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

[windowwashingbanshee]

Without wanting to refer to another thread too much (...), I did 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.

[SolidGoldBrass]

Basically, the answer to the problem of poverty is getting more money to the poor. When they have more money, they spend more money, thus improving trade and encouraging more people to set up more little businesses. One of the obvious faults with this scheme to award the poor food vouchers they can only spend in Asda, for instance, is that it's better all round for people to buy their fruit and veg at the local market: cheaper, fresher, supporting a local trader etc.
There is a big, obvious problem in that a percentage of rich people have become rich and are getting richer by making other people poorer. The subcontracting out of public services to agencies mean the state is paying agency fees as well as wages: the agency pays itself a big chunk and underpays the worker...

[WafflyVersatile]

Employers should have to pay a living wage, of course you fucking should, but this is not an answer on its own. Lots of things need to be different. the whole system is fucked.

[GrendelsMum]

AbbsCrossWoman - no idea if this would work, but DH and I were toying with the idea of upping the NMW and cutting taxes on business at the same time, so that from the business perspective things evened out, but that employees got all their income from their wages, rather than from benefits. But, as I said, we don't employ anyone on NMW and can't see that changing in the future, so it's not necessarily our area of expertise.

[abbscrosswoman]

What do we think a living wage should be ? Presumably this would also equate to the NMW ? If adopted at this level, what benefits would/should end ?

How much in benefits should be paid to people who don't/ can't work and earn a living wage?

If this were to increase the Social Security bill, what government spending would you cut or what taxes would you increase/ create ?

[LahleeMooloo]

Something in this country is broke. There aren't enough jobs. A full time isn't a guarantee that you'll be able to afford to clothe, feed and house your children. I am not clever enough to know what the answer is, but I do know that something is terribly wrong with the whole shebang.

[DialsMavis]

Some of us work for NMW and don't get TCs etc! I work my arse off NMW 2 eves a week and one day (basically whenever DP can take time off, he works 6 days a week do that we can pay the rent) DPs basic earnings are just above the threshold for TCs etc, but our rent is £1500 PCM on our cold, dated house. I worked very fucking hard at university and graduated last year with a pretty good degree. However I can't get a job that would even break even on childcare and even ones that would leave us out of pocket (something we can't do, not really surviving as it is) have around 200 applicants. Its shit!

[GrendelsMum]

SGB - that's true to some extent, and it's the objection my DH made when discussing it, but I think it's important not to assume that independent businesses can only be the preserve of the wealthy, as that then becomes a self-fulfilling prophecy. At the most trivial level, for example, quite a lot of cleaners get their employers to provide the mops, dusters and detergent, which gets round those start up costs, so you're then down to the cost of the newsagents' window.

For example, I heard about a terrific niche business the other day, where a man had used a skill he'd learnt as a total by-product of training to work at a company, to set up on his own after he'd been made redundant. Apparently his wife had spotted how people could make use of this skill, created a website using a free service, and they were pretty much up and running.

I'm not saying that everyone can do this, but I genuinely don't think that we should tell ourselves that only the rich can work for themselves, and everyone else has to tug their forelocks to them.

[SolidGoldBrass]

Grendelsmum: But it's not that easy to set up a small business on your own, even if you have a useful skill - if you have no spare money at all. Most businesses require some money to being with, for supplies/stock/transport/advertising. Even if you set yourself up as a cleaner-for-hire with a card in the local newsagents' window, you need to buy mops and dusters and bottles of detergent, you need to pay the newsagent for putting up your card, and you need to be sure that 20 of your neighbours haven't had the same idea. If you have a knack for creating a delicious foodstuff, you need to have your kitchen properly kitted out and pass an inspection if you are going to sell the foodstuff to other people. Quite a lot of goods and services that an individual could produce or offer from home are things that most people don't really need but might want - however, particularly at the moment, if most people can get the same thing from Asda at half the price, they will not pay the extra for the 'support local traders' brownie points.

[GrendelsMum]

DH and I were chatting about this over the weekend, and I thought I'd share our experience regarding some of the other suggestions on this thread.

Some people have suggested that more small / medium businesses should include profit sharing among all employees. In our experience, that actually doesn't work terribly well. Because no-one knows how much they're going to get, people can't budget for it, or rely on it, and so it's not that useful. We found that the majority of people would rather have a slightly higher reliable salary, than the potential for a larger bonus at the end of the year. The other problem is that people don't necessarily feel its fair - they see their colleague get the same bonus, even if they feel the colleague didnt put so much work in.

We then gave people the opportunity to have some of their wages made up out of commission from sales that they made. Again, people felt it wasn't reliable as a source of income and so it wasn't very popular.

Because of this, we've now moved to performance-related bonuses which is an attempt to recognise people's hard work. We'll see how this goes, i think, but so far it's nice to say "X, you've taken on extra work with Y gone, and so here's a bonus for those months." Again, it isn't reliable as an income source, but at least people seem to feel they've been recognised.

(I should say that we don't pay anyone we employ directly less than a living wage.)

[GrendelsMum]

I think a lot of people are effectively running their own businesses without realising it - whether that's a one woman ironing business, or two friends together doing cleaning. They do it without worrying about start-up costs or formal business plans, and they're often exactly the people whose other options are NMW.

I think we need to recognise that entrepreneurial spirit and talent in those around us, and encourage others to take the same step.

If not, I think the issue is that you replace a mindset of 'be grateful for what the boss gives you' with a mindset of 'be grateful for what the government tells the boss to give you'.

[ConferencePear]

I'm with CloudsAndTrees on this.
I've really tried but I can't think that it's right that someone should work hard all week and not earn enough money to live on.

[TeWiSavesTheDay]

I completely agree with you darkesteyes - Part of the benefit of raising nmw (as I see it) is that it will help those on low incomes who don't have any dependents and so get very little/no help from the government via benefits currently.

[CloudsAndTrees]

Childless people wouldn't have to struggle on NMW if it was higher. There would be no need for child tax credits or working tax credits, and no one one be penalised either way, unlike the way things are at the moment.

If NMW paid enough for a person to live a reasonable life on, then anyone having children would have to stretch the budget they already had without getting more money because they chose to have children.

[Darkesteyes]

It also causes division in the workplace. If a childless person is working with a parent with your attitude whois they might not be very forthcoming to cover for you at work when its time for sportsdays/dentist appointments.

[Darkesteyes]

I still dont see why a childless person should be expected to struggle on minimum wage just because they dont have children.
Either because they have decided they cant afford it or they are suffering the pain of infertility.

its almost saying that people with children will get more help for that choice (and i DO support this. Check my posting history) but people without kids can be penalized for their choice.
Single people households are not just those under 35. Many older people are finding themselves single at an older age with rent/mortgages and council tax just like everybody else.
But fuck you for being on your own. You can just struggle.

[freerangelady]

Sorry food not fuel.

[freerangelady]

Exactly feminine - risky. Another major factor in why bosses should be paid more. Paying bosses 10x the workers salary is in my opinion an awful idea. My workers don't have to go into work and cover on Easter Sunday because someone else has gone sick. In fact, they can go sick - bar life threatening illnesses if you run your own business you don't have that option. I think profit sharing is a much more viable alternative.

On the nmw bit - we run a small business that employs a few part time workers on just above nmw doing unskilled work producing a food stuff you all consume in one way or another every day. Would you be prepared to pay more for it in the supermarket? If so fair play but I see a lo of threads on here worried about the rising cost of fuel. We also chose to employ local people on school hours because we thought it would help locals and fit in well with our business.

[Mumsyblouse]

One of the real problems though with the current system of tax credits is that it is leading families into underemployment. Many families do not work the maximum they could, with both on the NMW at all. There have been two illuminating threads yesterday, in which the OP revealed that in a household of two adults, they only work 20 hours a week, another thread reveals people living apart though a family so as not to lose tax credits.

So many people are not getting the NMW anyway as they are deliberately working less so as to get their benefits. Surely part of the responsibility is on them to work longer hours as a household (like most people do when they don't have enough money). How much would the NMW have to go up if people are only working 20 hours, or living apart to look poorer?

[TeWiSavesTheDay]

Grendel - because you cannot save a start-up fund on nmw, and banks are extremely reluctant to lend to new businesses. Thus us an ongoing problem that the government is not doing enough (or much at all really) about.

[Feminine]

I don't think everyone is capable of that though grendels :)

My DH is a fantastic employee , but would struggle with being a boss/setting something up.

Not everyone is cut out to manage.

Being a boss is like a talent (almost) we are not all born with that skill.

We have both been self -employed in the past, however, it just became too risky when we had a family.

[GrendelsMum]

I think that we're looking at it in the wrong way - we keep talking about how the people currently on NMW hould be paid more, and the business owner should be paid less.

Why don't we look at getting those people who currently are on NMW to set up their own businesses, just as the OP did?

We've all agreed that the people on NMW are competent, intelligent, hard-working people, with the skills to contribute to a business - why shouldn't that business be their own?

Why shouldn't they earn their own salary of £20k or 40k or 60k from their own independent business, rather than working for someone else?

[Feminine]

Despite the more intelligent responses (than mine) I still have to say that

there is something very wrong with a min wage that is not enough to live on without governmental help.

I think many posters would be surprised to learn of the jobs that pay MW. The workers actually have to be skilled.

its not just packing boxes , or stacking shelves.

[Bonsoir]

The issue isn't about who works harder but about who adds more value.

[SolidGoldBrass]

Whois: do you really think the head of a company works two hundred times harder than an unskilled employee? The difference between earning £15000 a year and £150000 a year seems to me to be a reasonable one.

[Bonsoir]

There is very poor understanding of the profitability of businesses.

If you run a business with many hundreds of employees and, as CEO, you take home £300,000 a year while most of your staff are on NMW for semi-skilled work and your business just turns a profit, there is nothing unfair about that. You are providing secure employment for many hundreds of people and even if you gave them half your own income it would barely make a difference to their lifestyles.