Minimum Wage To Go Up, Are you negatively effected?

wotsthat

mwpt wrote: »

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

People get a pay rise and therefore fewer benefits.

Instead of politicians deciding whether they're worth it more of the decision is handed to the customers of their employees.

We then sit back and watch what happens.

mwpt

wotsthat wrote: »

People get a pay rise and therefore fewer benefits.

Instead of politicians deciding whether they're worth it more of the decision is handed to the customers of their employees.

We then sit back and watch what happens.

So if the customers decide it's not worth it, people are made redundant and we pay unemployment benefit? Or if hours are reduced, salary remains constant, we still pay the same benefits.

I don't want to get into a long argument for the sake of arguing (because that's what's going to happen here) but it's not so simple as "raise wages reduce benefits".

makeyourdaddyproud

mwpt wrote: »

So if the customers decide it's not worth it, people are made redundant and we pay unemployment benefit? Or if hours are reduced, salary remains constant, we still pay the same benefits.

I don't want to get into a long argument for the sake of arguing (because that's what's going to happen here) but it's not so simple as "raise wages reduce benefits".

You're forgetting the fact that if everyone raises their prices, then in theory nothing changes as the customer will buy at the higher price from someone, whatever the company. History has proved that after the initial lull, companies and employees embrace the changes.

I see this not being a big a deal as some people make out, as we are seeing a 10% increase in wages and the fittest companies will weather the wage policy.

The question really is, if an employer really wants to be a ratbag, is there any future for her in an economic sense?

mwpt

makeyourdaddyproud wrote: »

You're forgetting the fact that if everyone raises their prices, then in theory nothing changes as the customer will buy at the higher price from someone, whatever the company. History has proved that after the initial lull, companies and employees embrace the changes.

I see this not being a big a deal as some people make out, as we are seeing a 10% increase in wages and the fittest companies will weather the wage policy.

The question really is, if an employer really wants to be a ratbag, is there any future for her in an economic sense?

I'm not speculating whether the nmw increases are a good thing or not. They may be, we'll have to see, though I suspect that as always, there is no such thing as a free lunch.

I was merely wondering about the concept that we can eradicate benefits dependency by raising minimum wage.

wotsthat

mwpt wrote: »

So if the customers decide it's not worth it, people are made redundant and we pay unemployment benefit? Or if hours are reduced, salary remains constant, we still pay the same benefits.

My view would be customers deciding the staff are/ or aren't worth it falls in their remit rather than politicians and this would be a move in the right direction. As those getting made redundant were working for businesses that couldn't survive in their present state without subsidy I'm hopeful they'll go and find more productive work outside of the coffee serving industry.

I think it's more likely less benefits will be paid overall but, yes, they might be the same or more.

mwpt wrote: »

I don't want to get into a long argument for the sake of arguing (because that's what's going to happen here) but it's not so simple as "raise wages reduce benefits".

I agree.

kinger101

makeyourdaddyproud wrote: »

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?

The rate increase in April 16 is 50 pence per hour. Anyone currently on £7.20 an hour is probably in an unskilled entry level job, and I can't see why they would be offended that someone in another unskilled entry level job also now gets £7.20 an hour.

Where I work, recent pay negotiations have often been more generous to those at the lower end of the scale. Which is fair enough, as it makes more of a difference to them.

kinger101

mwpt wrote: »

I was merely wondering about the concept that we can eradicate benefits dependency by raising minimum wage.

I don't think anyone's taking of eradication, but it can help reduce the benefits bill if it reduces entitlement to benefit. More widely, employment taxes (NI and IT) are higher than corporation tax, so there is a net benefit to the treasury there as well. Likewise, VAT receipts may increase if retailers pass on wage costs to customers (assuming no fall in sales).

There's a study by KPMG (not quite on the same thing) here;

http://www.livingwage.org.uk/news/kpmg-economic-analysis-raising-minimum-wage-living-wage-would-benefit-staff-and-businesses

Jon_B_2

Why the business reaction to NLW has been so negative is because it is being introduced so quickly. Most businesses form their financial year budgets with an assertion that national minimum wage will rise and include that into their forecast.

The problem with NLW is that for a lot of businesses it will be unbudgetted and therefore will need to be recouped. Whether that be by increasing the prices of their goods, reducing their workforce hours or both.

Thrugelmir

mwpt wrote: »

I was merely wondering about the concept that we can eradicate benefits dependency by raising minimum wage.

Name an alternative. Governments subsidising those in work is administratively costly as well. With the dominance of multi national companies in the market place setting a fair rate of pay seems reasonable as well. Given the low unemployment numbers now is the time to make the adjustment.

mwpt

Thrugelmir wrote: »

Name an alternative. Governments subsidising those in work is administratively costly as well. With the dominance of multi national companies in the market place setting a fair rate of pay seems reasonable as well. Given the low unemployment numbers now is the time to make the adjustment.

Why would I name an alternative when I'm not debating if we should raise NMW or not.

I'm questioning the conclusion that doing so will de facto reduce benefit spending.

This all started because I questioned Generali's comment that this will reduce in benefit spending. And that was the sum total of my commentary. I was pondering the same thing myself and there were just too many dots to join and lines to draw to come to anything remotely conclusive (in my mind). I couldn't see how someone could conclusively say that increasing minimum wage would reduce benefit spending.