to think gov's Youth Contract proves NMW too high

[takingbackmonday]

The gov is ploughing more money we dont have to 'tackle' youth unemployment by subsidising half of the minimum wage businesses pay new staff.

AIBU to consider this yet more proof that NMW should be either lowered or abolished. Business taxes should also be lowered. The economy's a mess. NMW is set to high.

so you run a business then adamschic?

not sure, heard an economist talking about it a while back it made sense to me

No but I have worked on the finance side of quite a few.

Also, I would say the NMW isn't a true living wage as most people earning it will need top ups from government funds to keep them above the poverty line.

So how are to people living below current NMW to make ends meet?

YABRBU.

I wonder if farming is going to be the best business to get into in the future,since we can't produce enough food.

tbh, we'd best all start keeping chickens and growing our own veg because we're going to struggle to afford food if things carry on like this!

At the risk of banging on about it small businesses struggle to set up and get going. It is expensive to employ people and you don't see the benefit of doing so for quite some time and although you can see that you need to do it in order to grow, it is difficult to manage in the short term. Wages, employers NI contributions, annual leave...

It is hard to get finance for a little business. It is totally unreasonable and unrealistic to expect that a small or new business has got the money to grow without really feeling the pinch. That doesn't mean they shouldn't be in business! They have the potential to offer employment and to benefit the economy. It is just hard to get off the ground.

Surely it makes sense to provide support to those businesses because if they get through that period, they go on to provide employment for more people!

I sort of agree Hecate, I do!
Although I have seen with my own eyes many small business fail because, well, they were actually crap ideas, badly executed, so there is always going to be a sort of weeding out process.

IME a lot of the set up cost was to do with premises, and stock, and in the UK, it's really hard to get those things in place when you have little personal credit, and not much capital, so more flexibility and less red tape about things like that would be good.
On my high st are several empty shops now, but the landlords wont drop the rent because they are waiting for Boots or whatever to come, and would rather the shops stay empty until they can get a corporate tenant.
It's like every business, however small has to fit into this very corporate mold, and there is no room for small independents, which is tough on everyone.

Hecate so right, on chickens, veg & running a business

i run a small IT company, a friend runs her own business...we refer to people who dont run their own small co, as 'civilians' - because they really dont get how hard it is!

northern definitely bad idea businesses should fail because, however sad it is for those involved, they are a complete waste of time.

if NMW stops new jobs being created, while workers on NMW require topup benefits, who benefits from having one?

I really don't think NMW does stop jobs being created though.
That's what I mean, I think it's a red herring. NMW is really really low, but before they brought it in people said "if you bring NMW back in small business will not be able to stay afloat."
Well, that didn't happen, and it wouldn't happen if NMW was £8 ph either. I really believe that.

Well, that didn't happen, and it wouldn't happen if NMW was £8 ph either. I really believe that.

But if NMW went up to £8p/h, what would you then pay someone who's currently on a little over NMW?

Let's say you have 10 people making widgets on £6.09 p/h current NMW. Their supervisor is on £8.09 p/h and the supervisor's manager is on £10.09 p/h.

NMW goes to £8 p/h so widget maker is now on supervisor's rate. Then what?

Then everyone can live off their wages and not be dependent on government handouts while working 40 hours a week.

I can see the issue there, even though I am the biggest mouth on MN WRT raising NMW. No-one is going to want to take on the extra responsibility of being a supervisor if they are not getting any extra money than the person they are supervising. And if they then raise the supervisors wage - the supervisor's manager isn't going to want the extra responsibility of being a manager if they are not getting any more money than the person they are managing.

So if you raise the NMW workers wage to £8 p/h, you would have to raise the supervisors wage to £10 p/h, and the mananger's wage to £12 p/h.

But then, surely, at some point in the 'chain' that would stop being an issue, because even if you raised the manager's wage to £12 p/h, HIS boss might be on a salary equivalent to £17 p/h anyway - and so what if HE is only earning the equivalent of £5 p/h more than his immediate junior - he is still earning MORE so HIS wage wouldn't need to rise. IYSWIM.

And THAT is where the problem is - the manager's boss doesn't WANT to 'only' be earning £5 p/h more than the manager - he wants to earn at least £7 p/h MORE. And that's where the greed and rot sets in...

I don't think it's as simple as greed. I think it's also because people feel like their importance, their value if you like, is not only in how much they earn but in how much they earn compared to others.

So it's not enough to the manager that he is worth £17 per hour, he also has to be worth £7 an hour more. If he is reduced to only being worth £5 an hour more then even though he isn't losing money, he still feels that his relative 'worth', value whatever, is now less. He's less important.

iyswim

People are weird and irrational creatures

The issue is even simpler than that, in reality.

Inflation.

Wages rise so the cost of the widget goes up. Before the ink has had time to dry on the new NMW legislation, the person who benefitted from the increase finds that their extra £2 p/h won't actually buy them any more.