Should minimum wage be linked to company size and/or income

[Iyiyiiii]

If you work for Sainsco (just an example) full time (35 to 40 hours a week) at minimum wage

37.5 hours at minimum wage (£10.42) is £ 20,319
Total benefits: £ 68.96 per week
Universal Credit

Dob 1981
Location south east
Rent to private landlord £800 a month

Why on earth don’t the government make large companies pay more wages.

I think that it should be a company size issue, like the Sunday trading laws. You can't fudge how many people you employ like you can hide/write off profit money

Example, if you employ more than 150 people, your minimum wage goes up to £13.30 an hour

To take home £1,903.25 (min wage + UC) per month, you will need a salary of £27,671.28. (Hourly rate around 13.30)

**figures are not exact

AIBU no this would never work and would stunt company growth

YANBU not a bad idea....

Well said, nail on the head there. That's exactly what opponents said when the MNW was first introduced, they were shouted down. But it's exactly what has happened in so many industries/trades/professions. The differential between simple/stress free minimum wage jobs and jobs that require skills/education/experience/stress, etc., just isn't enough, and as you say, hence why nurses, teachers, lorry drivers, etc are now leaving and doing "simpler" work. The covid lockdowns increased the trend as lots of people had no choice but to look for work in, say, supermarkets, when their businesses folded or their employers couldn't operate, and they've simply not gone back!

Sainsbury's has large profits because it's a large company. Its profit margin (profit as a % of sales) isn't particularly high...

Larger companies also offer better opportunities for promotion or relocation compared to most small businesses

So how do we wean big business off of taxpayer subsidies? Not a policy person but would love to see this happen.

National Minimum Wage should be a universal floor to wages, regardless of the size of company.

It would be more interesting to explicitly link income tax thresholds to the NMW. You might get a few more of the better off taking an interest in the lowest paid if their own take-home was directly linked to NMW.

Sorry, OP, but I think that's a stupid suggestion. Why penalise the lower paid employees of smaller organisations? And why make smaller businesses deeply unattractive to work for?

Much better to tax the big corporations more heavily so that they pay for the subsidies that way. Or raise the minimum wage for everyone and then provide more financial support/tax relief to smaller organisations so that they can afford the difference.

The OP needs to stop thinking about size and start thinking about turnover/profit per store or per employee, and then they'll see that it's not much different to much smaller/private businesses. Divide the turnover/profit by number of stores or number of staff or number of customers, and you usually come down to a more realistic number!

this does not work, clearly as we have MASSIVE companies avoiding tax, and its disgusting

But Sainsbury's £300m profit is approx £250k per store or £1700 per employee per year. So, if they increased their pay by £1 per hour, it would wipe out their profits! Don't be fooled by figures that seem big to you. You need to divide them down into per store, per employee, per customer and you start to see the reality of tight margins etc.

People shouldnt be subsidised by the taxpayer and work full time, thats just wrong.
That plan would seem to be very effective at shafting the economy and small businesses though, they would struggle to get employees and the ones they could get would be the leftovers that couldnt get a better paying job at a larger company.

Small companies and individuals also avoid tax on a proportional scale.

I would link the pay to the most senior managements pay.

So nobody in the company can earn more than 10x (in total inclusive of bonus, pensions, benefits etc) the lowest paid worker (full time equivalent)

That way if the senior executive wants to earn the mega bucks they have to be paying their lowest paid workers much better!

What about if we taxed compaines based on staff numbers as well as profit?

The issue is that someone working full time needs to get benefits to survive. The current system does not work.

Then companies would squeeze more work out of staff than they currently do. It's open to exploitation.

And speaking as an accountant, it's not as easy just to overhaul an entire system to "tax companies based on staff numbers."

Because inflation goes up, prices go up and people need more money. Most businesses can’t (or won’t) give a pay rise proportional to inflation but people still have more money after that pay rise so they start spending a bit more. If the supply of things stays the same bit demand goes up (because people have had a pay rise) then prices and inflation will go up. It’s not good but it’s essentially what happens.

That's what I'd need to earn to get off benefits completely. I could earn £40k and still claim a small amount of benefits according to the UC calculator.

I based the calculations on my own circumstances - a single parent of one child earning £24k wage. Say they were paying £1700pm for a 2 bedroom place in London. They would be entitled to around £2000pm in benefits, plus their take home pay of £1600pm after pension and tax deductions, so they'd need to be bringing home £3600pm to match that and get no benefits at all. Obviously that figure does not apply to everyone, it all depends on circumstances so it might not be relevant to you.

It's not £80k, I just guessed that figure off the top of my head. After doing the calculation it's more like £65k but someone with full time childcare costs would be claiming a lot more.

“minimum wage linked to company size”
“What about if we taxed compaines based on staff numbers”

This policy would encourage companies to reduce recruitment (replace by AI, outsourcing etc.) and demotivate growth. Eventually hurt the people/economy harder

Totally agree, OP. It has always annoyed me that the taxpayer is in effect subsidising large profitable companies.

No, because it’s just passed on to the customer, who then pay more for their shopping. You can’t force them to take it out their profits. As for competition reasons it needs to be a competitive landscape. If all the major supermarkets charged more then so would the small shops, many of who do already. So the consumer pays

If a company can't afford to pay wages that an employee can live on without needing benefits, they are already not a viable business. If the government didn't subsidise them, they would have to pay, go under, and employees either go elsewhere or starve.

Agree, but with rent costs so high the cut off for benefits is very high in some places, so you'd have to pay someone a high salary in some cases to not need benefits. Rent costs are part of the problem and need addressing too.

It companies that are profitable enough to pay that need a law change so they are forced to. Otherwise it’s us the taxpayer that tops up via tax credits, or if the business isn’t viable, stops the employees from starving by footing the bill for unemployment benefit.

The rent and childcare elements of UC need to be treated separately to the employment subsidy.

I understand what you and the PP have written, which is essentially the same thing. Neither of you have been able to explain why wage growth his vastly outstripped by inflation. The answer, of course, is that wage growth has not caused our sky high inflation rate, which is the result of poor economic policy.

They used to be until UC was introduced. I used to claim my housing benefit via the council. Then some bright spark decided to shove them all together.