Minimum wage increases can lead to lower income for employees

Thrugelmir

economic wrote: »

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.

Nothing dynamic about a transitional workforce from a business perspective. Good employers like to retain their valued staff. 95% of employers in the UK are SME's. I.E. they employ less than 50 staff. Being unskilled or semi skilled doesn't make them any less valuable. Equally important are factors such as absence taken , punctuality, productivity, knowledge of the organisation, loyalty etc etc. Costs time and money to train new employees too.

economic

Thrugelmir wrote: »

Nothing dynamic about a transitional workforce from a business perspective. Good employers like to retain their valued staff. 95% of employers in the UK are SME's. I.E. they employ less than 50 staff. Being unskilled or semi skilled doesn't make them any less valuable. Equally important are factors such as absence taken , punctuality, productivity, knowledge of the organisation, loyalty etc etc. Costs time and money to train new employees too.

if the employers are good and if it makes sense they will raise the wages then. if not the employee has the option to move to a higher wage job. if not they are then in the new minimum wage paying job.

GreatApe

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.

The only way 'differentials' could be kept is if there was enough people willing to give up their current near min wage jobs to take min wage jobs. I do not think that is likely because min wage jobs are also often low status jobs

So for instance the two biggest min wage paying sectors are retail and hospitality.
A job just above min wage might be an accountants assistant.

So today

Waiter/Dishwasher at the local restaurant on £7.50ph
Accounts assistant at £9.50ph

Post min wage increase

Waiter/Dishwasher at the local restaurant on £9.50ph
Accounts assistant on £9.50ph

Would a sufficient number of account assistants give up their office jobs to wait tables and clean dishes so their remaining brethren could bid up their wages to £11.50? I do not think so.

Also we have had more than inflation pay rises for min wage for a number of years now, its not been inflationary its not just pushed all wages across the spectrum up.

GreatApe

The problem with simple economic models is that they are often just crap

One of the realities of running a business is that often your workers are just lazy (when it comes to looking/comparing other jobs/pay) and extremely risk averse. What that means is that business can keep workers who are smart and hard working and productive doing low paid low productivity jobs. It hurts everyone

Economic theory might say Mr Smart Hard Worker is continuously looking at his pay and conditions and what is available in the market and is able and willing to move. This movement of marginal workers sets the pay of different sectors jobs and workers. Only its mostly a load of !!!!. For instance I know one person who was a hard worker quite smart and was in a dead end job low productivity job for years. I decided to offer him a job but I said to him first go and talk to your boss and ask for a 35% pay rise and tell him you have an offer of 30% more pay elsewhere (which is what I was prepared to pay him). His boss decided to give him the 35% pay increase and he decided to stay (the job I had for him was more difficult than what he did). He simply did not know his worth and would have stayed at his wage and job for many years. Like most people he simply fir his lifestyle and spending around his pay. Rather than aim for a certain quality of life and move jobs to get the pay needed to sustain that quality of life

GreatApe

Thrugelmir wrote: »

Nothing dynamic about a transitional workforce from a business perspective. Good employers like to retain their valued staff. 95% of employers in the UK are SME's. I.E. they employ less than 50 staff. Being unskilled or semi skilled doesn't make them any less valuable. Equally important are factors such as absence taken , punctuality, productivity, knowledge of the organisation, loyalty etc etc. Costs time and money to train new employees too.

That sounds like a fake stat to me,

The government employs something like 20% of the workforce of the uk and the government is not a SME. Tesco employs 470,000 people or 1.5% of the entire British workforce! The top 10 supermarkets alone employ about 1.5 million people or close to 4% of the entire uk workforce.

It would be interesting to know how many people actually do work for small companies, I bet its a lot less than you think

HAMISH_MCTAVISH

michaels wrote: »

I will respond to Hamish's substantive point later.

Is it later yet?

Sapphire

GreatApe wrote: »

It would be interesting to know how many people actually do work for small companies, I bet its a lot less than you think

Certainly far fewer than used to. Small (and medium) but successful companies started to be taken over by global corporations in the 1980s – it really happened very suddenly, certainly in my industry. Loads of people lost their jobs then. Other companies that couldn't compete with the corporations simply closed down.

I went to the 'antiques' market at the Angel the other day and it has changed beyond recognition. When I lived near there it used to be a fantastic place for buying antiques and curios of all sorts, with a great atmosphere.

Now there is some sort of a huge sofa(!) emporium where there were a large number of characterful antiques shops, and where there were interesting individual shops elsewhere you have things like a Reiss, chains, 'artisan' food shops and other such mundane rubbish that you can find anywhere else.

There are a few antiques traders still left there, but they complain bitterly about the globalisation that has brought this about and killed off their (and others') business. More of this to come, I'm sure – we were warned this would happen decades ago by certain people, and our glorious political 'masters and mistresses' (from all parties) allowed it and I assume encouraged it, presumably for their own short-term aggrandisement…

What with advances in technology making jobs increasingly redundant, there's plenty of nice things to look forward to.

Lovely…

Fella

GreatApe wrote: »

That sounds like a fake stat to me,

You may be at cross-purposes. 95% of employers isn't the same as the employers of 95% of workers. 95% of employers being SMEs sounds plausible to me.

HAMISH_MCTAVISH

Fella wrote: »

95% of employers being SMEs sounds plausible to me.

It does to me too if you include the millions of self employed people/contractors as an SME... But that isn't what most people would think of as 'an employer'.

And actually the FSB has some data that backs this up to a point.

In 2016, there were 1.3 million employing businesses and 4.2 million non-employing businesses.

So as 76% of businesses did not employ anyone aside from the owner - it's probably a stretch to describe those as 'employers'.

And it appears the majority of British workers are employed by large employers, whether they be public or private sector, rather than by SME's.

Thrugelmir

GreatApe wrote: »

That sounds like a fake stat to me,

Tesco's is one organisation. The Government another. That's only 2 in total. A SME by definition employs less than 50 people. The vast majority of UK companies employ far fewer than this.