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?

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

In an ideal world, sure. But when you start bringing reality into it, it just doesn't work that way.

Housing costs differ massively depending on where you live. Around here, you can rent a 3-bed house for less than £400 a month. Where I used to live, that wouldn't even get you a room in a shared house. That's just one example.

Also, how many people do you expect minimum wage to support? One adult? A couple? A family? If it's expected to support a family, how many children does that involve? What if one of them is disabled? What if a couple have multiples?

I get what you're saying - that anyone who works full-time should be able to support themselves on their wage. Which works fine on paper, but not in the real world unfortunately.

My employer moans about having to pay people their contracted hours at all when it's quiet. He says no one has ever shown gratitude (actual words) for being paid the full 40 hours, or ever offered to be paid less when it's quiet (obviously we should still be committed and available to jump when he needs us here or to stay late)

He complained to me when the pension contributions increased as well. It's quite comical sometimes.

We had a manager on around 25k (v. technical role, even basic level roles go for 30k min elsewhere, senior level would be 50k), he wasn't replaced and I've had to take over most of his work for £8.50 an hour because 'someone needs to do it but we can't afford a manager'.

The staff levels have more than halved since I've been here and he still moans. So many times I've wanted to scream 'it's not a viable business if you can't pay 3 staff for 7 people's work!!'

Luckily I'm leaving next week. Everyone who has left in my time has had a bollocking about loyalty and the money he has invested in them though, so I'm not looking forward to that.

It’s a bit of a nonsense statement, really. If the business isn’t viable because the minimum wage is set at a particular level, then it isn’t viable. But since what is considered to be a living wage could easily be more or less, it’s an arbitrary measure of whether the business is worthwhile.

I do support the NMW by the way.

Very simplistic, OP.

Well the business is viable in current market conditions. It wouldn’t be viable if the staffing costs went up. The idea that it will boost the economy is a bit thick though. PPs have said they’d eat out more etc haven’t taken into account the price rises and job losses that are likely to occur from a rise. Many business, like the one you describe are only viable due to the low staffing costs, if staffing costs increased they’d either have to maintain profits by raising prices for consumers or laying people off. Obviously some would just shut down altogether. Saying that a rise in MW will mean people have more money is too simplistic.

Of course, some businesses are actually charities and they pay low to ensure as much money as possible goes on the actual charitable aim. It's not necessarily about viability per se, but if people see too much being spent on wages at a charity, it makes some people less inclined to support them.

Most unions would disagree with you OP. If it's a choice between NMW or the business closing, they will back the NMW.

And some businesses aren't making big profits. Some are just breaking even. Does that mean they should close if they can't afford to pay over and above market rate? Putting people out of work? Employees are free to leave and go elsewhere to find better paid work. They aren't slaves.

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

My grandfather was a miner, and supported a wife and three children. They were in a council house, but no other top-ups. Uncles were electricians, steelworkers and plumbers, and also supported families on a single wage. They bought three bedroom houses in the 70s. They went into those jobs straight from school, with no qualifications (GF left school at 13, uncles at 16 but no O-levels as people didn’t bother back then - DM was seen as getting above herself with two O-levels).

These jobs used to exist, and now they either don’t (mine work), or at far worse rates of pay compared with cost of living.

Oh just remembered, other GF worked in a shoe shop (just a normal assistant, not a manager), and supported a wife and five kids on that salary. Not sure if he owned or rented their house, but he certainly gave himself airs and graces because he didn’t get his hands dirty doing manual labour.

Tesco made 2billion profit last year before tax so after corporation tax that is about 1.4 billion, it employs approximately 300,000 people in UK, supposing half the profits were shared out, the rest going to shareholder building new stores etc,

0.7 billion or 700 million shared between 300,000 is £2333 each or about £1 extra per hour, so sharing out even 10% of profits would give an hourly rise of about 20p
A £500 year rise amounts to 25p per hour before tax if you work 37.5 hours a week, just a little under an extra £10 a week

I know people who work very hard on zero-based, min wage contracts in care homes. They do a really good job and are professionally qualified and make sure their residents and families are well cared for and engaged in life.

No doubt, if there was no min wage, they would be paid less.

It is illegal to be paying less than the min wage.

What bona fide, ethical business operates in a blatantly illegal way? Ummm those that are not insured, dont pay their taxes, not registered, poss breaking other laws such as employing illegal immigrants, underage, improper materials or products, not providing safe working environments and poss more dodgy than this too ... ...

What bona fide, ethical business operates in a blatantly illegal way?

None.

Paying NMW doesn't make a business not ethical.

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

My FIL supported five children and a SAHM on a plasterers wage. My DH was the last born in the eighties but the others were born in the sixties and seventies. Don't get me wrong, they weren't rolling in it, but they had enough to live comfortably and have a couple of UK holidays a year too.

He's in his seventies now so this wasn't that long ago. We're in the NW.

Right now, businesses get a significant government subsidy on one of their main inputs - the cost of labour - through in work benefits.

A better system would be for businesses to pay for the cost of labour for what it actually costs - a wage people can live on - and provide more targeted (and cheaper) subsidies for smaller businesses and particularly micros and startups, while removing the subsidy from medium and large enterprises.

People who moan about benefits while championing a massive subsidy to business in the form of in-work benefits are massive hypocrites.

My uncle was a plumber and did extremely well for himself. A lot of it used to be cash in hand though!

I completely agree OP. Small businesses always bleat on about not being able to afford to pay their staff fair wages, but funnily enough they can still afford nice cars, expensive houses and often private school fees for their kids. Of course you want to earn well from your business, but it should not be at the expense of your employees.

I've yet to meet someone running their own business who was hard up, though in some cases that's probably because their partner is in a salaried job earning a decent salary.

Agree that in some cases regulation is expensive, eg for childcare, but when the Coalition government tried to relax ratios there was an outcry and they had to give up the idea, even though those ratios work fine in other countries.

I agree with previous posters who have asked what a FT minimum wage should cover.

I agree that working FT on minimum wage should cover the cost of living for a person. A single person.

I don't believe that a family should be able to be supported on one wage. It's just completely unrealistic - simple economics says that if costs for businesses rise, prices will rise to cover it and then nobody will end up better off.

I say this as a single parent who struggles at times, and I don't know what the answer is - but I'm not sure this is it

In many companies the owners pay themselves ludicrous salaries - millions of pounds whist their workforce claims tax credits and goes to food banks.

They probably expect their minimum wage workforce to be grateful for working for their amazing company!

It's a balance between staff retention and market rate.

It's a business, the whole point is to stay competitive! So yes, a market rate based salary plus a good package, but you only need to keep it attractive for valuable employees. There's no need to over pay people easily replaceable. Sounds a bit harsh, but you know what I mean.

Some prestigious businesses can offer low salaries because people fight over each other to get that name on their CV.

There's a minimum wage in this country, minimum legal breaks, so as long as you keep things legal, you are not doing anything wrong. We are very far from abusing people or modern slavery.

If people are unhappy, they leave and it end up costing a fortune to employers. Despite what many people like to think, no one wants that and waste time and money in constant recruitment.

In many companies the owners pay themselves ludicrous salaries - millions of pounds whist their workforce claims tax credits and goes to food banks.

you might find that not that many business owners pay themselves "millions of pounds" and why on earth would anyone go through the stress and of building and running their own business if they didn't get something out of it.

Do YOU over-pay your builder, your cleaner, your hairdresser, the small business owner that sells you what you need? Do YOU really, or do you stick to the price...

Didn’t HSBC do this for a long time? Paid their execs millions while the front line staff in branches and call centres (including managers) needed benefits to supplement their incomez

It does cost an employer more than the employee's salary to employ someone. The employer also has to pay NI contributions (depending on the salary) and possibly pension contributions as well. It is extremely unlikely that they have no additional costs other than salary!

The example given above for Tesco - if the employee is in the pension scheme then Tesco would also be paying a higher amount for their contributions, if the company make any additional payments to staff such as enhanced sick pay and enhanced maternity pay - all these are costs to the employer.

www.google.co.uk/amp/s/www.cnbc.com/amp/2018/01/22/heres-how-much-ceo-pay-has-increased-compared-to-yours-over-the-years.html

www.google.co.uk/amp/s/amp.theguardian.com/business/2019/jan/04/uk-ceos-make-more-in-first-three-days-of-2019-than-workers-annual-salary

so a CEO earns more than a cleaner, what else is new