Saturday, 18 June 2011

Philip Davies should have stuck to his guns

Tory MP Philip Davies has clearly dropped himself in something of a hole with his suggestion that disabled or impaired people should be allowed to opt out of their entitlement to the national minimum wage. By focussing on these vulnerable individuals, Davies has ended up sounding as if he advocates some form of employment apartheid, where those deemed to be of full mental and physical fitness are treated considerably more equally than those who are not. As political own goals and gaffes go, this is right up in the higher echelons of the scale, with a policy suggestion which I believe stemmed from perfectly benign intentions incurring the wrath of mental health charities and members of his own party alike.

Davies' comments make for interesting reading - the fundamental premise of his argument is that those with a mental or physical condition that impairs them may be seen as 'less productive' and therefore a greater calculated risk to an employer than someone who is medically of (for want of a better phrase) able body and mind. The requirement to pay the national minimum wage to whoever the potential employer chooses to hire is therefore likely to tip the balance in favour of the 'able' candidate,"Given some of those people with a learning disability clearly, by definition, cannot be as productive in their work as somebody who has not got a disability of that nature, then it was inevitable given the employer was going to have to pay them both the same they were going to take on the person who was going to be more productive, less of a risk,"

Now some of the language here is clumsy and insensitive, as is the assumption that someone with a learning difficulty would automatically possess less aptitude for any job at all. Of course, every individual is but a collection of their own strengths and weaknesses, and there are very few who I have encountered in life that appeared to possess absolutely no kind of 'talent'. People are sometimes fortunate enough to find themselves in an occupation that taps into their niche or area of expertise, thereby rendering whatever issues they have (be it a health issue, disability or whatever) somewhat irrelevant. So Davies' application of the broad brushstroke in such black and white terms was not exactly helpful, but then it stuck me more as ill-chosen words than anything deliberately malicious.

But there's a deeper observation to be made when absorbing some of his other musings on the subject. Davies continues, "My view is that for some people, the national minimum wage may be more of a hindrance than a help. If those people who consider it is being a hindrance to them, and in my view that's some of the most vulnerable people in society, if they feel that for a short period of time, taking a lower rate of pay to help them get on their first rung of the jobs ladder, if they judge that that is a good thing, I don't see why we should be standing in their way." I'd concur with that sentiment 100% and then ask why he felt that singling out a vulnerable group in society would somehow enhance his case or make it easier to digest from a political viewpoint?

In reality, this is an argument against the principle of the minimum wage itself, and the only logical explanation that I can think of for Davies diluting it to the point where it appeared positively hideous is that the minimum wage, and the notions that first brought it onto the statute book in 1999, are now accepted conventional wisdom in the political mainstream. The main threads running through an argument for a state-imposed price fix on labour are that 1) it reduces poverty, drives up living standards and stops exploitation while 2) not increasing unemployment. It's worth addressing these two points separately.

There are undeniably winners as a result of the minimum wage. At the 2000 Labour Party Conference, John Prescott proudly announced that "1.5 million people got a pay rise last year thanks to a Labour government". Some of them would probably have got that pay rise anyway, but it would be churlish to suggest that most, let alone all would. Now a lot of the debate about whether or not to have a legal minimum comes down to how one defines the value of an individual's labour. If you take the view that it is not what one believes themselves to be worth, but the price an employer is actually prepared to pay them, then it is likely that the biggest winners of a minimum wage would be those whose genuine market value fell just a fraction below it - ie low enough to actually benefit while not necessitating the huge increase in remuneration which would price them out of gainful employment.

However, when balanced against the relatively small numbers of beneficiaries, there is a much greater number for whom the price-fix operates as a barrier to the acquisition of skill and experience. Now this perhaps does not apply so much to those who had a relatively unbroken record of employment prior to the introduction of the minimum wage. Even in the absence of a tangible skill, a track record of reliability and having done a job well in the past will drive up the value of a potential employee. Those that suffer most are young people who have no such list of positive experiences to call upon. Britain's official unemployment level currently stands at 2.43 million, and over 900,000 of those are under the age of 25. Now the question naturally follows from that statistic is - has the minimum wage priced any of these people out of work?

It is difficult to understand how a fixed minimum could not cause at least some level of state-imposed idleness. For it to have any of the desired effects of the statist, then it has to be set at a level considerably higher than the real market value of some of the lowest paid. After all, a minimum wage that did not (hypothetically) raise the earnings of a great many would be pretty pointless, right? But if a legal minimum does not cause unemployment, as the statists would have you believe, then why don't we raise it to £15 an hour, make everybody comfortable and raise living standards across the board? Because the almost certain end result would be that of pricing millions out of work, leading to a mass outbreak of state-imposed idleness. So it stands to reason that any minimum wage that has the intended consequence of raising living standards for a fortunate few will also have inevitable, undesirable and unintended ones.

Next question - is an increase in unemployment therefore a price worth paying in an ideological war against worker exploitation? I'd answer this by making two observations. Firstly, the most important thing for a person perhaps leaving education at 16 or 18 is to get on "the first rung of the jobs ladder" as Davies himself put it, and let's be realistic about what someone in that situation can offer to an employer, and their bargaining position as a result. Without the benefit of a track record or demonstrable skill applicable to their occupation, it is not unreasonable to suggest that the would-be employee does not hold many of the cards in a discussion about remuneration. In reality, the two potential selling points of employing a school or college leaver are that they are usually enthusiastic and as a rule are a lot cheaper than someone with proven skill and experience.

By applying a price-fix, presumably with the intention of strengthening their hand in that conversation, the state actually contrives to weaken it by reducing one of their competitive advantages. Is work for a short period on what might be a very low wage preferable to no work at all? I would argue that it always is and struggle to see anything compassionate in forcing people onto benefits to stop them from being 'exploited'. Surely it is up to an individual to decide for themselves if their employer is short-changing them or not? If they spend time building an experience and knowledge base then find that their reward does not mirror the change in circumstances, then someone, somewhere will be prepared to pay what they are worth.

Of course there are cowboy employers run by morons just as there are a great many who possess some form of enlightenment in their approach to remuneration. In reality, cowboy outfits are that way out for a specific reason - because they struggle to retain the services of talented individuals for very long. A large part of the notion of the minimum wage appears to be the denial of a very simple fact of life - namely that the labour of some people is worth more, sometimes a lot more than the labour of others. To use a sporting analogy, a player who runs round like a headless chicken while lacking an end product may please supporters who commend his effort, but in reality what a team needs is those who can score goals, create goals or stop goals - ie make something happen which has a tangible value. Such players invariably command higher transfer fees and wages for a very good reason, and so the same principle follows in every walk of life.

But surely people need to earn enough money to live on? I hear the cry and would raise a few points to answer it. Firstly, many of those who would fall below the current legal minimum in terms of real market value would be very young people living with their parents, so the notion that an admittedly very low wage would automatically equate to immediate starvation does not get off the ground. Is moving away from the tyranny of Mum and Dad and into a place of one's own a right? Well for those with particular circumstances relating to issues of (for example) abuse, then they can be taken on a case by case basis, and yes the state and/or a charity could temporarily fill any shortfall while the individual was taking responsibility for his or her own life and increasing their earnings potential. However, outside of these instances, surely the means to choose a more expensive lifestyle is something that one should earn on merit? And if you really want to boost the incomes of the least well off, surely taking them out of income tax altogether would be a more effective way to go? If the current minimum wage is seen as a measurable decency threshold, then why are those earning precisely that amount still subject to income tax and national insurance?

And here's a question to ponder - does comfort, at least in some cases, stifle motivation? Is it helpful to enforce an improvement in the living standards of those fortunate enough to find employment at the lower end of the pay scale? I ask this while recalling a conversation I once had with a manager from a previous place of work. He told me how he'd had to put in hefty shifts of overtime in order to pay for a holiday when he'd just started out, and acknowledged that the reward for his labour at the time was, in his own words "a bag of shit". However, it was apparent to me that this had clearly driven him on towards improving his lot, and it begs the question as to whether his motivation would have been quite the same had he been earning more between the ages of sixteen and eighteen?

This cannot become a central thread in the argument as it would be plain wrong to suggest that we are all motivated solely by money, but it is worth thinking about. A glance at the world of music or sport will bring up examples of people who achieved great things having seen the pursuit of their talent as 'a way out'. There are also plenty of instances where an individual never quite fulfilled their potential having become 'too rich too young'. Of course many were more than just comfortable, and so there is not an exact fit that is applicable to the 'normal' world. However, if you look at the plethora of sportsmen in particular whose nosedived after they made a few notes, it is clear that financial security somewhat affected their psyche and motivation.

Perhaps the best observation on this theme came from the great middleweight boxing champion Marvin Hagler, who once commented that "it is hard to get out of bed to go running at 5am when you're wearing silk pyjamas". A person's efforts are worth what they are worth, but does a state-imposed pay rise to increase living comfort actually hinder some people and reduce their earnings potential in the long run?

Some who take my side of the argument perceive the policy of a minimum wage as a further example of statist self-congratulation, of demonstrating to themselves how 'compassionate' and 'caring' they are while disregarding the unintended consequences. I don't take this view, and instead see it as a well-intended muddle that its supporters genuinely believed would improve the lot of the least well off while not increasing unemployment. The reality is that the acid test of a minimum wage is when the economy is not doing well, and 20% youth unemployment suggests that it has failed this examination fairly spectacularly. Sometimes statists contrive to blur the lines between opportunity and outcome, and by fixing the outcome, they inadvertently slam the door of opportunity in a great many young faces.

I believe that there is nothing compassionate about depriving people of the opportunity to get their first job even if it happens to be a badly paid one, thereby forcing them into the trap of welfare dependency. Philip Davies clearly believes this too, and had he simply said as much, then the negative press would not have mounted as quickly, while an interesting discussion of the subject would probably have ensued. There was no need for him to single out the handicapped or disabled in any way, and it is a great shame that he did.

6 comments:

  1. I'm 49 years old, have Asperger's syndrome and have never had a job.

    I need to be able to offer an employer something so that he will at least just consider giving me a job; and I reckon that his being able to pay me less than statutory minimum wage might just do it.

    I doubt I would be any worse off than actually being paid a proper wage because of the complex interactions between the various benefits I receive and the amount of money I have to pay to social services for my care. In effect a wages subsidy would be in operation.

    I desperately want to work, and need to work, so that I can fully contribute to, and participate in, society; and strive to become the best person I'm capable of becoming - and the minimum wage legislation is hindering me in my quest.

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  2. A comprehensively well argued case against the minimum wage. A piece of real quality as I have come to expect from Daz.

    He is kind about the intentions of those who campaigned for and implemented this stupid legislation. I am sure that many of them were well intentioned, but those good intentions were bolstered by their complete failure to understand the economics involved and the actual consequences of minimum wages. Others were much more interested in how many votes they could buy with this legislation from comfortable middle class voters who wanted to salve their consciences about perceived poverty while doing nothing more about it than favouring the supposed compassionate route over the nasty party.

    Philip Davies is opposed to minimum wages. He has correctly argued in the past that the amount a person is paid is a private matter between an employee and their employer in which the state should have no role. The reason that he got himself into this distraction about disability rights is that the statist parties that form our government and totally dominate parliament make it impossible for him to continue to present that position. Instead of opposing a law that damages the interests of every potential worker whose labour is worth less in the market than the minimum wage, Davies was driven into trying to nibble at the edges of the law because that was the only option open to him.

    The disability lobby, and the sensationalist press, have leapt on his references to those with physical or mental impairments, but he actually highlighted the situation of people who have impaired work histories as well. Of course nobody cared about fighting the cause of ex- prisoners and the reality is that most of those making a fuss aren't genuinely acting to better the lot of people with disabilities. They are looking to damage Philip Davies for political reasons.

    Our political establishment, and much of the media, fear the rational arguments of those of us who want to see the wasteful, intrusive and destructive behaviour of governments reduced. Philip Davies is facing the hard lesson that genuine independent thinkers are not wanted in parliament.

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  3. Voice of Reason18 June 2011 at 17:06

    A well argued article, Daz, like a good wine your improving with age, but two flaws this time with respect to young people being able to get a foot on the ladder:

    1. The National Minimum Wage is stepped:

    •£5.93 - the main rate for workers aged 21 and over
    •£4.92 - the 18-20 rate
    •£3.64 - the 16-17 rate for workers above school leaving age but under 18
    •£2.50 - the apprentice rate, for apprentices under 19 or 19 or over and in the first year of their apprenticeship

    The under 21s are certainly not disadvantaged compared to older workers and this positively encourages employers to give young workers a try.

    2. Internships

    Whilst it may be illegal to pay below minimum wage it is perfecly legal to pay nothing at all in the form of an internship.

    My son having found the jobs market bleak on graduation is doing an unpaid internship with a publishing company. I accept that iternships tend to be restricted to graduates and white collar professions, but I think you will get the point. Of course for non graduates there is another way of getting work experience -voluntary work.

    I was an ardent supporter of the minimum wage, but for me it has been a bit of a let down, but not for the reasons you state. I don't think it prices people out of the market, it is set far too low for that. For me since the NMW has been introduced far too many companies have adopted it as their wage rate for unskilled staff. Companies which had there been no NMW would have probably paid more. If you take a tour around your local job centre it is staggering to see the number of jobs that pay NMW. It was supposed to be the minimum not the norm!

    It is not surprising that so many people find it difficult to get off the sofa when this all that is on offer.

    Now isn't it about time you stopped getting wrapped up in all this political stuff and got yourself out of the house. Young lad like you shouldn't be cooped up with a computer every night. why don't you get a hobby?

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  4. Mr Voice,

    You are speaking very good sense today. When I was at the rock factory in the early 80's we didn't have no minimum wage init!

    I was paid only 50 pence per hour for doing very hard manuel work. Sorry I mean manual work. Manuel used to work there too. I was getting confused. This glue is a different brand to what I usually sniff.

    One day they reduced my wages to 40 pence an hour just because I made a simple mistake when putting the name through the middle of the rock. The said I had splelt Blackpool wrong. To be fair I had spelt it "Morecambe".

    I had to work 80 hours a week and still didn't have money to buy food. I just had to eat rock. I didn't know I was being exploited, I was in a foreign country, living the dream- I was a Rock Roller and I took no prisoners.

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  5. A good piece Daz. A good economist always seeks to look at the unseen consequences of actions, not just the seen (thank you Henry Hazlitt). Many people have been hurt by the minimum wage but they are unseen so they do not matter.

    By the way, your trolls are excellent. Do not feed them but if they stay it show your are hitting the spot. A blog without trolls ain't worth jack.

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  6. MNN - thanks - I'm struggling to see when I 'had a go at the disabled'...

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