UBI and the minimum wage

[Aught3]

Would the implementation of a UBI could lead to a reduction or elimination of the minimum wage and might this be a positive thing?

The first minimum wage was in 1984 New Zealand and, in my estimation, it's been a way to stop employers exploiting workers. As long as a minimum wage is a big subject for debate we know that it remains necessary. But if a UBI is implemented, a minimum wage may no longer be necessary.

Assuming that a UBI is implemented at a level which is just barely livable, people could leave jobs that, in their estimation, did not provide sufficient remuneration for their time. Rather than being compelled to work out of necessity, a UBI would increase worker choice. Employment that previously paid too little for the long hours of drudgery would have to pay more in order to tempt people to perform the jobs or go out of business.

Perhaps some jobs that were particularly desirable for alternate reasons could even fall below the previous minimum wage standard. With people still willing to work as 'candy tasters' for less than the current minimum.

On the other hand, we know certain corporations will take any chance given to screw down their employees so maybe a minimum wage would be necessary even with a UBI, but perhaps it could be set at a lower level. It's at least plausible to me that the implementation of a UBI could do away with the need to tweak the minimum wage every few years and at least that would stop the 'why not raise it to $25/h hurr-durr' comments from the current PM.

 

[Master_Ghost_Knight]

I don't know what the United Bicycle Institute has anything to do with it.
...
Ok, here is what I think of it. No! It is a bad idea to just give government hand outs without a minimum wage, for a couple of reasons.
1. If jobs give you less money than the government, why the hell would you work?
2. Business should be self sustaining. When you have an employee, you are using his time to make a product or a service and convert it into money. If what you are doing isn't enough to make a living wage, then you better start doing something else that does it. So your business better be able to produce enough to pay a decent salary to your employees, else you shouldn't be in business.

As for providing some safety net that would allow people to switch jobs, then there are unemployment subsidies. Yes, it is temporary, but if you are sponging from the government for too long and you haven't find a job yet, then what the hell are you doing? And you probably deserve to be homeless.

 

[Aught3]

I don't know what the United Bicycle Institute has anything to do with it.

Ha! That's what I get for not defining my terms. For anyone who is uncertain UBI = universal basic income it's a payment made to every citizen just on the basis that they are part of society.

1. If jobs give you less money than the government, why the hell would you work?

This is one of the points of implementing a UBI. People would not have to work in low wage, poor condition jobs. Other reasons to work in low paying jobs might be to earn a bit of extra income, enjoyment of the work, or believing it is worthwhile for society at large to continue in your employment. We're not talking about a large income, it would actually be pretty minimal, so most people are probably going to want to keep working to earn extra. However, I agree that some people - no longer feeling compelled to work - would stop. I see this as a good thing. The one experiment with a temporary UBI, mincome, saw a decrease in working hours between 1 - 5% for different cohorts. People spent the extra time in education or with their children.

2. Business should be self sustaining. When you have an employee, you are using his time to make a product or a service and convert it into money. If what you are doing isn't enough to make a living wage, then you better start doing something else that does it. So your business better be able to produce enough to pay a decent salary to your employees, else you shouldn't be in business.

I like this argument and mostly agree with it. I especially think it's true of businesses that don't provide for the public good. Organisations that do provide public goods should be rewarded with some kind of subsidy that takes account of their positive externalities.

But this is kind of my question, do you think that with a UBI business would have to increase their pay levels to attract workers back to their employment? Or will businesses exploit the UBI by screwing down wages below minimum levels?

Potentially, some of either scenario could happen but one should dominate. I suppose being the idealist, I would expect people to leave low-pay work to take up creative, educational, or familial oppurtunities leading to more competition in the job market and increased prices for labour. I suppose the problem is that there is already so much unemployment that the expected wage competition just wouldn't arrive and businesses would take the oppurtunity to pay even less.

 

[PAB]

2. Business should be self sustaining. When you have an employee, you are using his time to make a product or a service and convert it into money. If what you are doing isn't enough to make a living wage, then you better start doing something else that does it. So your business better be able to produce enough to pay a decent salary to your employees, else you shouldn't be in business.

I like this argument and mostly agree with it. I especially think it's true of businesses that don't provide for the public good. Organisations that do provide public goods should be rewarded with some kind of subsidy that takes account of their positive externalities.

But this is kind of my question, do you think that with a UBI business would have to increase their pay levels to attract workers back to their employment? Or will businesses exploit the UBI by screwing down wages below minimum levels?

Regards your question i think its impossible to say. The Canadian experiment found a low amount of reduction in work hours (about 5% i think) but also concluded hat this may not be accurate as people were aware that it was only a temporary situation. Essentially wages (price for labour time) are subject to supply and demand as a commodity, if the supply of labour time decreases significantly then wages should rise in relation to demand for labour. However the complexities of modern society may effect this (a historical example is the slave trade and enslavement of aboriginal peoples to give a large amount of labour fast for maximum profit), today illegal immigrants and migrants who i expect wouldn't have UBI may take up jobs for lower wages. Additionally a business may simply offshore their production or service if possible to find cheap labour where there is no UBI or low minimum wage, which would effect wages if jobs became particularly sparse especially creative/ skilled jobs.

Businesses are not in the business of trying to generate a "decent salary" for workers, the aim of the game is profit. There is a reason why minimum wage laws exist and that is to counteract the tendency for wages to be as low as possible, and wages are pushed as low as possible to increase profits either for personal consumption, bills, or further investment.

Lets say a skilled worker earns £2,600 a month (31,200 per annum), a handsome well off sum. Ubi of £1,200 is introduced , the employer adjusts the wage to £1,000. (assuming the job is a desired job and there is demand via unemployment etc). Meaning that the new income for that individual is 2,200, still a healthy sum . Except people have mortgages and rents, families, bills, and untold other complexities. Simply if his rent/mortgage was £600 a month, a sum not unknown in places like London (or take your pick of high priced capitals) the worker is in trouble.

The Business/ Employer, however has profited in this hypothetical by £1,400 a month from the UBI.

Now the opposite of this hypothetical may also be the case. But what ultimately will be the deciding factor if UBI is implemented is who wields the reigns of government : representatives of working people and their interests or representatives of the capitalist class and there interests. I also don't think you can look at UBI on its own, all welfare, and public services must also be looked at, as well as income tax and corporation tax.
For me UBI is upside down and back to front (my hypothetical maybe as well ), Instead of UBI i would rather see free and universal healthcare and education, as well as subsidized housing and social housing projects. Because if there is a risk that money will essentially be pouring, even more than it is, into private profits this is, in my opinion detrimental.

 

[Aught3]

Businesses are not in the business of trying to generate a "decent salary" for workers, the aim of the game is profit. There is a reason why minimum wage laws exist and that is to counteract the tendency for wages to be as low as possible, and wages are pushed as low as possible to increase profits either for personal consumption, bills, or further investment.

From these arguments and others I have come to the conclusion that a minimum wage would still be a good idea even if a UBI was implemented. Thanks guys!

 

[PAB]

Although im being very critical of a UBI, it would be very interesting to see the real long term effects of a UBI. Also im not 100% against a UBI, as someone from the far-left socialist spectrum, the UBI is interesting as a technical means for distribution not based on wages. Something which is important for an emergent form of society which aims ultimately to abolish the exploitation of the wages system.

It could as a reform, ideally, act as a safety net for the poorest members of society and those in most difficulty . But just as i would argue that minimum wage laws may be necessary, so too would a whole range of other welfare and pro-worker measures be needed. For me the fundamental question is :
Who is the UBI for ?. Like i mentioned before regards political wielding, ignoring the Class question can have unintended consequences.

 

[Aught3]

Who is the UBI for ?

A UBI is for two different groups. It supports those who are not able to derive enough income from the prevailing economic system. Giving them enough to support a basic lifestyle while they try to move up the economic ladder. Secondly, it is for people who want to spend their lives doing something that may be socially, culturally, or personally rewarding but not financially rewarding. For example, pursuing education, child raising, creative disciplines, social businesses etc.

I would expect a UBI to financially support lower class citizens by providing them more money back than they pay in to the system through taxes. Ideally, the payment back would be sufficient for a minimal type of lifestyle. People in the middle class would get from a UBI less than or equal to what they paid into the tax system. Here a UBI does not support their financial lives but provides a level they know they can fall back on if times get tough. It allows them to take advantage of more opportunities in starting businesses or for education and training. It would also allow them to pursue creative and social work if they wanted to. The upper class would pay vastly more into the tax system than they get back from a UBI their benefit would come through what will hopefully be a better and more equal society with all its associated advantages.