Benefits are actually subsidies for big business

[Thatsalineallright]

I don't know, I'm not an economist, but I can't help feeling that all the various benefits and top-ups given to people in work are actually just subsidising greedy corporations.

For example an amazon delivery driver working full time. Can't afford to pay for the ordinary costs of living on their low salary. The gov gives various help with energy costs, housing, children etc. So instead of Amazon having to pay their workers a living wage, ordinary tax payers have to fill in the gap.

The delivery driver maybe feels a bit shit about needing the extra help instead of fully supporting themselves, tax payers are angry and complain about so-called benefit scroungers, the government have less money to spend on other areas. And then Jeff Bezos or whoever is happily pocketing billions in profits.

AIBU? What got me thinking was the announcement about energy subsidies for lower income households. I'm of course happy that people won't be freezing this winter, but the system just seems so broken.

Thought experiment here: imagine benefits for anyone in work were stopped but benefits for the unemployed were kept or even increased. Loads of people really would be better off not working and so would simply decide not to work. Would companies have to raise wages in order to attract enough employees?

I quite like the idea of a citizens wage, but haven’t really looked into it in depth tbh.

I lived in a world with no in work benefits. It wasn’t so long ago. There was several industries. Silk mills, coal yards. Large manufacturing industries, exporting all over the world.
Workers on the shop floor didn’t earn much. Just about scraped through. They formed a union and went on strike. Got pay rises. Repeat the process. The wages were unsustainable and the businesses went under. I can’t help thinking that the government subsidising their wage would have been a better solution.

OP yanbu it's been the case since Blair and his tax credits

Much like housing benefit is a payment to landlords.

Normal jobs don't pay enough for a decent standard of living.

I lurk on a landlord forum (Landlordzone) and there was an article stating that many renters are paying more than 40% of their income in rent. This was viewed as a particular problem for older renters who may not have the same opportunity as younger working people to improve their income due to age and infirmity. The argument being that they might struggle to cover essentials such as food and utilities with their remaining disposable income.

One landlord commented that anyone who "did not buy a house back in the 1980s when they were cheap" was feckless.

Another said "I have no interest in the personal circumstances of my tenants."

The general opinion was that it was perfectly acceptable to set rents at "market value" and simply good business.

Our taxes are going to fund housing benefit to this bunch of greedy wankers who have the arrogance to call themselves "Lords" rather than housing providers..

It’s a difficult one. I think that Gordon Brown introduced a lot of the tax credit system in good faith, but there have been some unforeseen consequences around 15 hours etc and the availability of tax credits and zero hours has been detrimental. It also, and this is said without judgement, subsidises families to make choices on food deliveries that are bad for health and the environment, so it acts as a nudge in the wrong direction - those workers should be paid more AND spending less of it on artificially cheap but socially costly convenience, but I think that the convenience becomes more attractive due to the depressing nature of struggling to earn enough.

It’s a mixed picture as on one hand it’s costly but we need jobs so just dropping it could say vast lay offs which wouldn’t help.

The op uses Amazon as an example but the UK economy is more SME driven.

YABU. I once did an in depth study of Tesco's accounts. The "profit" per customer and profit per employee were ridiculously low. The margins are wafer thin when you take into account the capital costs, borrowing costs, etc. I calculated that if you didn't pay any dividends at all (lots of which are to various employee pension schemes so would hit millions of people), and the directors were paid much lower wages/bonuses, etc., the amount "saved" would literally only be a few pounds per week to every worker or every customer, so in that scenario, neither the staff (if distributed with wages) or customers (if distributed with lower prices) would be negligible. It's a numbers game - a "Big" amount spread over a huge number of people results in a small amount.

Also, lots of public sector workers claim universal credit - if wages were increased across the public sector, then taxes would have to rise meaning people would be no better off!

Take a big company’s profits, the government then bills the company for any benefits paid to its workers, and only then can any remaining money be given to shareholders. Where is the downside in this?

@Thatsalineallright I am the first to call people benefit scroungers, however, I would never call someone working full-time and receiving top-ups this.

There’s a massive difference between someone working hard and needing a helping hand vs those that choose benefits as a lifestyle.

However, you do have a valid point regarding corporations not providing their workers a living wage and leaving the tax-payer to top-up.

This said, if corporations were made to provide workers a decent wage, they would employ less people and therefore more people would be solely claiming benefits. I basically see the top-ups as just their tax being returned to them. So possibly tax-free work.

I read Moneyland this summer—it’s all about how the super rich move their money to whichever country has the most lax tax laws. So not only are the small wedge at the top earning all of the money through salary, bonuses, and dividends; leaving the “taxpayer” to top up the poverty wages the regular employees earn—THEY AREN’T EVEN PAYING INTO THE TAX SYSTEM THAT SUBSIDIES THEIR OWN EMPLOYEES.

Yep, Walmart in the US is a big recipient in a similar system. And then where do people take their money? Of course Walmart!

Absolutely.

Care workers for example are paid a pittance for a difficult, important job while families and local authorities are charged a fortune by care home owners.

Same with supermarkets and the majority of the retail, hospitality and leisure industries.

I have sympathy for small businesses but there is no justification for big businesses to pay their staff a pittance and expect the tax payer to pick up the tab.

Same with housing benefit aspect of Universal credit going into the pockets of greedy landlords who charge extortionate rents.

Funny how only the individuals who claim benefits to make ends meet are criticised but not the whole, rotten system and how the rich also profit from it.

The only downside I can see to this is the fact that as a country, most of our company pensions are invested in the stock market, and a hit to returns/dividends will affect our pension growth—we’re all counting on this to grow our tiny pensions. The average UK pension pot is £32,700 (according to ONS—Pension Bee says it’s £21,875), and slowing down its growth wouldn’t be great.

They love it. Employers. The taxpayer is paying what they might have to if the taxpayer didn’t.

Employers compete with one another. For staff. Especially the good ones. If employer A offers more, good staff go to them. If employer B does not, nobody wants to work for them.

Now all that happens is everyone is paid the same. A few are on the living wage for a modest job. But generally, everyone paid the same. No movement. No incentive to go to an employer who will pay more.

Local authorities should be able to qualify the fees charged at a care home.
Mind you, on how many councils do councillors own the care homes.

Rather too many I suspect.

The real problem is the lack of affordable housing. A low wage doesn't guarantee you will receive benefits. It is high rents that mean working people get help. One of the biggest mistakes ever made was the selling off of council houses.

I hate the single mum benefit bashing. The pointing out women working 15 hours a week at Asda are ruining the country. I know so many women who’ve needed benefits to escape DV etc, that didn’t expect that their husbands would start beating them once a baby arrived or would leave them for another woman.
Working class women would be dying at an alarming rate without benefits. We do the shitty jobs nobody else wants for crappy pay. We are the carers who can end up with catastrophic back injuries after working 15 hour shifts. Women spoken to like shit because someone wants to return half eaten boxes of chocolates to the Tesco customer service desk. Women threatened at receptions by angry men who believe that waiting in a queue is beneath them.
Take away the money that actually helps them, because wages only cover so much, and those women and their children are fucked.

I don't really understand why people have only just realised this. I thought this 20 odd years ago when (I think it was Gordon Brown) announced the introduction of in-work benefits. It was obvious that employers would just pay enough for the taxpayer to top up. The same for the minimum wage (now become a floor amount that can never go up because of infinity immigration meaning workers have no bargaining power).

Yes.
Been saying this for years
Taxpayer is subsidising businesses wages.
Why would they pay more when we pick up the slack?

It's a bit worst of world's isn't it? You don't have the dignity of earning your own way but you do have the inconvenience of having to give up your time for someone else.

I sort of agree. The issue is that a bunch of businesses would become unviable. Some people will say well, your business model doesn't work, tough. You see this happening all the time with certain shops disappearing from the high street. If a coffee shop can make more money the other places get pushed out. And we end up- with gambling/vapes/coffee.

But I want certain businesses to exist. I definitely want a local supermarket, and as others have said, margins are thin. So it's a case of we all pay more for our shopping so that shop workers' wages can go up. And if Sainsbury's only do it then they are at a disadvantage, hence we then have minimum wage legislation to force everyone to do it.

What's actually happened recently is the minimum wage has risen a lot compared to other wages. Which has sort of compressed the lower end of the wage scale. And led to some people on jobs of say £30k with more responsibility wondering if it's worth the extra hassle.

Which is an unintended consequence of something that sounds good in practice. And had to happen because the cost of living went up so much. Richer people can cope, people on minimum wage it's harder.

So we are sort of in an awkward place where the minimum wage is simultaneously probably a bit too high relative to the rest of the market, but not enough to live on because of our huge house problem.

It's also tied to the fact that productivity per worker has not really grown in the UK, which is a genuine economic problem. For wages to go up in real terms (meaning I can actually afford more/better stuff) productivity has to grow.

Force the fathers to pay... that's the issue.
They just fuck off and leave the mothers holding the baby- literally.

This. It’s not the Single Mums who are ruining the country, which is the current narrative. It’s the Single Dads, who disproportionately raise/pay for the children they’ve created.

The roots of the problem go back to the industrial revolution, really. The destruction of cottage industries and subsistence ways of living, enclosures and forcing people into the cities to work in factories.
Now the population is dependent on either a private employer or the state. Endless arguments about squalor versus dependency and who foots the bill have raged since.