To wonder why people think "raise the NMW" is the answer to poverty?

(141 Posts)
windowwashingbanshee Thu 28-Mar-13 16:05:59

Without wanting to refer to another thread too much (...), I did hmm at seeing yet another comment about raising the minimum wage being the answer to poverty.

I'm a small business (co-)owner. Five of our permies are on NMW, the starting point for all employees, with potential raises; having worked on NMW for years myself, I'm a firm believe of retaining people, rather than just hiring cheaply (too short-term thinking for me). Nevertheless, whichever way you look at it, we need fairly unskilled labour - it's warehouse work - packing, sorting, bagging, and preparing labels for shipping. Our work is fairly seasonal, with dips which are mostly predictable. When that happens, and orders are low, I normally focus on doing other things - making sure people are up to date on their training, we usually have a volunteer day which everyone can opt into, permitting extra-long holidays, and so on.

However, in those times we barely break even some years. And although the balance of the busy months makes us profitable overall, I know I'd face huge pressure to let one or two employees go every year if the NMW was put up to a "living wage" suddenly, depending on the length of the dip, or move to some sort of zero-hours contract situation, which I don't want to do.

I'm not sure I'm explaining it properly - but basically I can afford to keep under-utilised employees on full-time in quiet periods if they're paid NMW right now. If I had to pay several pounds more per employee, us "just breaking even" would tip into "making a loss", because the productivity of those employees wouldn't be worth the £8 / £9 (or whatever) it had been raised to.

So, AIBU to think that the posters who claim that "raise the NMW" is the miracle that would end poverty in this country are being quite short-sighted? It seems that way to me.

JakeBullet Thu 28-Mar-13 16:10:46

I agree with you window provided you are not among those decrying people who then have to claim tax credits and damning them as "benefit claimants".

Fact is that NMW is not a "living" wage and needs topping up by the Bovt.

ChestyLeRoux Thu 28-Mar-13 16:12:42

As long as people can keep their tax credits then why bother raising minimum wage.

RatPants Thu 28-Mar-13 16:13:39

People can't live on minimum wage. The fact that tax credits even exist is an admission of this.

How much do you and the directors take home though window?

If you're running a business that doesn't pay a living wage for all employees including you then your business isn't financially viable.

If you're raking it in and currently sipping champagne in your hot tub then maybe it's the opposite problem wink rich directors, poor staff

ChestyLeRoux Thu 28-Mar-13 16:14:33

Its better to be on tax credits than to have a higher wage for a lot of people. I would prefer to stay on minimum wage and have tax credits.

TiredyCustards Thu 28-Mar-13 16:18:06

Isn't this what people said about the nmw though?

The money either comes from the govt or the employer. Your situation is what makes it a tricky issue, but the govt subsidising Tesco et al to pay low wages isn't right imo.

Are your staff all on zero-hours contracts, as well? If you can't run your business without exploiting your employees then your business deserves to fail. There was a lot of whining when the NMW was first introduced, but it didn't lead to a total collapse.
Of course the answer to poverty involves raising the NMW because the way to address poverty is to get more money into the pockets of the poor. They will spend it, boosting the economy still further. It's hardly rocket science, though it seems to be beyond the Government to work this out.

acceptableinthe80s Thu 28-Mar-13 16:18:17

YABU. NMW is no where near enough to live on given the sharp rise in cost of living. Increasing the NMW would increase the amount of tax being paid and decrease the amount of benefits being paid in the form of tax credits etc.

As a co-owner of a small business myself i understand your personal predicament but you can't really expect people to try to survive on pathetic wages just so you can run your own business. If increasing staff wages to a decent living wage would mean running your business at a loss you need to re-think your business.
I pay my staff above MW but am lucky in that i employ mainly students and my busy periods are during term time so i don't really need the extra staff in my quiet periods and most students tend to go home then.
To answer your question, yes raising NMW will help reduce poverty but it will also see small businesses dwindling as they already are.

greendental Thu 28-Mar-13 16:20:09

I think you're doing well if you're retaining your staff on nmw and the turnover isn't high.

cantspel Thu 28-Mar-13 16:20:37

I dont think raising the mn is the answer but they should raised the tax allowance and exempt anyone earning less than £15k

HillBilly76 Thu 28-Mar-13 16:21:34

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HillBilly76 Thu 28-Mar-13 16:22:21

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GrendelsMum Thu 28-Mar-13 16:23:02

Isn't the OP saying that at the moment, she employs people on the same NMW all year round, and that she thinks that's a better option than her alternative, which is employing people only in busy months but at a higher wage? I don't think that zero hours contracts came into it.

stressyBessy22 Thu 28-Mar-13 16:26:37

If you can't afford to pay your staff a living wage then you shouldn't be in business.

acceptableinthe80s Thu 28-Mar-13 16:27:21

Chesty Why would it be better to be on tax credits than an increased wage? Who would that benefit?

ChestyLeRoux Thu 28-Mar-13 16:29:54

Employees with kids would benefit and companies. Its harder if you havent got kids, but it doesnt make sense to make high wages if you have kids for a lot of people.

whois Thu 28-Mar-13 16:31:13

Because, OP, an awful lot of people are not very clever. And another chunk of people don't have much of an understanding of basic economics.

FYI people can live on NMW. Those without children shouldn't have a problem.

IslaValargeone Thu 28-Mar-13 16:33:18

acceptable You have said that in your quiet times coincide with your employees (mainly students) going home.
Not all businesses can employ students though.
Surely it's better to keep people employed 52 weeks a year but on NMW than have to let people go during the quiet times because business is slow?

TeWiSavesTheDay Thu 28-Mar-13 16:34:46

If your business is not profitable without paying a living wage it is not a truly viable business and that's the harsh truth of it.

IslaValargeone Thu 28-Mar-13 16:35:31

Employees with families could benefit from a higher wage if businesses didn't have to pay a student £x an hour for answering a phone every now and again.

ParadiseChick Thu 28-Mar-13 16:37:20

It's tax credits that have enabled companies to pay shit wages that people can't even live on.

whois Thu 28-Mar-13 16:38:09

stressyBessy22 that's a stupid comment. It's way better for everyone to have a company providing a service and paying some people MW and gaining experience to hopefully move onto a better paid job.

Or would you rather the OP shut her business, made everyone redundant and increase the burden on the state?

You can't seriously think that's better? Fucking hell, I keep forgetting I shouldn't get involved with these posts. People. Stupid.

acceptableinthe80s Thu 28-Mar-13 16:39:05

Is that not because people have just gotten used to being subsidised by the state though? NMW workers only get handouts because they don't earn enough to provide for their families, surely it would make more sense to increase wages to a decent standard to allow people to be able to provide for their own families?

ChestyLeRoux Thu 28-Mar-13 16:40:14

No it wont be. I would turn down a higher wage if offered as its not worthwhile for me to do it. So minimum wage often benefits the staff and the employees.

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