only say that for those Singaporean cleaners and such, these people who are in the vulnerable group, will benefit at the end of the day.

Govt taxed levies but in return, you have no welfare in this country.

Goh Meng Seng