Tim Worstall

Regional Minimum Wages

There’s something very interesting here:

The report called for Britain to adopt a similar system to those
operating in Switzerland and America, where local authorities are
allowed to set benefits, the minimum wage, and the salaries of public
sector workers.

That would be a terrific leap forward: we could extend it to all public sector workers and abolish the national pay scales.

This, while moving in the right direction, is unfortunately flawed:

Gordon Brown is drawing up plans to vary the minimum wage region by region across Britain.

The
Prime Minister is understood to have been persuaded by academic studies
which have found that having a single minimum, currently £5.35 an hour,
right across the country, is uneconomic.

That wages should vary across the country is obvious: costs do, so wages should. But having the minimum decided in Whitehall simply perpetuates the problem: there should be no minimum wage laws at all. Instead of fiddling with regional rates, abolish it altogether.

We already have a working system of determining wages: markets, the balance of supply and demand.

In

4 responses

  1. Matthew Avatar
    Matthew

    I’ve always thought these things would founder at the hands of the national tabloid press. “Postcode lottery”, for example.
    Btw, is the idea that a Citizen’s Basic Income would vary across the country? I thought it was then argued that to do so would merely perpetuate regional differences?

    Reply
  2. Bob B Avatar
    Bob B

    The trouble is that the politics and economics of this diverge.
    Regional variations in the Minimum Wage will certainly arouse the political anti-post-code lottery lobby. That lobby, or some minor variation of it, will almost certainly also insist on national wage negotiations and centrally set pay settlements.
    From there, it’s not far to get to calls for no local variation in pay to take account of scarce skills in teaching or whatever. If maths or science teachers are hard to find in, say, on Humberside then the pay of all teachers, everywhere, must be increased until Humberside no longer has a problem – which could take a long time.

    Reply
  3. Jock Avatar
    Jock

    Re Matthew & Basic Income – I don’t think it’s usual to propose Basic Income varies (I might be wrong) but I’ve always thought that. as a Georgist, and assuming it would be funded through Land Value Tax, then yes, it would make sense for it to be a distribution of the locally collected land value and so roughly track the cost of living in each area, reflected by the land values in each area. A little like the old parish rate financing the parish dole.

    Reply
  4. Roger Thornhill Avatar
    Roger Thornhill

    Note the use of “region by region”. Brown is preparing the ground for the abolition of England.

    Reply

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