Living wage

MacMickster

The current system also deters any employer who would be prepared to pay a living wage.

If they were to do so then they would be at a competetive disadvantage with rivals who preferred to have the taxpayer pay half of their wage bill for them.

If a business can't make a profit without this taxpayer subsidy then it should not be operating as a business.

Pennywise

paulmapp8306 wrote: »

I dont see prices rising THAT much. OK shops will have to pay staff a little more - so that might push things up a little - but not stupid amounts. Most of the transport cost for goods is fuel - the drivers already earn a lot in general. A lot of goods come from outside the UK, so their costs wont rise.

Far too simplistic.

Shops aren't the only businesses in the economy. Minimum wage is also often paid in hotels, warehousing, factories and other jobs such as van driving. A few percent on every aspect of the manufacturing, distributing and selling processes soon means double digit price rises on almost everything.

Not only that, but you have to factor in the wage increase for all levels currently earning above NMW. If you push up wages at the bottom, then all the upper levels will also demand a similar rise, so it's a few percentage points on virtually all employees, not just those at the bottom. For example, if your floor sweeper is on say £6 per hour and your production line worker is on £8 per hour, do you really think the production line worker would be happy to stay on £8 per hour when he knows the sweeper has had a rise to £8? No, the production line worker will want £10, and then the production line supervisor, currently on £10, will expect £12, and so on.

How about something slightly different, such as scrapping employers national insurance (a tax on jobs), and forcing employers to increase staff pay by the amount of employers NIC they've saved, i.e. equivalent to a 13.8% pay rise for the average earning worker, and reduce state benefits by an equivalent amount.

grizzly1911

Pennywise wrote: »

How about something slightly different, such as scrapping employers national insurance (a tax on jobs), and forcing employers to increase staff pay by the amount of employers NIC they've saved, i.e. equivalent to a 13.8% pay rise for the average earning worker, and reduce state benefits by an equivalent amount.

Even that has issues as the NI threshold is applied to Secondary Threshold and above £7488 or about 25 hours a week on NMW. A lot of NMW workers are part time and even if full time the benefit of the removal of NI would only be around 6%, which in itself would make little difference.

State benefits would also need to tapper to give an incentive to work.

Not quite sure how you would ensure that casual workers would feel the benefit.

macaque_2

HAMISH_MCTAVISH wrote: »

Whether the additional pay/benefits for employees comes from consumers in the form of tax, or in the form of higher prices for goods and services, doesn't really matter.

Unemployment benefit is a legitimate use of public funds as is paying for or subsidising some categories of employment (public servants and charities).

This is a different case. If a private sector company can only survive by paying less than a living wage, they should not be in business. In many cases however it is worse than this. Wealthy London companies are paying what amounts to slave wages to inflate what are already large profits and bonuses.

Quite apart from the dubious morality of this practice, it does not benefit the economy since those companies that do pay a living wage are effectively cross subsidising the companies that don't. This makes decent employers less competitive.

Linton

Pennywise wrote: »

...
Shops aren't the only businesses in the economy. Minimum wage is also often paid in hotels, warehousing, factories and other jobs such as van driving. A few percent on every aspect of the manufacturing, distributing and selling processes soon means double digit price rises on almost everything.

..

No it doesnt - if each aspect of manufacturing increases its costs by x% the total increases by x% not the sum of all the x%s.

HAMISH_MCTAVISH

paulmapp8306 wrote: »

I dont see prices rising THAT much. OK shops will have to pay staff a little more - so that might push things up a little - but not stupid amounts.

After the cost of goods, the largest cost component by far of most small to medium retail and hospitality/leisure businesses is wages.

Between 20% and 35% of takings is fairly typical, depending on business type.

And most of their staff would be on minimum wage.

Obviously if you doubled wages, you'd have to pass on a similar increase to the price of goods.

Whereas for something like supermarkets, the wage component in percentage terms is far, far smaller, but the cost of goods in percentage terms is far bigger.

There is no doubt that increasing minimum wage would see a significant increase in prices for everything we buy. Exactly how much would depend largely on the type of retailer and their business model.

MacMickster

HAMISH_MCTAVISH wrote: »

There is no doubt that increasing minimum wage would see a significant increase in prices for everything we buy. Exactly how much would depend largely on the type of retailer and their business model.

As higher wages would not have to be subsided by benefits (and the added costs of administering those benefits) however, we should face a reduction in taxation.

The money that people receive (whether through their pay or benefits) has to come from somewhere. I would prefer to see employers have to pay a living wage and hence have less of the benefits culture which seems so prevalent in this country.

HAMISH_MCTAVISH

MacMickster wrote: »

As higher wages would not have to be subsided by benefits (and the added costs of administering those benefits) however, we should face a reduction in taxation.

I agree.

Mentioned that in my first post in this thread.

The danger of course is that no such tax decrease happens, and we all end up paying more in total.

The money that people receive (whether through their pay or benefits) has to come from somewhere. I would prefer to see employers have to pay a living wage and hence have less of the benefits culture which seems so prevalent in this country.

Also agreed.

The problem however goes beyond that of minimum wages and into driving wage costs up across the board, as the person currently on a living wage as a supervisor for example, would need to maintain the gap between his income and the new higher minimum wage.

Which would then translate into a serious wider inflation problem.

It's not a bad idea in theory, but there are some significant complications that would need to be worked out first.

Not least of which is that large supermarkets and other high volume retailers would need to raise prices significantly less than small retailers to cover the gap, thus increasing their competitive advantage and driving ever more small retailers out of business.

zagfles

HappyMJ wrote: »

Why work at all when the government will top everyone up to the same level no matter how many or how few hours you do?

Personally, benefits should be reduced to give a very basic lifestyle. Then removed at a fair and reasonable rate such as 50% to make it actually worth working. Benefits are currently quite high and reduced pound for pound making working not worth even doing just a few hours trapping many in poverty. If more people just work a few hours just one day a week will do to earn £50 a week more to have a reasonable lifestyle that would reduce the benefits payable to them by let's say 50% - £25. Then once they have this one day a week job they can see the benefit of an extra £25 in their pocket each week and will look to increase their hours until they have an amount of money in their pocket that they are happy with. At the moment it's all or nothing.

Good idea, but the "child poverty" targets make such a policy impossible. The gap between those at the bottom and those in the middle would widen, so increasing "poverty" as this is how it's defined.

coastline

As far as I can remember many jobs were contracted out in the 1980's...and probably the ones in the article...
Before the minumum wage was introduced the Tories rejected it... John Major said it would cost 2 million jobs...

http://www.guardian.co.uk/society/2005/mar/29/socialexclusion.money

No idea what the answer is but folk should be paid a living wage theres no doubt...£6 for young workers isn't the end of the world ...but adults won't be buying much apart from paying basic bills...if goods have to rise to pay for it then who can complain really...doubt many on here would be happy with it..