To think raising NMW is a good thing

I have a client that is suffering terribly already. Increase in NMW, increase in e'er's NI, Brexit causing their parts costs to increase massively, plus they're still recovering from Covid, when they were classed as an "essential" business, so were able to stay open, but their business plummeted, meaning they couldn't justifiably furlough all their staff like other businesses.

Meanwhile, the company's owners haven't paid themselves for the last year, focussing entirely on making sure their employees get their wages first.

A bad budget will force this business to close, and add 13 people back into the unemployment numbers.

Don't be fooled into thinking that all business owners are making a huge amount of money.

It's the cost of living and accommodation prices which are the problem. The government can't keep handing that problem over to businesses and expect them to sort it out with ever increasing pay.

What about the companies that can afford to pay their staff a decent wage but instead choose not to and just pay their staff NMW?

Or you could, for example, look at it from the POV of the pub owner. Everything is going up...everything. People have less cash in their pocket so fewer are going out. The publican might have paid for training in hospitality and are repaying loans, as well as business loans. They have taken on a huge amount of financial risk to open the pub, and personal risk too. When it comes to paying for everything, their own wages are the last in a long list of priorities. They have no employers' NI contributions or pension contributions or sick pay or maternity/paternity pay. However the person potwashing and wiping tables gets all those things, and their pay is almost as much as the business owner, or maybe even the same. How does that work from a business perspective? Who is going to take risks in that climate? And then you have people coming in every day and moaning about the prices, if they come in at all.

19 times in 25 years is pretty good! A lot of employees probably haven’t had 19 increases in this period. Quite a lot of salaries have been frozen year on year. They’d be better off increasing tax thresholds, which results in more money in your pocket, rather than freezing them for years which just pulls more people into paying higher amounts of tax through fiscal drag. Increasing the minimum wage may make the government look good but they aren’t funding it, it’s down to the employer. In fact it’s a win for the government as they will receive more in taxes from ‘ordinary working people’.

I don't know the answer as I see both sides. Wages need to go up for everyone because prices and taxes continue to go up.

But if UK shops, cafes and other businesses go bust then the gap will be filled by Amazon, Costa, etc who use loopholes and don't pay their share of tax into our economy and things will continue to get worse.

Lots of businesses are struggling we have lost many big names over the last decade and many owners earn less than minimum wage to support their staff and retain jobs, especially in retail. NMW does not apply to business owners, self employed or company directors. Not everyone has fat cat shareholders.

My mum works in one. They’re making redundancies.

If companies can't afford to pay the staff a decent wage they shouldn't be in business.

Exactly, it is just silly, people on NMW will end up with the same living standard (increased salary / higher prices) and everybody else is worse off.

“I believe it’s rising by 50p an hour? So for a full-time, 40hr/week employee (which most on NMW aren’t) is £20 a week or under £100 a month. If a business can’t absorb that, it’s not viable and being propped up by the state.”

If you are running a people-intensive business on tight margins - much of the hospitality industry, for example - you might well not be able to afford that, so you will shut up shop. Suddenly all your employees are out of work, and far from being better off, they are worse off, as is the country as it has lost the tax they were paying as well as the fact that the workers are now benefit recipients. Put up the price of employment, and nursery fees rise, as does the cost of social care - it will have an impact on everyone, and will prove to be a highly inflationary measure. As for any sort of manufacturing industry, it becomes ever more profitable either to pay for AI machines, or to relocate abroad.

Well when you look at it that simply and uncritically...

Just listen to it. All the exact same false arguments from the Tory side when NMW was introduced and yet the rich are still getting richer.
😂

I have never been a business owner . As much as many seem to hate business owners, they have to be viable. If they fold and you just rant on about it being a bad business model so it serves them right that’s people now claiming benefits until they get another job, if ever.

*ETA i didn’t mean to quote!!

I read a thread this morning about ‘middle’ earners being punished in this economy. Actually they were paid more than middle but If they feel they are hard done by how do you think those of us on lower wages feel. I’m now on 5k more than minimum wage after a long NHS specialised career. I can’t get paid more as it’s banded.

I can see both sides of this. But genuinely what is the answer? we pay people less and expect the customer to tip highly like in the USA? The goverment pay more in benefits because people can’t afford to live on low wages? I’m not an economist, i’ve no idea how it can be sorted. But i do see many companies making profits year on year ( not small businesses) I also see small indie hospitality near me opening less hours despite being really busy.

I do understand that but surely those people also warrant a minimum wage. Oxfam was threatened with strikes last year as it was not paying its staff in the UK enough to live. And that isn’t right is it?

I see both sides of it in the small business I work for, and honestly I’m torn.

Our lowest paid staff are on NMW, and the increase that we saw in April this year between that and NI was almost unsustainable. The money that we pay out additionally in wage costs, has affected our overall budget and therefore our growth. We work with schools, they were even worse affected by it - a huge amount of TAs are on NMW and school budgets aren’t infinite either.

But - speaking to those people, they’re almost universally struggling with the cost of living. Many of them rely on benefit top ups to get by, and have almost nothing left at the end of the month. They’re asking for more money that isn’t available, and if we looked at universal pay rises for our lowest paid staff, we’d have to employ less of them so someone would end up unemployed.

If they cannot afford to pay their workers, they will employ fewer workers, and/or shut down. How does that benefit the working class?

Next time you see a shuttered pub, that used to be the heart of the district, you cna rub your hands and go "Good! Serves them right for not being able to survive in this business environment. Up the workers!"

Labour are doing that for you
You need to understand that companies need to make a decent profit to make it worthwhile that is why people start a business
no one starts a business for the privilege of employing people

If they do not make a worthwhile profit for themselves they will just make people redundant or close the business

How about charities/charitable companies that don’t make a profit, have no shareholders but are doing really important work? Not ‘nice to haves’ but essential, statutory work such as health and social care, housing, domestic abuse support and counselling etc? Often these organisations work to support the poorest/most vulnerable with essential services. Funding given by local authorities/trusts/donors is reducing and NI and minimum wage costs affect them too.

I completely get the shareholder profits/big business arguments but the above organisations are also massively affected, so it’s not as easy as ‘greedy shareholders shouldn’t be taking everything’ or ‘don’t run a business if you can’t pay your staff’.

I don’t know what the solution is, but just wanted to give another perspective.

I’m gonna have to lose a member of staff now this on top of everything else. So it’s not good for all workers hey

When NMW is increased those that are paid more hourly take an effective paycut unless their employers are willing to increase too which generally they aren’t. In my NMW job my pay has been increased a few times in the last few years but my managers has been increased by a tiny amount so she effectively earns about 50p an hour more than me now which seems insane

Yes, and during that time that 'nobody will do it' what happens? The elderly in care homes left to rot? People in hospital getting no care? Children in danger going even more under the radar?

It just isn't as simple as 'make companies pay everyone more'

Unless businesses just get told they're limited to how much profit they can make?

I cant work out what i think.

I cant balance wanting to make sure people are paid enough to afford to live with the reality that an employer will want thier employee to provide value to them of the amount of minimum wage. If you dont provide that value, the job doesnt exist anymore.

The higher minimum wage, the more they want from you. When minimum wage fist came in it was for quite low skilled work and it was possible to start out doing entry level stuff and progres. Now it seems for quite skilled work and really hard to pull away from.