Aibu to not want a £15 minimum wage?

[Israisingwagesworthit]

This morning I saw a post saying there are calls for a £15 per hour minimum wage.

I understand fully that the current minimum wage doesn't give people enough to survive on and something needs to change to ensure everyone gets a comfortable living wage, and I support this.

However by pushing up the minimum wage doesn't that just add additional costs for businesses, therefore increase costs to consumers removing any benefit of an increased minimum wage in addition to reducing the disposable income and pay gap of anyone above minimum wage.

Surely this only benefits the government with additional income tax?

Is this the best option in a time of potential 18% inflation, would this not increase it further?

Capitalism is the issue, rather than sharing the profit wealth, CEO's (of all levels of business, small and large) keep the profits for themselves and just raise prices when costs go up.

Am i being unreasonable to assume that in order for the £15ph wage to be successful, companies must accept lower profits rather than increasing prices in line with the wage increase otherwise its just pointless and daminging to all wage earners not just the minimum wage.

Won't the government have to threaten windfall taxes to those who increase prices to maintain profits to make it work and to actually benefit minimum wage earners?

I'll admit I'm a middle earner (£40k) civil servant (so no chance of a payrise anytime soon) so would be financially damaged by a raise in minimum wage if nothing is done to stop the subsequently price increases of products after a minimum pay rise. As a result my view may be biased, but am I wrong?

How is unpaid overtime (common in lots of jobs) being factored into this? A professional might earn 40k but doing a 50 hour week. Why would I do that when I could earn 30k doing a standard 37.5 hour job where I can just clock out?! The maths doesn't math.

Then you should earn £50k. It's all good.

What people fail to understand is that if wages are so low that they require to up benefits - everyone is taxed at a higher rate than would be be necessary in a fully functioning market economy. We are basically propping up business models that are economically non viable. The money that is going in top up benefits could be spent on the nhs and improving services for all. I don’t want crumbs from the govt table. I want to earn enough to pay bills and support my family on a full time wage. It’s not a ridiculous ask.

I've often thought this. If you average out the hours and the responsibility and stress in some mid-salary jobs, they become way less desirable. If you are on 90k but regularly work a 60 hour week and only manage to get 2 weeks off a year and a few days at Chrostmas, you're only on £30ph. If the same is true on £45k, then the stress isn't worth £15ph.

Employers would have to either have to stop expecting employees to work unpaid overtime, or pay them an increased rate for the extra hours they work.

The little independent shop i work in, would have to close if NMW went up to £15 hour, as would thousands of others.
I really wouldnt want to see that happen (or lose my work)!.. Towns around here would be left with a Spar, and Lloyds the chemist .. oh and the odd estate agent!
Independent shops are vital for so many towns.

It's not about working harder- people in low paid jobs work exceptionally hard.
Yes, and in many ways tougher jobs, a lot would be physically demanding, with loads of pressure and less job stability and zero perks!

I agree.

It's a sad state that the government allows large corporations to pay pittance and rely on the taxpayer to subsidise wages, all whilst paying out huge dividends to shareholders.

What we need are more companies that operate a John Lewis model (or at least how they used to operate), where staff are partners, earn a ratio of the CEO and receive a share of the profits. Although even with their business model, you'd still have to raise the minimum wage.

If having to pay staff a decent wage would mean they have to shut down, then they don't have a viable business. The end of slavery in the US meant a lot of plantations weren't viable and had to shut down. Nobody now would say that was a bad thing.

In any case, millions of people would have a lot more disposable income if NMW went up to £15. Businesses would flourish.

Indeed. My tax dollar is supporting your cutesy independent shop. This is not the purpose of taxation. It should be used to redistribute wealth and provide public services that benefit all like decent housing and universal health care.

How is your tax supporting the 'cutsey' independent shop i work in Allywill?
(interesting description, its never been called that before, but presume away..)

Another factor to consider is that many in employment positions of 'responsibility' actually enjoy and prefer these positions irrespective of pay and would not only be bored shitless 'behind a supermarket till' (the current fiction considering this the 'benchmark' job) but would really miss being in charge/responsible for their, and others', work and the 'kudos' involved. And just be a little cog in a big wheel instead?

Ooo methinks that whilst declarations of "I've trained, studied, worked my way to a position of responsibility/power" has some merit - it's not just for the paypacket that these positions are sought, it's for the 'power' too.

So I suggest the power-seekers get £17.50 an hour whilst the menials get £15.

It’s supporting it by topping up the wages of the people who work there to a level that they can survive on. The owners are therefore able to pay a (very) minimum wage and so create a level of profit that wouldn’t otherwise be there. It has been suggested that if they had to pay an increased minimum wage then they would go to the wall which further suggests that customers do not value their product enough to pay the market level price that it should charge to cover both profit and actual costs. It’s a little like someone running a hobby business from home, but people will only pay enough to cover the basic costs of raw materials. It’s a hobby not a viable business, sorry about the cutesy comment, it was flippant and I can see why it annoyed.

its possibly useful when the business is very new and trying to become established, maybe then you could argue that some level of government support could be helpful to fledgling new businesses but it is not a justifiable long term strategy.

Again, presumptuous, there are 3 of us working there part time (along with the 2 owners) none of us are have our wages 'topped up', us 3 employees work in many other jobs too.
The owners have been in business for over 30 years and live very frugally above the shop, they charge realistic prices for the market believe me. A section of the shop has a very rapid turnover, others slower as they're more specialist/ collectors items.
But what with rising outgoings its a fine balancing act these days.

Incidentally my local MP has just been on telly echoing what ive just said about local businesses in our rural area not being able to afford £15 hour.

Your argument completely ignores the public sector and privately run services which perform essential services on a very thin profit margin. Like nurseries and care homes. Things that are already closing because they aren't viable financially. Yet we still have demand for them. Just not the means to pay higher wages for them.

Thats the problem. You can't just put up wages without making massive adjustments elsewhere too in parallel with that change.

And that does need to be highlighted and talked about rather than just having lazy soundbite ideas for policy that are social media friendly but shit in practice.

If minimum wage is £15 an hour, lots of other jobs that are currently £15 an hour will not be able to recruit staff. So either everyone's wages below about £50k need a decent wage increase, or we accept lots of semi-skilled jobs will become impossible to recruit to.

I DO actually agree with that.

But you can't just switch to an alternative system from the position we are now in with identifying where they'd be a problem because you would need further adjustments too. Particularly around those not in work for whatever reason or working in the public sector / essential services.

You need a two pronged policy to make this even vaguely work.

Whatever the minimum wage is, it should be enough for some to have a decent standard of living.

I earn less than £15 per hour in my degree educated NHS role. Plus I work several unpaid hours each week. If minimum wage rises to the same level I am paid I will quit in an instant and go and do a job where I don’t have peoples lives in my hands and all the stress and responsibility that comes with that.

Incidentally my local MP has just been on telly echoing what ive just said about local businesses in our rural area not being able to afford £15 hour.

so how much is the rent or average house price in your rural area? Can some working on minimum wage at £9.50 x 40 afford to rent a property and put food on the table or will they go hungry & cold?

Our current inflation isn't demand led. Its imported & due to supply restriction.

The theory about rising wages creating more inflation only really applies where inflation is demand led.

Prices will rise anyway. All that raising minimum wage will do is enable people to not starve and stay warm this winter.

You need a two pronged policy to make this even vaguely work.

Agree which is why i keep banging on about you have to completely rethink. UBI is a good place to start - could be handled via the tax and benefits system which would pretty much cover everyone on PAYE. Self employed and other would have to apply.

But the points about businesses not being viable if they can't afford to pay the NMW are valid. And it doesn't matter if staff are having their wages topped up by the government, a munificent benefactor or by doing 3 other p-t jobs. The fact is that if the business requires 2 members of staff plus the owners - let's say 80 extra paid-for hours a week - it doesn't matter if it's 4 people doing 20 hours or any combination: they still can't cover the NMW.

There are very good arguments for government help for small and new companies, and this too should be possible (via the tax system probably since the infrastructure is already there)

As for managers/owners having invested sometimes everything - them's the risks. Because the rewards can also be very good. Are they evenly sharing out those with their workforce? Any employee takes a risk when they hitch their wagon to a company. Way back when i was last applying for jobs i paid more attention than ever to doing due diligence on prospective employers, and i wasn't shy about asking probing questions at the interview stage. I've turned down offers from companies i believe to be on less than solid ground and i do know of one that has unfortunately (pre-covid) gone under.

Unpaid (expected) overtime is a whole other can of worms.

So, say we accept that businesses are just not viable if they can't afford to pay their staff at least £15 per hour. Based on the median salary, this will mean wage increases for more than half of the employees in Britain. Those who are already earning £15+ per hour will presumably expect their wages to go up as well, as they may no longer be willing to carry additional responsibilities if they are only getting minimum wage.

Loads of businesses - especially SMEs which employ a large proportion of the workforce - will be unable to afford that, and so they will fold. Others will pass on the increase in costs to customers in order to survive. The cost of running public services will rise substantially. Most charities will go under.

As vast numbers of businesses close due to no longer being viable, or cut staff in order to reduce their costs, unemployment will rise significantly.

With income tax receipts down as a result of mass unemployment, and corporation tax down as a result of large numbers of so many businesses no longer being viable, how are we going to raise enough money to pay for all of the extra benefits that will be needed to support people who have lost their jobs, and how are we going to cover the vastly increased costs of running public services? I guess we could whack up income tax for the people who are still employed on £15+ per hour, but wouldn't this wipe out the benefit of increasing their pay in the first place?

Instead of forcing employers out of business by making them pay wages that simply aren't affordable, wouldn't it make more sense to increase the income tax threshold so that people earning less than £15 per hour didn't have to pay tax on what they earn? And increase the tax on higher earners in order to balance out the loss to the Treasury?

I'm retired, living on my DC pension. Those profits are my income. Why should my income go down so workers income can up?

(All magical left-wing solutions to economic hardship assume there is some pot of money belong to other people that can be raided with no adverse consequences. Apparently all problems can be solved by finding an ill-defined group of other people who don't matter, and grabbing their money. Although I think economic illiteracy is the prime reason for this type of thinking. The idea that because profits of a given organisation are a large number that means they must be excessive seems to be accepted by everyone, in threads like these. It's utter nonsense. Profits are a return on capital, and when you average them across time, companies and countries, are in the vicinity of 5% a year, but with huge variability, so they are in fact worth less to investors than a fixed 5% interest rate would be.)