In a discussion of minimum wages, Anthony says:
Minimum wage adjustments in Australia also serve another purpose: when the AIRC and now the Fair Pay Commission adjusts minimum wages it does not simply raise the level of a single minimum wage but adjusts the entire wage structure for all award wage dependent workers who havenâ€™t concluded an enterprise bargain. That is, absent minimum wage adjustments, the difference in pay between two workers doing exactly the same work with similar levels of skill but one of whom happens to have strong bargaining power under our enterprise agreement-making system would widen.
This relates to one of the points that David Card made on Wednesday night -Â that we might care about wage inequality in and of itself (separately from inequality across households).
If that’s the focus, then minimum wages are a pretty effective instrument, since all sides of the debate agree that a higher minimum wage reduces the number of low-paid workers: either because they get wage rises or termination notices.
When thinking about inequality, my general feeling is that we should care most about the distribution of resources across households – but I can see reasons why you might also be concerned about widening inequality in hourly wages. For example, maybe wage inequality makes workplaces seem more unfair (on the other hand, maybe it creates stronger incentives to work hard). Other thoughts?