That Was Then, This Is Now

A talking head was expounding on the brilliance of the higher minimum wage the other day.

The so-called expert settled on Ireland as an example of a country that raised the minimum wage to a respectable level, and didn't the economy take off? Based on history, it would make sense to increase the minimum wage in the U.S. because that would help the economy, not hurt it.

That, as they say, was then. In the days of an economic boom, Ireland did enter into social partnership agreements that saw an ever climbing expense for wages. The well-educated workers were able to do the work for a lower cost than in other countries, and multi-national firms flocked to Ireland.

This, on the other hand, is now. By lifting wages annually, Ireland has lifted the workforce to a level where they can no longer compete against Eastern European nations. Those same multi-nationals that flocked to Ireland are flying off to Poland, to set up shop where the workers will work for less.

Speaking at the MacGill Summer School, Dr. Peter Bacon has stated that wages in Ireland would have to be trimmed by 10-15% to restore competitiveness. Large firms are closing up at an alarming rate, all citing the high costs of doing business because the mandated wage is too high. To have any hope of economic recovery, salaries must be slashed or the jobs will continue to migrate overseas.

So when you hear a talking head speak of the Celtic Tiger, keep in mind that the Celtic Tiger was laid off a year ago. Raise wages during an economic downturn? Yes, by all means, look at Ireland as an example, but consider today's Ireland.