Grandpa:
Three problems. The first is that it’s difficult to define a minimum wage, or a living wage, because a single man has different outgoings than a family man.
Possibly, but we are not specifying the wage itself, only that it will not be beneath a reasonable minimum.
A social policy is not invalid just because it does not meet every eventuality or individual circumstance - for example, we do not refuse to treat rickets and cholera, just because we cannot always successfully treat cancer.
Meeting the living costs of children is a separate issue, probably most precisely met by taxation and fixed transfers to parents - this also ensures that people who are not parents, still share the costs of social reproduction. We already have systems such as these to some extent.
Second, as wages rise so does the cost of living. If you’re on £10ph and a cup of coffee costs £3, you’re no better off if you’re on £12ph and the same cup of coffee now costs £5. As the cost of production rises and that includes labour, so does the final product. Employers will not take a profit loss, they’ll pass it onto the consumer.
But the cost of living does not increase faster than the wage rises.
In practice when some workers take pay cuts, the effect is not prices that drop commensurately - we know this as wagon drivers, where real-terms reductions in wages and pensions have not been accompanied by reductions in shop prices, petrol, rents, training costs, or anything else.
Even if the worker worked for free, the reality is that the landlord would still attempt to charge him rent, the retailer would still attempt to charge him profit, and so on.
Another aspect is that when some workers take pay cuts, often that is not used to drive down prices, but soaked up by other workers - for example, the manager who forces down wages on the shop floor, will demand higher wages for having done so, he won’t follow suit and lower his own wages.
So accepting pay cuts in practice simply subsidises the lifestyle of those whose incomes are not cut - either because they don’t work for wages (bosses, landlords, shareholders, etc.), or because they belong to a group of workers whose wages are not being cut (senior managers, bankers and financiers, etc.).
Third, supply and demand. If there’s an excess of labour, wages will stagnate or fall as the labour market too is a buyer and sellers-market. If you’re the only plumber in town you’re going to make a lot more than if there are a hundred others that will charge less than you.
Indeed, and that is a fault in the market mechanism, because it suggests that whenever there is a single extra worker available, wages will drop to zero until that surplus “leaves the market”.
In practice, the Tories prevent workers leaving the market by eroding social security and hassling those on benefits. So the ultimate logic of this is that a single surplus worker will cause market wages to drop to zero until somebody starves to death (by which time the majority will also be moribund and impoverished).
That’s why we have to intervene in the marketplace, and ensure that bosses are obliged to pay decent wages to those who actually do the work, even under conditions of surplus labour being available. If we do not, then as workers all we do is enrich the boss and impoverish ourselves every time a surplus worker is available.
We also have to intervene to ensure that teh capital value of workers and the initial investment in their production is recognised.
We cannot allow bosses to starve workers out of the market, because doing so not only destroys the productive capacity and the massive cost and years of investment made in their upbringing to begin with (who may be useful at a later time, when labour is short relative to demand), but the impoverishment of workers who are not quite starved to death on any particular occasion still impairs the reproduction of workers which is currently ongoing - when children end up with empty bellies in school, when parents start to become neglectful because they are too involved in and exhausted by struggling to survive themselves, when families and relationships split up under financial stresses, and so on.
If you tax too highly employers will outsource, those who can will leave for elsewhere, or go bankrupt. The ‘Tax the rich’ idea was already tried in the 70s and failed. If you chase away businesses with high taxation, you also chase away the jobs they provide. So it’s a kind of double edged sword.
The rich didn’t leave for elsewhere in the 70s, because there were capital controls. They were only abolished by Thatcher (whose rule did bring economic chaos, including a record and unsurpassed unemployment rate in 1981).
The problem in the 70s was the perception that Britain was starting to fall behind its European peers on account of second-rate management and lack of investment.
That being said, the simple remedy to “outsourcing” (I assume you mean offshoring) is to make sure the rich cannot take capital or machinery away, and ensure that if they try to export back in, having paid a pittance in wages to third world workers, then they are subject to tariffs which disgorges all the profit they would have gained by the scheme.
When truck drivers talk of stagnating wages they’re not talking of 50, or even 30 years ago. They’re talking about 15 and they’re right. That’s when the cheap East European drivers started to flood in. Remove that and you remove the competition, but we can’t.
But as we saw on the other thread with farm labour, the reality is that when the Eastern European do stop coming, the Tories just fling the doors open to Ukrainians and Russians instead.