Know Your Wage?

I recently heard of a student who had started working part time at a cafe. Three weeks into the job she still did not know how much she was being paid (her first pay day had not yet come). My first thought was "How irrational!"

But then it occurred to me that it might not be as irrational as it first seems.

First, a definition: Your reservation wage is the lowest wage at which you would accept employment.

Now, a law: In the UK you have to be paid at least the minimum wage of £4.98 an hour (aged 18-20).

So, in theory if the student in question had a reservation wage of £4.98 or less, she would not care about what the cafe was paying her, because she knows it has be above her reservation wage by law.

So, she could be rational.

But then, another thought occurred to me: A rational worker would never have a reservation wage below the minimum wage. (Because they know that they could get paid more elsewhere - the lowest wage you would accept would never be lower than what you could get paid elsewhere). Thus a rational worker must have a minimum wage of at least £4.98 an hour.

Conclusion: Either the student has a reservation wage of exactly £4.98 an hour, or she is irrational.

Epilogue: This analysis assumes she is able to get a job elsewhere at the minimum wage. This analysis also assumes money to the only motivator for working. We assume her primary reason she is working is the wage, not the ambience of the cafe, for example.