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Impact of minimum wage
piporiko Mar 17 Fév 2009 - 22:24
Impact of minimum wage
Jean Erich Ren¨¦
As a matter of fact the government must ensure the welfare of the poorest
by balancing the labor market. The working class is usually the prey of
some employers wishing increase their margin profit. They cannot cut back
on fixed costs and variable costs of inputs. The labor force becomes the
sacrificial lamb. However it should be emphasized that the greatest victim
is the unskilled labor. Also to ensure its protection a minimum wage must
be paid in order to meet its domestic needs. However, the law on minimum
wages often leads to unintended consequences.
"The laws derived from the normal things order," said Montesquieu. The
fixing of minimum wages instead of increasing the purchasing power of those
earning the lowest incomes reduced many of them unemployed. The minimum
wage law takes happy effect when there is an increased demand for workers.
Competition between different firms forces the owners of factories to offer
higher wages to attract the workforce they need.
It is not wise to invite an elephant in a crystal shop under penalty of
attracting more customers. The imposition of a minimum wage as a result of
the intervention of the Government must follow some processes to avoid the
opposite effect. Our congressmen by virtue of the powers conferred by the
Constitution come to a proposition bill increasing the minimum wage from 70
gourdes to 200 gourdes a day.
200 gdes - 70 gdes : 70 X 100 = 186%
What is the impact of this increase of 186% of the minimum wage?
Businessmen are not enlisted in the Salvation Army. They are looking for
profit. They can easily avoid increasing their payroll while respecting the
minimum wage law by taking:
1. lay-off workers
2. increasing the number of hours worked
3. robotizing the manufacture
4. closing the company and transferring it to other countries where labor
is more competitive.
In a poor country like Haiti where unemployment rate exceeds 65%, there are
many workers who are ready to work for wages below the minimum wage law.
Certainly, it is illegal to hire workers below the fixed hourly rate of 200
gourdes. However the government doesn¡¯t have the means to implement its
policy?
In an economic context where the Government is facing the picket line of
teachers because they don¡¯t receive their wages for several months, it¡¯s
very inappropriate on the part of public authorities to raise the minimum
wage. The State must begin by treating its employees well before ordering
the private sector to do it. Come on! A State relies on its revenue to
balance its budget, so the private sector is subject to its accounting to
calculate the salary of its workers and the depreciation of its machines.
Robert Solow has built a model that allocates the total income between
capital and workers¡¯ wages. Either the following Cobb Douglass function:
Y = F (K, L) = K ¦Á L 1-¦Á (equation 1)
Here ¦Á and 1-¦Á are exponents
Where:
Y = the total income of the company
K = the capital of the machines and accessories
L = all workers of the company
¦Á = proportion of income allocated to the Capital K
1-¦Á = percentage of income allocated to labor L
Literally Equation 1 can be read as follows: the income of the company is
equal to expenditure incurred for the maintenance of the machines K and
wages paid to L.
Mathematically we cannot raise one side of the equation without increasing
the other. So any increase in income Y depends on the increased capital K
and the increase in payroll L. On February 5, 2009 on the proposal of the
congressman Steven Benoit, 43 members projected a bill raising the minimum
wage from 70 to 200 gourdes for 8 hours per day. It is a wage variation of
130 gdes daily and 25 gdes hourly.
Robert Solow in its production function defines the conditions for
maximizing the rent (r) of capital invested by entrepreneurs and the wage
(w) paid to workers by asking the following function:
Max F (K, L) = wL - rK
a) The partial derivative of this function with respect to (w) shows that
the wage equals the marginal productivity of the worker:
w = dF / dL = (1-¦Á) Y / L (Equation 4)
According to equation 4, the worker cannot receive a salary higher than his
job performance.
b) The partial derivative of this function with respect to (r) shows that
the rent received by the contractor is associated with the return on
capital invested:
r = dF / dK = ¦ÁK / Y (equation 5)
According to Equation 5 the contractor only receives rents (r) related to
rental costs and depreciation of equipment.
Setting a minimum wage to be fair and equitable requires:
- Complete revision of the operating account of the haitian manufacturing
sector.
- The inventory account of profits made in operating expenses and income.
- A comparison with different industries in other countries.
- The profit of owners in other countries regarding to the branch of
production.
- Taking into account the parity of the haitian Gourde against the U.S.
dollar.
- The level of minimum wages in other countries like Haiti.
Arbitrary imposition of a minimum wage will reduce the quantity of labor
hired. This law may have a negative impact on unskilled workers without
taking into account the details on the mechanism of production of the
manufacturing sector. A brainstorming with haitian entrepreneurs with
available accounting data will permit to find a solution according to
Pareto sense ie arranging everybody without disturbing anyone.
Jean Erich Ren¨¦
As a matter of fact the government must ensure the welfare of the poorest
by balancing the labor market. The working class is usually the prey of
some employers wishing increase their margin profit. They cannot cut back
on fixed costs and variable costs of inputs. The labor force becomes the
sacrificial lamb. However it should be emphasized that the greatest victim
is the unskilled labor. Also to ensure its protection a minimum wage must
be paid in order to meet its domestic needs. However, the law on minimum
wages often leads to unintended consequences.
"The laws derived from the normal things order," said Montesquieu. The
fixing of minimum wages instead of increasing the purchasing power of those
earning the lowest incomes reduced many of them unemployed. The minimum
wage law takes happy effect when there is an increased demand for workers.
Competition between different firms forces the owners of factories to offer
higher wages to attract the workforce they need.
It is not wise to invite an elephant in a crystal shop under penalty of
attracting more customers. The imposition of a minimum wage as a result of
the intervention of the Government must follow some processes to avoid the
opposite effect. Our congressmen by virtue of the powers conferred by the
Constitution come to a proposition bill increasing the minimum wage from 70
gourdes to 200 gourdes a day.
200 gdes - 70 gdes : 70 X 100 = 186%
What is the impact of this increase of 186% of the minimum wage?
Businessmen are not enlisted in the Salvation Army. They are looking for
profit. They can easily avoid increasing their payroll while respecting the
minimum wage law by taking:
1. lay-off workers
2. increasing the number of hours worked
3. robotizing the manufacture
4. closing the company and transferring it to other countries where labor
is more competitive.
In a poor country like Haiti where unemployment rate exceeds 65%, there are
many workers who are ready to work for wages below the minimum wage law.
Certainly, it is illegal to hire workers below the fixed hourly rate of 200
gourdes. However the government doesn¡¯t have the means to implement its
policy?
In an economic context where the Government is facing the picket line of
teachers because they don¡¯t receive their wages for several months, it¡¯s
very inappropriate on the part of public authorities to raise the minimum
wage. The State must begin by treating its employees well before ordering
the private sector to do it. Come on! A State relies on its revenue to
balance its budget, so the private sector is subject to its accounting to
calculate the salary of its workers and the depreciation of its machines.
Robert Solow has built a model that allocates the total income between
capital and workers¡¯ wages. Either the following Cobb Douglass function:
Y = F (K, L) = K ¦Á L 1-¦Á (equation 1)
Here ¦Á and 1-¦Á are exponents
Where:
Y = the total income of the company
K = the capital of the machines and accessories
L = all workers of the company
¦Á = proportion of income allocated to the Capital K
1-¦Á = percentage of income allocated to labor L
Literally Equation 1 can be read as follows: the income of the company is
equal to expenditure incurred for the maintenance of the machines K and
wages paid to L.
Mathematically we cannot raise one side of the equation without increasing
the other. So any increase in income Y depends on the increased capital K
and the increase in payroll L. On February 5, 2009 on the proposal of the
congressman Steven Benoit, 43 members projected a bill raising the minimum
wage from 70 to 200 gourdes for 8 hours per day. It is a wage variation of
130 gdes daily and 25 gdes hourly.
Robert Solow in its production function defines the conditions for
maximizing the rent (r) of capital invested by entrepreneurs and the wage
(w) paid to workers by asking the following function:
Max F (K, L) = wL - rK
a) The partial derivative of this function with respect to (w) shows that
the wage equals the marginal productivity of the worker:
w = dF / dL = (1-¦Á) Y / L (Equation 4)
According to equation 4, the worker cannot receive a salary higher than his
job performance.
b) The partial derivative of this function with respect to (r) shows that
the rent received by the contractor is associated with the return on
capital invested:
r = dF / dK = ¦ÁK / Y (equation 5)
According to Equation 5 the contractor only receives rents (r) related to
rental costs and depreciation of equipment.
Setting a minimum wage to be fair and equitable requires:
- Complete revision of the operating account of the haitian manufacturing
sector.
- The inventory account of profits made in operating expenses and income.
- A comparison with different industries in other countries.
- The profit of owners in other countries regarding to the branch of
production.
- Taking into account the parity of the haitian Gourde against the U.S.
dollar.
- The level of minimum wages in other countries like Haiti.
Arbitrary imposition of a minimum wage will reduce the quantity of labor
hired. This law may have a negative impact on unskilled workers without
taking into account the details on the mechanism of production of the
manufacturing sector. A brainstorming with haitian entrepreneurs with
available accounting data will permit to find a solution according to
Pareto sense ie arranging everybody without disturbing anyone.
piporiko- Super Star
-
Nombre de messages : 4753
Age : 53
Localisation : USA
Opinion politique : Homme de gauche,anti-imperialiste....
Loisirs : MUSIC MOVIES BOOKS
Date d'inscription : 21/08/2006
Feuille de personnage
Jeu de rôle: L'impulsif
Re: Impact of minimum wage
Invité Mar 17 Fév 2009 - 23:32
Pipo,
Ale di JER li an reta.
Sou fowum nan, nou te gentan konsidere tout pwen sa yo nan yon langaj senp e nou te voye note bay Steven Benoit.
Ale di JER li an reta.
Sou fowum nan, nou te gentan konsidere tout pwen sa yo nan yon langaj senp e nou te voye note bay Steven Benoit.
Invité- Invité
Re: Impact of minimum wage
Rodlam Sans Malice Mer 18 Fév 2009 - 8:03
maten yan map li yon email kote yap montre tandiske gwo manjè nan Goldman Sachs ap touche gwo bonus ak lajan takspayer ameriken yo li ap peye enploye Burger King mwens ke 14000 dolar pa ane,yon salè ki mete tout moun sa yo nan ran pov.Mwen konnen ke mwen pa ka konpare sa ki ap pase nan burger king ak sa ki ap pase nan faktori an ayiti.men sim konprann byen dapre sa gwo zotobre di menm si met faktori ou met entrepriz la vle peye 2 gouden pa jou se dwa li paske genyen twop moun nan chomaj.2 gouden pa jou saa genyen anpil moun ki beswen li tankou pov devan Ste Antwann yo.menm si anployer la fè yon som ekstraordinè kom benefis paske genyen anpil moun ki beswen travay li genyen dwa poul fè tout travayè tounen tiberkile nan travay di san manje?
Why doesn't he ask to reestablish slavery in haiti.God, thank you for taking me out of that hell.
Why doesn't he ask to reestablish slavery in haiti.God, thank you for taking me out of that hell.
Rodlam Sans Malice- Super Star
-
Nombre de messages : 11114
Localisation : USA
Loisirs : Lecture et Internet
Date d'inscription : 21/08/2006
Feuille de personnage
Jeu de rôle: Stock market
Re: Impact of minimum wage
Rodlam Sans Malice Mer 18 Fév 2009 - 8:54
Men se nonm saa ki tap ekri konbyen kalori ke yon moun beswen poul viv;li tap di konbyen yon ti mamit pwa koute, yon ti mamit mayi, poul montre konbyen kob yon moun ta beswen poul manje byen epi se li ki twouve ap kondane Stephen Benoit ki mande pou travayè touche 200 goudes pa jou.ki di 5 dolla pa jou.eske se pa Sixto ki te genyen rezon lè li te di ke Profesè ya ap li nan gwo liv men li pa wè Ti Saintanys nan gwo liv la.Wi mwen konnen genyen moun ki ta pito se Montesquieu ke mwen site poum montre m ke se save men se Sixto ki te ekri pou peyi dayiti nan epok mwen yan se pou sa se li mwen pito site.Se la raj ;pafwa wap made eske si se frè ak sè w yo kite jwen moyen mete blan nan esklavaj si tap genyen blan ki rete ankor jis pou yo ta pran liberte yo.
Rodlam Sans Malice- Super Star
-
Nombre de messages : 11114
Localisation : USA
Loisirs : Lecture et Internet
Date d'inscription : 21/08/2006
Feuille de personnage
Jeu de rôle: Stock market
Re: Impact of minimum wage
Rodlam Sans Malice Mer 18 Fév 2009 - 12:03
"Au départ, l’esclave noir n’était pas payé. Il était simplement nourri-logé-soigné . Et ce système a duré trois siècles. Après l’abolition de 1848, les anciens esclaves sont devenus travailleurs agricoles recevant des salaires de misère, cela jusqu’à la fin des années 1950. "
Notons ces trois mots :Nourri-logé-soigné dans le paragraphe precedent qui decrivent la situation de l'esclave noir dans les colonies.Si nous considerons la situation des travailleurs haitiens à qui on paie un salaire de 5 dollars par jour que certains esclavagistes jugent exhorbitant nous devons conclure que l'esclave des plantations etait mieux loti que le travailleur haitien de nos jours.
Et qu'on ne me dise pas le contraire car les haitiens prefèrent vivre dans les bateys dominicains,emigrer vers les antilles au lieu de rester chez eux parce que leurs propres frères et soeurs ne les traitent pas mieux que les anciens colons qui au moins nourrissaient , logeaient et soignaient leurs esclaves.
Notons ces trois mots :Nourri-logé-soigné dans le paragraphe precedent qui decrivent la situation de l'esclave noir dans les colonies.Si nous considerons la situation des travailleurs haitiens à qui on paie un salaire de 5 dollars par jour que certains esclavagistes jugent exhorbitant nous devons conclure que l'esclave des plantations etait mieux loti que le travailleur haitien de nos jours.
Et qu'on ne me dise pas le contraire car les haitiens prefèrent vivre dans les bateys dominicains,emigrer vers les antilles au lieu de rester chez eux parce que leurs propres frères et soeurs ne les traitent pas mieux que les anciens colons qui au moins nourrissaient , logeaient et soignaient leurs esclaves.
Rodlam Sans Malice- Super Star
-
Nombre de messages : 11114
Localisation : USA
Loisirs : Lecture et Internet
Date d'inscription : 21/08/2006
Feuille de personnage
Jeu de rôle: Stock market
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