I too am curious how there is not more unemployment in Australia if they have a minimum wage of $15.96. The fact there is already an underground economy forming to pay people less suggests to me there is enough government intervention or hanky panky going on that there is more to this than meets the eye. About the only explanation I can come up with as to why Australia's unemployment rate is so low is that it is not that big of a country (population wise) and the commodities boom they are having it keeping the market rate above the minimum wage.
But I am speculating.
19 comments:
You are right, our mines are digging the ore at great such a great rate for China that it is part of the reason (maybe most of it) why Australia is one of the least affected westernised countries, for now...
http://www.youtube.com/watch?v=pbDeS_mXMnM
It is incorrect to state that Australia has a $15.96 minimum wage. Australia actually has a complex tiered minimum wage system that takes a number of factors, age among them, into account. For many groups whose labor typically has low value, the actual minimum wage is well below $15.96.
Hi Cap'n,
This thread on mises.org has some thoughts on the question.
http://mises.org/Community/forums/t/27105.aspx
At my local shopping centre there were signs posted in nearly 25% of the shops looking for workers. Mining has done a lot of good for Australia.
Also, those idiots don't realise that while AUD is at parity with USD, we still have to pay more for our good.
I agree with Monads assesment.
I am sure that if the USA had not invited 50 million immi-grunts into our country, starting wages would be at least $i6p/h. If you have 10 workers for each job...
Cabk when they raised the min. wage to around $7 (in the USA), I remember seeing that the local Taco Bell was hiring at $10. (in the DFW metroplex)So maybe the going rate is already higher than the minimum wage.
The best way to strengthen arguements for removing the minimum wage is to show where the minimum wage works and figure out why it does. Good on ya captain, challenging our egos for Truth.
I'd vote to say the shit ton of mining and lack of immigration contribute to the high min. wage working in this country. It might even be higher in a system without regulated min. wage, who knows?
Anon, the minimum wage is certainly higher than $15.96. I am a 20 year old and have never been paid that low other than doing odd jobs for parents (should've called in the gubmint). My current job as a waiter I get $22.05 plus 15% loading after 7pm as a casual. My previous job was about $16.50 however that was an introductory wage which had to be increased after 3 months to 19 or so and included holiday and sick pay.
Do not forget either we have compulsory superannuation, where employers pay an additional 9% of your wages into a retirement account.
To thank the mining boom for the fact that despite a high minimum wage, people are still employed is a little bit ridiculous. Even back in 2004 the minimum wage was $12.50 an hour with around 5% unemployment.
The living wage argument works in Australia, there are many older people (say 25 to 65) who are on the minimum wage most of their lives. Having a welfare state means that they'd be on some sort of government benefits anyway. At $32000 of income, an individual will still be paying $2500 of tax. Not a great sum but we don't have 50% of tax filers paying no net tax.
The high minimum wage can almost be seen as a corporations tax when compared to the US, ours is 30% rather than 35%. I'd be interested to see if righties (and lefties) in the US would be willing to trade a large cut in the corporate tax rate for an increase in the minimum wage.
Large areas in Australia (but not all) are suffering from the same labour shortage seen in the Canadian oilsands. Intense competition for labour - any labour, pushes pay rates up.
Side note, the booming Canadian province of Alberta has a minimum wage, but the actual starting wages are (in general) much higher. The more economically successful the jurisdiction, the less relevant the minimum wage. Only in places with failed economies does minimum wage matter.
Another thing to realise in Australia is the cost of living is huge here, so even minimum wage, won't get you too far here. To rent out an average 3 bedroom home here you will be up for $400 per week. Groceries are the highest prices in the world, petrol is more expensive here than USA, so it is all relative. We do not tip waiters here in Australia, and those that do so are wrecking our Australian way of not doing so. The Australian system is more in line with Europe's socialists systems, rather than USA. We have near free medical, highly subsidized medicine, high taxes, but high standard of living. Being a socialist controlled country we have little to no rights, in fact we have no bill of rights at all, cannot carry a weapon at all, not even a knife. We have very low crime here, so things run smoothly. I think making a comparison to USA to AUST is the same as comparison of USA to Netherlands; same difference.
Hi Captain,
Some things about Australia:
Firstly, our cost of living is MUCH higher then what you're used to in the USA. (Call it tax induced inflation if you will.)
Secondly, we have a very well funded welfare state.
Thirdly, we are now a one trick pony. If China stops (or even reduces) buying our ore, we are screwed.
Oz does not have 10% of it's "working age" residents as ILLEGALS dragging down the wage rate (when they work) while also consuming costly govt services from 'sanctuary cities'. Being surrounded by ocean makes it harder to simply sneak in and then hang out at a big box store seeking cash work the next day.
Davers6
I'm another Aussie living in Sydney. I think most of these reasons have been mentioned, but I'd put the key factors as:
* commodity boom
* immigration levels are high, but a large proportion of immigrants are skilled workers who aren't competing for low level jobs
* exceptions to the minimum wage; e.g., youth and apprentices
* cash work below the minimum wage; e.g., restaurants, tradesmen
* a constrained property supply pushing up both the cost of living and wages
* hidden unemployment; e.g., working only a few hours per week, "disability" benefits, extended education of adolescents
Because the argument a high minimum wage automatically leads to unemployment is a myth.
Australia's mining boom has been a cyclical feature of its economy, and the current boom is at unprecedented heights.
However, it has ALWAYS had a relatively high minimum wage by global standards. it dates back to a decision called the 'harvestor case' about what a living wage should entail.
Likewise the current high cost of living is a feature tied in with the current boom and not enough competitors in the market place. One feature that we do suffer from is being relatively socialist, regulatory capture and barriers to entry have ensured we have duolopies galore throughout much of our economy.
However even as recent as 12 years ago, Australia had probably thw lowest cost of living standards comensurate with wages.
The 'underground economy' for lesser wages have more to do with evading GST, or illegal immigrants who don't have work permits.
If you and your readeres were less of an idealogue, you'd read up many diverse sources that a high minimum wage has an immaterial impact on long term economic growth. Rent seekers tend to suffer from this, not return on capital. All that means is less diamond studded collars for Chihuahua's, not less investment. Wage earners tend to funnel wealth and wealth creation back in the economy via savings, consumption or increased demand.
Rentiers horde wealth, thus supressing demand and making money inert.
The thing about Australia is that we have a two-speed economy. Mining is booming, everything else is falling. Manufacturing sector is dying a slow, painful death.
The papers aren't reporting it, but there are 1000s of engineers who are out of work now with the only sector that's 'sort of' hiring is mining (but only if you've got experience).
Australia unofficially has 'Dutch disease', although I doubt anyone would officially come out and say it.
Cappy, in Australia you are considered employed if you work for 1 hour paid work a week.
To be considered unemployed you need to be 'actively seeking work' in order to get unemployment benefits and be counted towards the figure.
As a 20 y.o living in Sydney, I can tell you it is not difficult to find above minimum wage low/no skill jobs. Even if the minimum wage was lowered, most employers will still pay above as demand for labour is still high.
Cappy, it seems from the comments, you have your answer(s).
That isn't the true minimum wage. The costs are higher even though their Dollar is about the same as ours. But, most importantly, their mining is smoking!
Specifically, they're doing great with coal exports. Look to the green nutters for the cause. They're a few years ahead of the US. Instead of utilizing our resources, we've greened up and decided we've no use for our coal. So, we're exporting it. The Aussies, are currently exporting more than anyone else, but the US will catch them soon ... assuming no govt intrusion.
It's utter madness. We both are doing this because we reject cheaper electric costs because of CO2 emissions. But, we'll export coal to be burnt elsewhere. I loath green nutters and their illogical idiocy.
as a yank ex-pat who's been here since 2000....and I thank God we made the move when we had the chance... I'd suggest culture. Australia respects the "tradie" and eschews the fake degree holder. The country is too small in pop to buy into too much leftie nonsense as it isn't good for biz. And it is very much an Anglo culture, which looks down on dole blodgers... just discovered I'm a neoreactionary and love your worldview... I'm enjoying the decline vicariously!
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