china minimum wage income wage gini

Minimum Wage to Rise in US & China But Enough?
payroll tax cut work hour

Should Bosses Pay More, States Tax Less, Or Both?

Everybody talks about wages but they all miss a huge potential geyser of income: the worth of Earth. We excerpt three articles from: (1) BBC, Feb 6, on China's minimum wage; (2) Huffington Post, Feb 17, on the US minimum wage by P. Cleveland; and (3) AlterNet, Feb 13, on more pay with less work by D. Rosnick.

by BBC, by Polly Cleveland, and by David Rosnick

China has approved a plan to tackle the widening income gap between rich and poor, which includes raising its minimum wage.

The minimum wage would increase to 40% of average urban salaries by 2015.

State-owned firms would also need to give a greater share of their profits to the government, which it said it would use to fund social security.

China's Gini coefficient, which is a gauge of income disparity in a country, rose to 0.474 in 2012, higher than the 0.4 level analysts often cite as a threshold for potential social unrest.

The cabinet said its latest plan was targeted at lifting as many as 80 million people out of poverty by 2015.

To read more

JJS: Raising the legal minimum is one way to close the income gap. Cutting taxes on wages is another.

Studies show that a modest increase in the minimum wage, one that only affects a few percent of workers, won't increase unemployment rates. However, there may be a reason why most studies show little effect: employers often cheat by paying employees for fewer hours than they actually work. The nominal wage may go up, but the effective wage remains the same.

Regardless of the exact share as between boss and worker, payroll taxes encourage workers to drop out, and employers to hire fewer workers and squeeze them harder, or to automate, or simply to fail.

The proposed federal minimum wage increase will at best benefit a small number of workers, and only until inflation wipes out the real value of the increase. If President Obama really wants to help the working poor, he should propose to mitigate payroll taxes.

To read more

JJS: However workers are helped, small steps are nowhere near enough.

It is ridiculous to ask workers who are not sharing fully in the prosperity offered by today’s economy to accept fewer hours and smaller paychecks. Rather, ordinary workers should see both fewer hours and larger paychecks. Suppose that in the year 2100, workers can produce 2.6 times as much as they could in 2010. Why not work only four days a week and produce “only” twice as much?

Of course, this would depend on workers sharing in the economic gains. That means ensuring that high and rising health care prices do not overwhelm the economy. That means breaking government-enforced monopolies by reforming patent and copyright law. That means shifting our decades-long focus pressuring factory workers to make do with less to instead increase competition in high-paying fields of medicine, law, economics, management, and in the very-highly compensated financial industry.

When economic gains are shared broadly, there is no reason prosperity cannot include significant reductions in work hours as well as material improvements.

To read more

JJS: Everybody talks about raising wages but there’s only so much gain to be got from one’s labor. Same goes for one’s capital. There’s lots of competition between qualified workers keeping wages down. And there’s lots of drops in the stock market, keeping modest the returns to the many small-time investors and their pension funds -- assuming you first have earned enough to save and invest.

At the same time, however, there is an immense flow of money spent by society in general for the sites and resources it uses. That flow now goes to far fewer people than the number of jobholders or savers, yet it could go to everyone. And why not? It’d be fair. Society creates the value of locations and none of us created land itself.

Once we grow the chutzpah to demand a fair share of Earth’s worth, we can forget about arguing over minimum wage. With security provided by a Citizens Dividend, workers will enjoy the leverage allowing them to negotiate full and fair wages from bosses -- all without government taking either side.

As luck would have it, in Ireland the Greens and the press actually push for the public recovery of socially-generated site values. Yeah! See if you can get your party and your media on board.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Tax Dollars for Mitt Romney & a Film Pro-Smoking

US Poverty -- Record Numbers Persist

More Cash Increases Wealth, But Nutrition, Too?

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