Why Have a Minimum Wage

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Why
 have
 a
 minimum
 wage?
 
 

 
  The
 minimum
 wage
 is
 again
 the
 focus
 of
 debate.
 As
 unemployment
 rises
 and
 young
 workers
 in
  particular
 end
 up
 on
 an
 unemployment
 benefit,
 some
 commentators
 have
 argued
 that
 the
 minimum
  wage
 is
 to
 blame.
 
  If
 only
 the
 minimum
 wage
 were
 lower,
 so
 the
 argument
 goes,
 employers
 would
 be
 able
 to
 offer
 jobs.
  But
 the
 rise
 in
 the
 minimum
 wage
 has
 pushed
 the
 price
 of
 labour
 to
 a
 point
 where
 they
 simply
  cannot
 take
 the
 risk.
 
  This
 may
 be
 true.
 Equally,
 it
 may
 not
 be
 true.
 The
 fact
 is
 that
 no
 one
 really
 knows
 if
 the
 minimum
  wage
 is
 contributing
 to
 current
 high
 levels
 of
 unemployment
 or
 not.
 
  In
 general
 terms
 the
 research
 we
 have
 available
 to
 us
 from
 around
 the
 world
 suggests
 that
 the
  minimum
 wage,
 set
 at
 a
 level
 that
 matches
 the
 state
 of
 the
 labour
 market,
 will
 not
 cost
 jobs.
 And
  therein
 lies
 the
 test
 –
 matches
 the
 state
 of
 the
 labour
 market.
 In
 New
 Zealand,
 the
 minimum
 wage
 is
  set
 after
 information
 has
 been
 gathered
 by
 the
 Department
 of
 Labour
 and
 tendered
 to
 Ministers.
 On
  the
 basis
 of
 the
 evidence
 presented
 Ministers
 agree
 on
 the
 rate.
 Given
 that
 the
 current
 Government
  is
 very
 sensitive
 to
 the
 needs
 of
 employers,
 it
 can
 be
 assumed
 that
 the
 last
 three
 minimum
 wages
  were
 set
 with
 an
 eye
 to
 what
 seemed
 “reasonable”.
 
  So
 it
 is
 perhaps
 safe
 to
 conclude
 that
 despite
 the
 lack
 of
 empirical
 evidence
 about
 the
 impact
 of
 the
  minimum
 wage
 on
 current
 levels
 of
 unemployment,
 we
 can
 be
 assured
 that
 every
 care
 has
 been
  taken
 to
 ensure
 labour
 is
 not
 being
 priced
 out
 of
 the
 reach
 of
 employers.
 
  Yet
 the
 arguments
 continue,
 so
 it
 may
 be
 useful
 to
 set
 out
 why
 we
 have
 a
 minimum
 wage
 at
 all.
 
  The
 first
 reason
 is
 that
 it
 is
 one
 of
 the
 main
 ways
 of
 dealing
 with
 inequality.
 In
 societies
 like
 ours
  where
 income
 inequality
 is
 a
 major
 issue,
 the
 minimum
 wage
 is
 an
 attempt
 to
 ensure
 those
 at
 the
  bottom
 end
 of
 the
 scale
 have
 at
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