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We can see why they’re doing the wrong thing

Summary:
The European Union is to insist that every country sets the minimum wage at 60% of the median wage. This is the wrong thing to be doing:The commission’s aim is to ensure member states set a minimum wage equivalent to 60% of the median salary in that country.The why is obvious. Poverty is currently defined as - even though this is inequality, not poverty - less than 60% of median income. So, if the minimum wage is 60% of median income there will be no in work poverty. Huzzah!The problem being that the ill effects of a minimum wage being “too high” don’t magically appear when it is set at 60% of median income. A more realistic estimate of when jobs and hours noticeably start disappearing is 45 to 50% of that median income. Thus the adoption of the target will lead to significant such

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The European Union is to insist that every country sets the minimum wage at 60% of the median wage. This is the wrong thing to be doing:

The commission’s aim is to ensure member states set a minimum wage equivalent to 60% of the median salary in that country.

The why is obvious. Poverty is currently defined as - even though this is inequality, not poverty - less than 60% of median income. So, if the minimum wage is 60% of median income there will be no in work poverty. Huzzah!

The problem being that the ill effects of a minimum wage being “too high” don’t magically appear when it is set at 60% of median income. A more realistic estimate of when jobs and hours noticeably start disappearing is 45 to 50% of that median income. Thus the adoption of the target will lead to significant such effects.

We’re also absolutely certain that the EU will adopt the full year, full time, median income as its target. And as even the very pro-minimum wage Arindrajit Dube has pointed out - he being the American scholar of the minimum wage the UK government is using as an advisor - it is the blended part and full time, temporary and all year minimum wage that needs to be used. This being notably lower.

It’s a bad aim, the wrong target and it’ll not be helpful in the slightest.

There is also that other problem:

Of the 28 member states, only Denmark, Italy, Cyprus, Austria, Finland and Sweden do not have a statutory minimum wage.

Different places have different solutions to this same problem or point. This difference being an anathema to those who would rule a continent, for if places can sort things out without that centre being involved what’s the point of that centre?

Well, quite, what is the point of the EU insisting upon a particular approach to the minimum wage? How does this, in the words of Sr. Barroso, stop Germany invading France? Again?

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Tim Worstall
Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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