Tuesday, December 19, 2006

Why are they low income jobs?

For the same reason that houses in Murupara are cheap. There are more people providing them than people wanting them. The price of unskilled labour is based on how much there is, vs how much skilled people are prepared to pay to not do jobs that literally anyone could do.
In short, there are too many people out there prepared to undertake low to no skilled jobs because they do not have the skills or experience to do anything else.
It is a matter of supply and demand.
So what is the solution? Adjust the supply and the demand.
The supply will only go up if you pay them more, because it becomes more attractive relative to semi-skilled jobs. The more you pay people to do something the more they will do it.
The demand will only go up if people have more money to spend on their services, like cleaning. So tax cuts may increase incomes for the poor. The demand wont go up if the price for their services goes up.
A socialist would say “because they are undervalued”. Who by? If you value these low income workers then go on, set up a competing business and hire them what YOU think they are valued at. You’ll have to charge people for that, which probably means some sort of “fairtrade” business whereby you say your business costs more, but pays better wages so there is a “feel good” factor. Go on, do it – stop moaning about how others treat those on low incomes and you pay them. Bet you don’t, far better to force others that act yourself. However I guess anyone who hasn't sacrificed their time, money and reputation to create employment wouldn't know better - far easier to just apply for jobs expecting others to create wealth opportunities you can share in, rather than do that yourself.


Lindsay said...

Your post has confused me (not always hard to do):-)

You say there is an over-supply of people willing to do the low income jobs, so the wage stays low.

But then you say the supply (the workers) needs to increase by paying them more.

In fact wages would go up if the supply went down. I am constantly amazed that the supply holds up given benefits can and do pay as much.

If we cut welfare spending and tax we should see more jobs and more available labour, more demand and more supply, so I can see no reason why wages would rise in the short term. The advantages of having people in work, however, remain obvious.

Merry Xmas

libertyscott said...

No, the supply does not need to increase but WILL increase with the raise in the minimum wage.

I suspect the big divide between market liberals and socialists is that we don't believe in relative poverty. The cost of unskilled labour shouldn't go up, unless the numbers of unskilled people go down and the number of jobs for the to do go up.

Regardless, I've appreciated your focus on welfare, and single minded determination to make people think about how destructive that dependency is. I'm saddened that the Nats seem to have lost interest in this.

Merry Xmas for you and yours Lindsay!