In the March issue of Economic Affairs, a paper by Karthik Reddy analysed the empirical literature on the employment effects of minimum wages. The paper shows that there was indeed a period in which several studies challenged the common interpretation of minimum wages causing unemployment.
Unsurprisingly, there is no shortage of studies challenging the challengers again, and the differences in outcomes appear to be mostly down to differences in the choice of the time period and/or the control group. Reddy concludes that the majority of the literature clearly supports the ‘orthodox’ position, but the paper shows that unresolved issues remain, leaving room for a serious debate on minimum wages.
But by implication, this also shows that there should be no room for the sort of emotive self-righteousness with which Jody McIntyre covers the issue on the Independent Blog. Following up on Philip Davies’ proposal to permit disabled people to opt-out of the minimum wage, McIntyre comments:
‘Well thank you for the privilege Mr. Davies, because £5.93 is a bit steep for us “scroungers”. [...]
[H]e chooses to reinforce the discriminatory myth that people with learning difficulties are more of a risk to employers. [...]
[T]he attitude that Davies conveys in his comments [...] allows not only employers, but many sections of the public, to continue to look down on disabled people as lesser or inferior members of society.’
McIntyre concludes – you guessed it – that Philip Davies himself should work for less than the minimum wage.
The text brims with misunderstandings. Firstly, it is wrong to overcharge economic variables by reading a philosophical statement into them. The wage rate an employer is prepared to pay does not reflect his appreciation of an applicant’s human qualities, let alone of their ‘value’ as a ‘member of society’. It is merely the result of the interaction of demand and supply in the labour market, nothing more and nothing less.
Secondly, it is perfectly understandable if a disabled person, who has successfully learned to manage their disability, finds it frustrating if they have to emphasise in job interview after job interview that their disability is not a drag on their productivity. But we have to acknowledge that most employers are not medical experts who know a great deal about what can or cannot be expected from somebody with this or that condition. We should not ascribe employers’ wariness in hiring disabled people to ill will or prejudice when it might simply reflect uncertainty.
Philip Davies’ proposal should be interpreted as a means to overcome this informational asymmetry, by making it more attractive to employers to give a disabled person a chance. If Davies’ critics have better proposals, let’s hear them. But what better way could there be to signalise competency in a job than demonstrating it on the job?