6 thoughts on “How minimum wages encourage discrimination”

  1. Posted 01/08/2011 at 13:43 | Permalink

    Yes, and if I were a woman who had undergone a hysterectomy, I’d try and mention it in any job interview. But I’m not in favour of abolishing all maternity benefit or the UK minimum wage. Adults earning less than £6 an hour somehow doesn’t seem right.

  2. Posted 02/08/2011 at 01:08 | Permalink

    Jonathan: Yes, exactly. It’s far better for them to earn nothing than less than £6/hour…

  3. Posted 02/08/2011 at 09:19 | Permalink

    @ Johnathan

    Does the thought of adults being (persistently) unemployed and unemployable feel better?

  4. Posted 02/08/2011 at 15:14 | Permalink

    @ Jonathan – Earning less than £6 an hour might not seem right to you, but it should be up to the individual concerned whether he wishes to sell his labour at a particular rate. For example, he might wish to work for £2 an hour because he will learn skills that will earn him £20 an hour in ten years’ time. Minimum wages effectively prohibit people with low productivity from working and are thus fundamentally illiberal policies.

  5. Posted 04/08/2011 at 10:38 | Permalink

    But, going back to the hypothetical example, the question that strikes me is: why should blue-eyed workers be forced to work for less than brown-eyed workers just because certain employers have an irrational hatred of blue eyes? This is a moral question rather than an economic one; I’m sure that what you are arguing is correct. But I think that, rather than just accepting that blue-eyed workers “deserve” less money for their labour, we should be trying to tackle the problem at the source.

    Incidentally, it also assumes that the potential employees have a certain amount of information about their employer; ie. that he is a racist, and that they should therefore offer to work for him at a lower wage.

  6. Posted 04/08/2011 at 14:10 | Permalink

    Greg I think you have misunderstood the mechanics at play. No one is saying that the blue eyed workers “deserve” less or that blue eyed workers should be “forced” to work for less just because of an irrational hatred. What is being said is entirely different, that is, that IF an employer does have an irrational “hatred” of a certain irrelevant characteristic (ethnicity is almost always irrelevant as a point of distinction for most jobs), you do the group being discriminated against irrationally harm by forcing employers to pay people the same amount of money. The effect is simply that they will not be employed. If employees are free to bid down the cost of labour in order to overcome their prejudice then, assuming that the particular characteristic was not in actual fact a relevant proxy for inferior performance, the employers that will be hurt will be those that refuse to take advantage of the cheaper labour. You must consider all of the firms in the market place. If there are no minimum wage rates to distort things, and half of the firms are willing to select from the entire population regardless of eye colour and half will only hire brown eyed workers then the firms that do not discriminate will have access to a greater supply of labour and labour costs will be bid down. For each job they are willing to offer there are more people available who can do that job. The cost of this for the discriminatory firm will be reduced market share and possibly insolvency.

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