Minimum wage increases can lead to lower income for employees

GreatApe

While I am right leaning I am pro the min wage and pro the min wage being higher than it currently is

Current median full time wage is about £28,000
I feel the min wage should be 2/3rds of that for a 2,000 hour work year so currently the minimum wage should be £9.33 per hour and it should go up in line with median full time wages. The minimum wage should be lower in the first two years of employment by £1 per year.

I do not accept the argument that it will lead to more unemployment, we have not seen anything to suggest that has happened in the UK. I do not care about one city in one country on the other side of the world. We have a bigger experiment in the uk over the last few years min wage has gone up faster than inflation and we are still at record employment and longer term unemployment is just 1%

I accept that some very marginal businesses would go bust, but that is not necessarily a bad thing at all and in fact it could be a good think.

Take the example of two fast food joints on a high street selling the same type of food. If one happens to go bust the demand for fast food does not fall so the remaining ones business will double. The remaining shop can afford to hire the lost workers and pay more wages because overall the business is more efficient. Instead of 2 rents 2 business rates 2 utilities 2 sets of management and owners there is now 1 set to be paid and thus the business can be run more productively than before. The empty shop could be used as something else or converted to housing


Also importantly we have decided that we want a minimum standard and quality of life for people in the uk. We either pay for it with wages and higher prices or we pay for it with benefits. Given the two options the higher wages seem the better road to take.

GreatApe

Thrugelmir wrote: »

Tech is more reliable too. Nor requires paternity or maternity leave, or be paid sick or holiday pay. Basic wage is only one aspect of the cost to a business. Increasing levels of pension contributions by employers will likewise cap increases in basic pay to the bare minimum.

about 70% of the uk economy is wages in one form or another

teddysmum

When the minimum wage rises, prices go up, so the person on minimum wage is no better off, so a higher minimum wage is necessary...

I remember my mum saying she could buy a quarter of sweets (in a 'poke' bag) for a farthing (Quarter of old penny and about 0.1p now), but weekly wages were in single £s (and not many of those for the labouring workers).

Thrugelmir

GreatApe wrote: »

Current median full time wage is about £28,000
I feel the min wage should be 2/3rds of that for a 2,000 hour work year so currently the minimum wage should be £9.33 per hour and it should go up in line with median full time wages. The minimum wage should be lower in the first two years of employment by £1 per year.

Employers contributions to pensions are set to rise. The whole package needs to be considered.

GreatApe

teddysmum wrote: »

When the minimum wage rises, prices go up, so the person on minimum wage is no better off, so a higher minimum wage is necessary...

prices would only go up for some goods and services, most would not go up as most goods and services are not produced by minimum wage workers.

If 3 million workers working 4 billion hours a year got a £2ph pay rise that would add £8 billion to costs which would increase goods/services prices by a one off 0.4%. By comparison those on minimum wage would be getting a 20% pay rise so their lot in life would improve.

It is true that some of the min wage workers would not see an actual 20% pay rise because the government will take 60-90% of it away with high marginal 'tax' rates for people on benefits/tax-credits. But that is not a loss for us if the state collects more taxes by withdrawing some of the benefits then it can cut taxes elsewhere or not raise them elsewhere.

Thrugelmir

GreatApe wrote: »

If 3 million workers working 4 billion hours a year got a £2ph pay rise that would add £8 billion to costs which would increase goods/services prices by a one off 0.4%. By comparison those on minimum wage would be getting a 20% pay rise so their lot in life would improve.

What about those that earn above the minimum wage but less than £2 more. You are proposing given the lowest paid a £4k wage rise. What about those a little further up the ladder. Don't they get to keep their differential. And so on and so on.

chucknorris

Thrugelmir wrote: »

What about those that earn above the minimum wage but less than £2 more. You are proposing given the lowest paid a £4k wage rise. What about those a little further up the ladder. Don't they get to keep their differential. And so on and so on.

That's a very good point.

economic

Thrugelmir wrote: »

What about those that earn above the minimum wage but less than £2 more. You are proposing given the lowest paid a £4k wage rise. What about those a little further up the ladder. Don't they get to keep their differential. And so on and so on.

over time it should naturally correct in an efficient labour market. those who you think are disadvantaged would go for the jobs now paying a bit higher, this reducing the supply of labour in the disadvantaged jobs, and those jobs will then have to raise wages to attract the labour back.

Thrugelmir

economic wrote: »

over time it should naturally correct in an efficient labour market.

What's efficient about telling employers how much they have to pay their employees?

economic

Thrugelmir wrote: »

What's efficient about telling employers how much they have to pay their employees?

you tell them by moving to a higher paying job. in fact at the lower wage levels, its a lot more dynamic and theres more movement. these tend to be low skilled and therefore easy to pickup new skills which pay higher.