Tuesday, January 02, 2007

Minimum Wage Retort

The best way to identify those who are truly conservative and not the least bit progressive, but claim to be, is to see where they stand on minimum wage increases.

Mr. I Am A Liberal, Jason Cherniak sounds like the Fraser Institute in his attack on the NDP proposal to increase the minimum wage in Ontario.
Say no to a $10 minimum wage

Yep he rolls out all their arguments; loss of jobs will ensue, businesses will close, blah, blah, same talking points the right wing uses. Which shows the Liberals real colours. Talk progressive but act regressive.

Now imagine his position on a National Social Wage/Living Wage. Why the same old canards would be hauled out. Despite the fact the Liberals off course say they favour a National Guarnteed Income.

What Cherniak and The Fraser boys forget is that wage increases means more money circulating in the economy. Those on minimum wages spend more on daily needs, including purchasing from local small businesses as well as large chain stores, investing their income directly into the economy. Moreso than those who get tax credits or tax breaks. In fact the argument of the right that Tax Breaks put money into the economy applies even moreso when it comes to minimum wage increases.

Why are Cherniak and the Liberalblogs still populating the Progressive Bloggers, well because actually it's their front group, the rest of the left is here just to give them cover.

Liberals Are NOT Progressives nor are they part of the Left. Jason proves it once again. Thanks Jason for clearing up any doubts anyone may have had.

Run from the Left, rule from the Right.


Minimum Wage

Social Wage

Jason Cherniak

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Anonymous said...

Thanks for bringing this to my attention Eugene, although it's a really old argument, I think it's interesting to see that it's still floating around.

Anonymous said...

It becomes apparent that so many PB'ers really believe in nothing other than the particular political party they've chosen to run with. It's pathetic.

Anonymous said...

Well fisked, Eugene. I'm sure I can find some good Dean Baker economics to slap him with too.

A BCer in Toronto said...

Why are Cherniak and the Liberalblogs still populating the Progressive Bloggers...

If you read the comments thread on the post Eugene you'll see some of the people disagreeing with Jason's view on this issue include Liberals, such as myself. Not that I want to disrupt your thesis or anything...

Joseph Krengel said...

So, does that mean that as a Progressive Blogger myself, that I am just catering to party interests? Especially because I draw different conclusions than the NDP party in many areas?

The fact is that the economics behind a minimum wage increase aren't as simple as "there's more money in the economy." While it is generally true that minimum wage increases do tend to narrow the gap between incomes and the median cost-of-living; these gains have traditionally lasted no more than five years, and they can be linked to employment shifts and the contraction of economic sectors. The evidence is weighed and measured differently by different people; and unsurprisingly not everyone arrives at the same conclusion. As someone who professes to be "progressive," I find it alarming that you would dismiss and mischaracterize a position which challenges your own so quickly.

For the record, I support a regular, indexed minimum wage.

Erik Abbink said...

I caught your post a bit late but came to the same conclusion; there's nothing progressive about Mr. Cherniak.

Good to read there are some more sensible Liberals too.

Anonymous said...

As a twenty plus year employee/labourer I say lowering income taxes is more effective means than raising min. wage/ less costly to employers.
Minimum wage is not intended to be the average wage but the minimum wage.
CAW get big raises and make allot of money for their workers but they cost themselves jobs and creat inflation which has a greater negative effect on economy overall. The CAW and most unions cause more harm than they do good, all things considered.Workers need better law and enforcment of existing labour standards NOT more Unions and higher income taxes.

Anonymous said...


I often find your posts insightful but this one is lacking.

First, Jason may be incorrect in many assumptions, but he is correct when he says that some jobs may be lost and some businesses will hurt. My parents own a their own business and they definitely can't afford to keep their staffing levels the same while paying a minimum of $10/hour to their employees. It's nice in theory to think of people with that type of earning potential but it doesn't make sense for many small to mid-size businesses.

Many of these businesses would have to increase product prices to afford the increase in staffing costs which would only negate any purpose in giving a minimum-wage increase.

I also don't like the assumption that just because we're Liberal doesn't mean we're not progressive. I won't deny there are some that fit your description. They even ran the federal-wing of the Liberals for awhile and hold power in places like BC and Quebec. But not all of us fit that bill. I'm willing to call the party out on issues I think they're making the wrong decision. And I'm not the only one.

Erik Abbink said...

What Cherniak and The Fraser boys forget is that wage increases means more money circulating in the economy.

Good point, and it rebuts the "increased wages => increased prices => slow down economy - cycle" well.

I can't believe that Liberals like Cherniak use Fraser Institute rhetoric as arguments to back up a position on minimum wages.

What DO Liberals stand for when it comes to minimum wages?

Anonymous said...


As a business owner/employer, I must say that the ever-increasing minimum wage will lead to the total depletion and non-existence of many small businesses across this province.

Living in a hospitality town such as I do, many mom and pops will not be able to employ the quality staff they need to in order to exist. They may as well take their 30 year shops and close 'em down.

They're already over-taxed and underpaid themselves. Maybe the day of the independent owners has finally given way to the multi-conglomerate corporation.

So what you'll have here is a business community similar to our current pre-existing populace. The rich and mighty will continue to grow and the poor and non-existent will fade away and nobody will give a shit.

Try explaining to a 20 year employee why you should only have to pay them $14 an hour to answer your phone when you're paying your university part-timer $10 an hour and they have zero experience in the workforce.

Oh well. I don't know much. That's just my humble opinion....and I am just another Liberal.

The What Do I Know Grit.

Erik Abbink said...

"Living in a hospitality town such as I do, many mom and pops will not be able to employ the quality staff they need to in order to exist. They may as well take their 30 year shops and close 'em down."

James, are you saying that the government should help 30 year old shops, which consistently neglect to pay their employees a living wage, by keeping the minimum wage low?

They're already over-taxed and underpaid themselves.

I see. If, after 30 years, a business still hasn't figured out how to make a fair amount of money for all of their employees, then maybe, perhaps, it's time for this business to change business plans.

berlynn said...

As a business owner/employer, blah blah blah. is what the business owner/employer always says when the minimum wage goes up.

Erik Abbink said...

Hi Berlynn,

I'm a "proud" (god, I hate that word) business owner. I don't have a problem with the minimum wage going up.

But I do get your point. It's like saying that employees, who work for minimum wage, welcome a raise....

Category slam dunk.

Anonymous said...

Minimum wage debate kicks off in BC, too

eugene plawiuk said...

Firstly Jason used Fraser Insitute arguments, which none of his Liberal supporters have denied.

Second there is no such thing as two sides to a story, as Joseph Krengel claims, if you would bother to look at my links, I don't post them for nothing on the Living Wage you will see that anti-poverty groups have all pointed out that minimum wage increases help not just bubble gum chewing university students getting their first job, but the biggest group of minimum wage earners which are single moms.

I posted the links to my stories on minimum/living/social wages because I am firm believer in EMPLOYERS PAYING THEIR WORKERS OUT OF THEIR PROFITS.Don't make profits get out of business. I cannot believe the whining I am reading here from business folks.

As any good right wing economist will tell you two things cut into profits, wages and taxes. Choose which you would rather pay. Why neither.

If your business is so weak it would collapse under the increase of a minimum wage, get out of business, or go out of business, thats the dog eat dog world of capitalism. Or did I miss something here.

Oh yeah the middle class cry small business makes Canada work so give me more state subsidies. Which is exactly what tax breaks are for small business.

But business is learning its lesson the hard way, want to keep your workers and not have them leave for Alberta, pay them better, give them benefits, increase your flexibility with hours of work, pay for their training and tools.

All stuff you avoid doing so that Taxpayers have to.

In Alberta the minimum wage is still the lowest in Canada but with the boom the lowest wage is now $8 an hour, and businesses are still closing because they can't exploit high school students for those wages, they leave to get better pay elsewhere. In Alberta businesses are closing for lack of staff.

Again too bad so sad that is the reality of capitalism. Or did I miss something here, was the State supposed to prop up business?

I have said here before two points,
all taxation should be of business earnings, before deductions, and the worker earning $100,000 or less should pay no taxes.

Add to that the reality that a social wage should be on average in Canada, $10 per hour and include the employer paying all benefits, RRSP, health care premiums, Blue Cross, etc.

As for Liberals being critical of Cherniak, great, I would hope so, but unfortunately the PB is full of partisan Liberals who spend more time attacking the NDP than attacking the Tories, and Cherniak historically is one of these hysterical types who spends his days attacking the NDP as I have pointed out before.

My crack about the Liberals using the PB as their immenant domain came from Jasons own blog praising Scott Tribe for coming out of the closet as a Liberal.

And though I am a member of the Dipper blogs, I am also a member of the Non Partisan Blog roll and the Liberty Blog rol...those criticising me of being biased towards the NDP must have missed the fact this is an anarchist blog.

An of course some Liberals think they are progressive, I on the other hand don't equate that term with socialism or the Left.

The bottom line is that if my critics checked Jasons arguments they would see word for word they were those of the Fraser Institute, which is why I linked to their press release.

If my critics would bother to read the articles I have posted on wages in the past they would see I have consistantly made this argument around wages and especially around the labour theory of value.

Anonymous said...

I liked this posting. I think there should be more discussion on the guaranteed annual income. It seems many other countries are making some slow progress towards this idea. It's long overdue. Basically my view as an anarchist is to protect those areas of the social "net" which allow people to survive but gradually remove the parts which are only there as mechanisms of social control.

Jason Cherniak said...

Don't you see the difference between the minimum wage, paid by employers, and a national guaranteed income, paid by the government and funded by progressive taxation?

Demosthenes said...

Jason: Other than that the latter encourages employers to pay as little as possible, confident that the government (and, thus, the taxpayers) will shore things up?

Even with a national guaranteed income, there would still need to be a minimum wage, if only to avoid this kind of blatantly exploitative behavior by employers.

AwaWiYe said...

Whether or not one passes a litmus test for conservative or progressive has no bearing on the merit of minimum wage policies. Minimum wage policies can either be defended by recourse to reason and observation, or they can not.

>What Cherniak and The Fraser boys forget is that wage increases means more money circulating in the economy.

No. The only way to have more money circulating in the economy is to increase the money supply. (If your supposition were true, we could jack up the minimum wage to $40 an hour and we'd all be living like kings - right?) If we increase total wages without a corresponding increase in productivity and/or the money supply, increased unemployment must result. In practice, what happens is that businesses reduce employment and/or increase the productivity of the staff (demand more work to match the wage increases). If government is on the ball, it increases the money supply to match. The net result is a new equilibrium. What can be bought with the new minimum wage is, approximately, what could be bought with the old minimum wage. That is what is observed. If you stop and think for a moment, you'll realize that today's minimum wage doesn't really buy any more with respect to the economy in 2006 than the 1980 minimum wage bought in 1980. To the extent that minimum wage earners can buy more with their wages, it's because of the same reason everyone can buy more: increased productivity, chiefly thanks to technological improvements. Minimum wage advocates aren't progressive; they're just running in place. The simple illusion of bigger numbers shouldn't confuse any reasonably intelligent person.

Tax breaks don't put more money into the economy either. Tax breaks transfer spending power from the government back into the hands of the people whose productive activities earned the wages. (Tax breaks improve the economic situation because what the government pays for isn't necessarily what each person needs or wants.)

eugene plawiuk said...

Werner it appears that even Garth Turner supports a Guranteed National Income! Andre Gorz and others have made this the main issue around precarious labour, part time work, home work, etc. And I have yet to get much response to my blogging on it. But it is an issue that can be mobilized around on a broad basis.

As for the point about women, single mothers in fact being the largest group impacted by minimum wages see my updated blog article Minimum Wage Redux

I have argued from a libertarian perspective that business should pay all forms of the social wage, directly through taxation of profits prior to their writedowns.

Business loves the State, which is why it created it. What the state pays for, that is what workers who are taxed back off their wages pay for, is expenses business refuses to pay for, education, healthcare, daycare, etc.

EI and the CPP are NOT paid for by the State they are paid for by us.

WCB is a state sanctioned institution to protect business, not workers, from lawsuits.

As for AwaWiYe comments on productivity, that is another term as I have pointe out here, for profit. To reiterate my point here, that is in another article, see productivity, you will note each and every Canadian is valued at producing $41,000 a year annually.

That would be the basis of the social wage. It also shows the difference between what a person living at the poverty level in Stats Canada estimation earns and what they are credited for as their productive worth.

Yes money does not grow on trees, nor is is simply printed as needed (as Social Credit found out) rather it is based on Canadian productivity which has risen based not on business or its investments but upon the wage cycle of workers. So if annual wages increased 2% then Productivity in Canada was 2%.

Workers wages in Canada represent their production of surplus value/profit, while the TSX represents capital being unproductive in the market.

AwaWiYe said...

>As for AwaWiYe comments on productivity, that is another term as I have pointe out here, for profit.

No it isn't. Productivity is just a measure of total output (of the worker, of the business, of the nation, etc). Profit is just one component of what happens to the output. From the point of view of a business, the profits are just another cost (along with labour, materials, taxes, etc) paid out to someone else such as shareholders or owners. The only profit useful to the business is that which is reinvested in the business (ie. proper exercise of capitalisation).

I'm waiting for the day when all the labour leaders and advocates who favour a transfer of outputs from shareholders to workers seize control of their pension funds, which are among the largest sources of capital and practitioners of capitalism in Canada, and use the shareholder voting leverage of their own pension funds to force the enterprises in which the funds invest to pay less "profit" to the pension fund (whatever amount this "fair profit" they keep screaming about is) and pay the remainder of the "profit" out to the workers as a variable annual bonus. I won't hold my breath. I figure Big Labour likes its pensions to rake in Big Profits along with the best of the capitalist dogs. But I digress.

Profits to owners and shareholders are the cost of investment capital, and the cost is generally driven by the risk of loss of part or all of the capital. It's up to the capital holder to decide how much profit is "enough" against the risk, not you or me or all of us acting as the State. If the capital holder is dissatisfied with the profit, he can simply sit on his capital. You can get mad and take his capital away because you have a head full of Big Ideas, but that's not libertarian.

People are not equally productive. Per capita productivity is just an arbitrary division of the sum of productivity of a group. Each Canadian does not have an inherent productive value, and there is no such basis for a "Social Wage". If you have nothing to offer that is worth more than $5 per hour to any other person, you are only worth $5 per hour unless you can force people to accept whatever you do in exchange for a greater demand. That's not libertarian either, BTW.

Workers wages reflect only their contribution to production. The TSX doesn't represent unproductive capital; it represents a trading venue for ownership. Unproductive capital is capital that has been expended on consumption or on things people don't want - fast ferries, for example.

eugene plawiuk said...

"I'm waiting for the day when all the labour leaders and advocates who favour a transfer of outputs from shareholders to workers seize control of their pension funds, which are among the largest sources of capital and practitioners of capitalism in Canada,"

So am I as I have blogged ,here before.

Polly Jones said...

Great post: it should be required reading for all Progressive Bloggers!

Anonymous said...

Cherniak's position has won the endorsement of Stephen Colbert.