To think if your business can’t afford to pay employees a living wage then it isn’t a viable business?

[tequilasunrises]

I see so many posts on here along the lines of ‘my/my DHs business couldn’t afford to pay people anymore’, usually defending NMW being so low.

I think that if your business isn’t making enough to be able to pay its employees a proper living wage (ie they don’t have to claim benefits on top or live in poverty) then it isn’t a viable business?

People having more money to spend can also only be a good thing for the economy and businesses surely?

AIBU?

Why would you pay someone significantly more than the market rate for their job if you didn't have to? Now that would be a highly questionable decision by a business owner. You can pay the higher end of the scale for that role but s lot more than that would be a bad business decision.

I agree to a extent , without staff you have no business . I also agree that it would boost economy. I was discussing with my dh who a wealthy relative eats out several times a week where we eat out once in a blue moon if we had more disposable income course we would spend on things like that . I do think all businesses are different even bigger businesses all outgoings are budgeted to the 1p so it's significant increase .
I do think that if you are contributing to that business by working so should be paid accordingly.

Why would you pay someone significantly more than the market rate for their job if you didn't have to?

Because they are contributing to the profits of the company
Because you value their efforts
Because it's a fair thing to do

It's a huge mistake to pay people as little as you can get away with. Reward people well, look after them, respect them and you'll have a far more successful business where everyone benefits.

In principle I agree.

However, big companies know they can pay NMW and then people have it topped up with benefits, which is really a benefit for the company because they don't have to pay a living wage.

The problem there is that for small businesses to compete and remain viable against large companies, they often genuinely can't afford to pay more because they're having to compete with bigger companies that have economy of scale.

Completely agree - I always laugh when my boss asks if I'm going anywhere nice when I take a weeks holiday... my wages barely cover the basics there's not enough for holidays!

YANBU.

If they pay more and they’re not a viable business and go bankrupt then everyone loses their job.

Is this what you’d prefer?

Paying more wouldn’t always lead to bankruptcy but sometimes it would.

Market rates! That's awful. It's only market rates because bosses keep salaries down and protect their own profits. This is exactly why we need a living wage. It's also why quoting low unemployment is a red herring. Looking at how many people are in jobs they can afford to live off without benefits would be more useful.

Completely agree, OP. This is an argument I had with my Tory-loving relative who owns several businesses. She terrified of a Labour government because then, she won't be able to carry on paying a pittance to her employees.

I think paying less than living wage to those who contribute to your riches is a crime. How the hell people like Zuckerberg and Bezos sleep at night is beyond me.

You definitely have a point about wages for single people.

However when people complain about top ups for working families it depends how many people that living wage is expected to cover. I don’t think there’s ever been a time when a single full time wage for an unskilled labourer has been enough to comfortably support two adults and (say) two children - some form of top up, whether from state, charity or part time work from the second adult has normally been required, and I think that’s the point where employers could reasonably argue that the number of their employees’ dependents are not necessarily their problem.

Would you prefer higher unemployment then?
It’s not just the wage, it’s the employers NI, the pension, the clients wanting to pay rock bottom prices for more & more work. For a small business, I’m talking a few people here, it’s hardly worth taking all the financial risk, it would be easier to go solo. 3 people will lose their jobs though.

I don't think it's that simple.

Smaller businesses don't have the advantages that big companies too. Big companies can afford buy in bulk, so they can take advantage of big trade discounts. So although they make more, they also spend less as a percentage of their profits.

The government also tops up low wages so companies know that even if they pay the absolute minimum, most people will receive benefits of some kind.

Also if everyone was paid the living wage, prices would just go up. So although you'd have more money in your pay packet, you wouldn't necessarily be any better off.

People wouldn't have more disposable income though. To pay higher wages, companies have to put prices up so we end up paying more for the same goods. Your wage goes up but your costs of living go up to achieve the same standard of living.

If only these things were black and white.
Businesses have to grow and people need to eat.
There is a vast difference between large corporations and small businesses but a fairytale proposal without substance behind it will only serve to make things worse.

Well Tesco isn't a viable Business than ,my Dh works for a Subsidiary of them and they pay slightly over the minimum wage .

She terrified of a Labour government because then, she won't be able to carry on paying a pittance to her employees

And yet I expect people like this are the first to call ‘benefits scroungers’. It’s so hypocritical. They are essentially having their own wealth supplemented by the tax payer topping up their employees wage. I do have sympathy for small businesses and startups doing this because money is tight for them but when it’s a profitable large business it’s outrageous to expect the government to pay so your employees can eat and have a roof over their heads.

In an ideal world, yes everyone should be paid a wage for full time hours that meet the cost of living, I'm above NMW but still receive TC as I'm a single parent. If the ex were to pay his share or I had someone of a similar income to share bills with, or if things like gas and electric, travel and food weren't so expensive, I wouldn't need TC.
But, I work for a small business and they are actually nice, honest people, they pay me, and some others more than NMW up to what they can afford, they invest back in the business to improve and attract more business. They wouldn't be able to do that should they pay everyone more, which would see the business run down, drop in footfall and then less money all together. The way things currently are, the people they employ are claiming less in the way of benefits than if the business closed and we were all out of a job. I live in an area where industry was huge, but year on year things have closed, so many jobs lost, no more jobs coming available. The opportunities that exist are mainly tourism related, or care work. They don't pay a lot, but they pay something.
I have also worked for some big companies, that also pay NMW, and shareholders got paid, profit was paramount and workers came last.
I don't know what the answer is, bigger companies with huge profits could absolutely afford to pay a living wage and not shut down, ones like I work for, I honestly don't think they could and that'd be even more people out of work. I know we make money, and I do wonder where it all goes - taxes? Rates? Big bills like gas and electric that are making billions in profit each year already? But on balance I'd rather be in work and earning something, than not in work at all.
I used to think that it'd be simple to just increase NMW to a living wage and that would lift people out of poverty and give more to spend and help the economy, reduce the benefits bill and improve life for so many, unfortunately I don't think it's as simple as that. In my simplistic view, cutting the cost of living, cutting the massive profits made by companies that we rely on for utilities and services and so are a captive audience to, may help but I'm not even sure it's possible.
I think we need to look at where the money is coming from, where it's going, who's spending back into the economy and who's just adding to already large bank balances and address those things.

@x2boys I think Tesco could afford to pay more though, they just choose not to in order to maximise their profits.

But Tesco choosing not to pay more isn't the same as a local independent being unable to pay more.

X2boys - how much do you think it would cost for Tesco to give every employee a pay rise? Are you sure they’d still be profitable after that? Are you sure you’d want your weekly shopping to increase to cover the pay rise?

Tesco’s employ so many people that a 10p pay rise would cost a fortune. I’m not their accountant. I don’t know if they can afford it or not. But I certainly don’t know they can.

I think it depends on the business. If it's a business which generates a lot of profit with fairly small overheads, then yes, they absolutely should pay more. If it's a local business which provides a valuable service, yet after overheads doesn't generate a big profit, then it's better for them to be in business than not at all. Around here though, those jobs tend to offer more flexibility which can save money in other areas, such as wrap around care if you have children; others offer solely working from home, just completing x tasks in y hours a day, which can be ideal for people, and saves money commuting.

Fruit and veg pickers are paid quite poorly... trouble is, folk don’t want to pay £5 for a punnet of strawberries or £3 for a cabbage.

Businesses such as private nurseries struggle with paying higher wages because they aren’t treated like other educational places. For example they still have to pay business rates, VAT etc whereas school don’t. However they are tied to strict staffing ratios and aren’t allowed to top up the poor funding levels given by the council to the real cost of providing places for children.

So some businesses would be viable if they didn’t have their hands tied by regulations and would then be able to pay staff living wages.

Overall I think it’s the cost of living that has gone too high rather than wages necessarily too low. Anyone working full time on min wage should be able to pay the basics without top ups.

Around here though, those jobs tend to offer more flexibility which can save money in other areas, such as wrap around care if you have children; others offer solely working from home, just completing x tasks in y hours a day, which can be ideal for people, and saves money commuting.

That's another good point. I would rather earn less per hour in a local job that saved me money on childcare, and that meant I didn't have an hour commute each way to work. Earning more money per hour isn't necessarily the answer to a better quality of life.

Anyone working full time on min wage should be able to pay the basics without top ups.

For themselves, yes. The problem comes when people have dependents on that wage though. Realistically speaking - how many adults / children is a full time min wage or living wage meant to support?

So many people ( including me ) shop around for stuff these days that in order to get the deal a business has to cut prices . So in effect these cuts are caused by people only wanting to pay the lowest prices . And that's probably because they are being paid a lower wage ! It's all connected.

Businesses with no shop overheads and who pay for a skeleton staff can offer lower prices than a lovely shop with plenty of staff to help.