Minimum Wage To Go Up, Are you negatively effected?

mwpt

CLAPTON wrote: »

maybe I misunderstand you, but the in work benefits depend upon the recipients' income: if their income rises due to high minimum wage then benefits fall

Well yes, as I said, that is the obvious simplification. The question is, is it so simple?

kinger101

mwpt wrote: »

Well, that's the immediate leap to make, yes, but I can't seem to work out a holistic theory that shows you can reduce welfare spending by mandating minimum wage increases.

I mean, I'm all for not subsidising our entire low wage private sector with tax credits and housing benefit, so I hope that conclusion is correct.

Remember as well the backdrop to this was Osborne attempting to cut tax credits. It got kicked into the long grass of Universal Credits though when the Lords blocked it. Though he could have stuck it in the Finance Bill (but is too focused on his popularity ratings as he wants to be the next PM).

Graham_Devon

mwpt wrote: »

Well yes, as I said, that is the obvious simplification. The question is, is it so simple?

In a nutshell, no.

Council tax is going up for the majority = increase in council tax benefit for those who receive it.

Rents are going up for the majority = increase in housing benefit for those who need it.

And one argument, which I'm on the fence on, but is used by those who say the minimum wage shouldn't go up quite a lot. The job losses the minimum wage may cause (or lack of hiring it may cause). That means a great social welfare involvement.

I think the only way it can be calculated really is to look at this question in hindsight with the welfare spending figures in front of us in a couple of years time. The trouble is, even then you'd have to take account of the other changes in benefits such as universal credit etc which would make greater differences to those very figures.

So in other words, I don't think it's that simple. I personally think it will make an insignificant difference to welfare spending. Other items will make a much greater difference to welfare spend....and people will use the figures to draw any picture they like.

wotsthat

mwpt wrote: »

Well yes, as I said, that is the obvious simplification. The question is, is it so simple?

Or, is it simpler than the current system where millions chase benefits and subsidies reducing productivity as they do so?

mwpt

wotsthat wrote: »

Or, is it simpler than the current system where millions chase benefits and subsidies reducing productivity as they do so?

So it replaces the current system. Can you show me the holistic theory? I still haven't been able to construct it.

lvader

Minimum wage used to be a very popular labour policy until the Tories upped the anti, now according to Labour it's damaging to business.:rotfl:

Thrugelmir

lvader wrote: »

Minimum wage used to be a very popular labour policy until the Tories upped the anti, now according to Labour it's damaging to business.:rotfl:

Wasn't so long ago that the proposed pay rates weren't high enough.

kinger101

I think a few small businesses will struggle with this, particularly ones that would find it difficult to pass on costs to customers (because overseas competition). Perhaps a few will even go out of business. Overall, I'm in favour of the changes though, but would have preferred GO to taper it with cuts in tax credits.

Businesses that are able to reduce hours and still have the same output as before had productivity problems. Some will say this doesn't happen in the private sector, but I've worked in enough places, and been a customer in enough places, to know this isn't true.

I also don't accept that everyone's pay has to go up to keep the differential. A business can pay everyone the same if they wish. What they can't do is pay two people doing essentially the same job different amounts. If a low ranking employee complained to me about now being paid the same as the cleaners, I'd simply say "OK, tomorrow morning, come in at 5 am and grab a mop".

On a side note, I actually think it's about time some employers removed automatic progression up pay scales based on length of time in a post. It's very common in the public sector and not at all productive.

AG47

Thrugelmir wrote: »

Less time at work is surely positive. More time with the children. Lower childcare costs. If there's the work to be done employers can offer additional hours and workers will be rewarded.

Asda hit the news recently.

"Asda sees biggest sales fall on record"

http://www.bbc.co.uk/news/business-35604336

Yes less hours for more pay is a good thing, yes less childcare.

Parent spending more time with family,

makeyourdaddyproud

kinger101 wrote: »

I think a few small businesses will struggle with this, particularly ones that would find it difficult to pass on costs to customers (because overseas competition). Perhaps a few will even go out of business. Overall, I'm in favour of the changes though, but would have preferred GO to taper it with cuts in tax credits.

Businesses that are able to reduce hours and still have the same output as before had productivity problems. Some will say this doesn't happen in the private sector, but I've worked in enough places, and been a customer in enough places, to know this isn't true.

I also don't accept that everyone's pay has to go up to keep the differential. A business can pay everyone the same if they wish. What they can't do is pay two people doing essentially the same job different amounts. If a low ranking employee complained to me about now being paid the same as the cleaners, I'd simply say "OK, tomorrow morning, come in at 5 am and grab a mop".

On a side note, I actually think it's about time some employers removed automatic progression up pay scales based on length of time in a post. It's very common in the public sector and not at all productive.

I agree to your assertion that pay differentials might not be preserved up the wage scale (depending on profit manoeverabilty) but those higher up the pay scale that are seeing they are paid no more than their subordinates would object but not directly.

You might see an undercurrent of bitterness that will encourage negative morale; who wants to run a business with a workforce having no motivation to deliver the product as well as was done pre NLW?

Even if hours are cut to mitigate the increase, you will have a productivity problem; less output normally means less product or lower quality product. Ok, you could impose faster working but this will also seal the negative morale into the fabric of the workforce once again.

Eventually, those first with the toughest conditions will struggle to employ or even retain staff as they will seek alternative employment that will preserve the work rate at the higher wage rate - i.e. more efficient companies with executives and shareholders that don't drain as much financial resource from their respective companies at the expense of their low paid.