Create One Million New Jobs. Halve The Minimum Wage.

In America the President is declaring that the second Depression has been avoided.  The NEBR has announced that the first one ended some time ago.  Yet if that is the case why is no one able to explain the reason there are no new jobs being created.  Companies are making money, sure, but that has been at the expense of employment.  By cutting costs, companies have found their profits increase.   Yet in employment terms, the depression has not yet ended in America, in Europe or elsewhere.

That said, we find in the UK, that with government cuts to spending levels of 25 per cent across all departments bar Health, Educaion and Overseas Aid, private business, where sales are getting harder to find by the month, is now facing yet another increasein the minimum wage, on top of increased payroll taxes.

Do they want unemployment to skyrocket? 

Will kids be sent to the scrapheap in growing numbers as they leave school? 

The only way anyone will be able to get a job for the foreseeable future will be to moderate their price to meet the market.

Prices are falling hard, though you wouldn’t know it.  Houses are cheaper, by quite a margin than they were two years ago.  Vested interests try to hide the fact but its true.  Petrol and home heating costs should have more than halved if the oil and gas markets decided the level of retail prices, as they should.  It is only the hidden climate change levy funding loss making wind farms across the nation which is keeping the bills at all time record levels.

This autumn, the latest mini phase in economic optimism, where European debt problems have been magicked away by keeping them out of the news, and stock markets have experienced the fastest one month rally since 1939 will soon find itself meeting another kind of story.  The world and his dog, who have not noticed that prices of near everthing are still lower than they were in 2007, will soon be reacqainted with the fact.  People are going to be reintroduced to the reality of the deflationary era we are now well into.

People can only remember inflation, and so that so that is still the beast that governments and trades unionists are all trying to slay.  They will soon wake up and realise that we are now into a different era where a  period of inflation would be a blessed relief.  By raising wage costs when credit and money supply are shrinking fast, people will be thrown out of work.  More people will be claiming benefits as a direct result.  The government’s social security spending bill will not be able to cope, with their debts already weighing us down to the ground.

The fall in credit so far has been the compulsory ending of credit provided to defaulters.  Credit card debtors are seeing their facilities removed, and banks are removing overdrafts from non payers.  As of yet, the realisation that the debt game has at least another twist to go in its downwards spiral, has not registered with financial companies.  Next up, the value of cash will rise to the point that few want to part with it.  Credit will tighten a lot further yet.   As soon the contraction of credit hits a second leg downwards, the effects on demand in the real economy will be felt very quickly.

To help keep people in a job, the minimum wage should be cut from GBP 6  to GBP 4 as soon as possible. 

In many industries that is already the amount being paid by companies brave enough to find loopholes in the law.  This is achieved by booking fewer hours than those actually being worked.  The workers in question go along with it as they are kept on a  trial basis only, where payment is not legally required, and are dismissed before the law hands them so called workers rights at three months.

After two weeks at home they are then rehired for another trial. 

This information was relayed to me by a fellow blogger who had taken on such a contract recently.  He was on GBP 3.50 an hour, but has since managed to find something better.  But for while he took it as he had to pay off his debts.  By living with his parents, he was able to cope.

The minimum wages goes up from £5.80 to £5.93 (2.24% up)  from 1 October 2010 , near enough $10 an hour.   Just crazy.  It would be sensible to halve it as soon as possible.

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.
Facebooktwitterredditpinterestlinkedinmail

7 Responses to “Create One Million New Jobs. Halve The Minimum Wage.”

  1. Anonymous says:

    Oh my god you are utterly retarded. Evidence? I’m happy to say that a dickhead Guido Fawkes poster brought me here.

  2. Tapestry says:

    Why do 20 per cent of households have no one in work at all?

    Wage rates are set at a level whereby an employee can afford to support an independent household. Yet millions live in shared accommodation, with parents etc.

    GBP 120 a week is valuable contribution to a household and would enable millions to get a job. Yet this market is made inaccessible by the minimum wage.

  3. lenin says:

    The trouble with this argument is that 20% of households had no one in work at all long before the minimum wage was introduced. This is part of the new sitution of mass structural unemployment introduced in the Thatcher era. In fact, the impact of introducing the minimum wage on unemployment was negligible. Unemployment didn’t rise, it fell. You’re cleaving to an ultra-orthodox version of NAIRU in the face of all countervailing evidence. Even the CBI no longer claims that the minimum wage drives up unemployment.

    The other problems with your argument are: a) living in shared accomodation is meaningless – I’ve lived in shared accomodation, as a student and a rent-payer, and it didn’t mean I lived in a shared household; b) the vast majority of those who live with their parents are young workers, precisely those between the ages of 16 and 20 who are excluded from the adult minimum wage, and whose rate is set so low that even the poverty employers can afford them.

    Lastly, a rise of 2.24% is actually well below the rate of inflation (RPI 5.1%), and therefore the minimum wage will actually decrease in value. You’re actually complaining about a rise in the minimum wage that is really a cut.

    This is an economy where the big problem in the next few years is going to be weak demand. Wages are falling, private sector borrowing is falling, and government spending cuts will ensure that demand falls further. The private sector is risibly weak, banks aren’t lending and businesses aren’t investing, so there’s no way it can be expected to pick up the slack. In fact, the lesson of Ireland is that the the more you cut, the less your economy will grow, the less confidence investors and traders will have in your ability to repay your debts, and the larger your deficit will grow. The one thing we don’t need is an attack on the purchasing power of those who, as you would know if you’d read your Keynes, are least likely to hoard their income and most likely to put it back into circulation.

    You know absolutely nothing, and you certainly shouldn’t be opening your ignorant yank yap to blather about the political economy of the UK minimum wage when you don’t even know the fundamentals.

  4. Tapestry says:

    I studied Keynes at great length. People have tended to focus on a narrow interpretation of the many things he wrote, to promote their own political viewpoint, just as you are doing. He died in ?1947.

    Besides the things you are alluding to, he also wrote that growth depends on the belief of entrepreneurs that their risk-taking would be profitable and worthwhile. If the price of wages can’t fall along with the price of everything else, then risk-takers will rightly believe that they cannot make money. There was no minimum wage at the time he was writing. Nor was one contemplated.

  5. While I don’t agree with all your point, the part about unemployment has a certain validity.
    A depression causes demand to fall until a point is reached at which labour and costs etc become so low that the situation begins to reverse and output begins to reassert itself.

    However, with a minimum wage and fixed employment contracts, the advantage for employers to remove higher paid workers to get cheaper ones is lost. This is no bad thing . Don’t want to price people into starvation.
    But it does significantly reduce start ups. Wages as a fixed cost can’t be below ‘x’.
    Rents at the moment, in my field of retail, can be got easily for zero. Yet these companies employ relatively few workers for the size of operation. Certainly before 1997 they would have, say, 10 people / site. Now its 4-5.
    Its not just minimum wage that does that, but it plays a part.

  6. Tapestry says:

    Which is better, Bill – keeping millions at home on social security who would work for GBP 4 an hour if it was permitted, or getting the government out of the low pay marketplace, and getting business going again?

    Two people living together can earn GBP 320 a week at GBP 4 an hour. If tax thresholds are raised to get these out of taxation as proposed by Lib Dems, the incentive is good enough.

  7. Fascist Hippy says:

    It is nobody elses business what the hourly rate for a persons work is, the rate is an agreement between employee and employer, certainly nothing whatsoever to do with the government, the minimum wage should be scrapped.

Leave a Reply

You must be logged in to post a comment.