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Will raising the living wage really help anything? watch

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    I don't think so but thought i'd open it up for debate
    my parents as small business earners can't afford to pay their staff the living wage so the only solutions would be to crank up their pricing or go bust, right now they're thinking it's better off to go bust (my dad has a job outside of the business so they'll still have income from that)
    costa coffee have chosen to put their prices up and I am sure many other businesses will too, so really we'll be spending the same % of our wage on our consumables, and will probably see a big decline in small/independent businesses..

    edit: I can't edit the title but I meant to say minimum wage, which is changing to living wage etc etc I think you all got what I meant
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    Before commenting on your point OP I'd like to point out that the 'living wage' is only for over 25s, and that the living wage, as stated by the living wage foundation, currently is £7.85 outside of London now, and £9.15 inside London, not sure if they includes tax credits however.

    By 2020 this will no doubt have increased beyond the universal £9.60, iirc, the Chancellor has said. And also the living wage isn't universal to each area, as seen most clearly in London vs out of London.

    On to the topic of small business. The argument you make happened over a decade ago with the minimum wage introduced, yet I don't see the capitalist society we live in crumbling due to workers being paid a fixed minimum amount.

    If businesses did put up prices that might suggest yet another hike would be needed for the living wage, which would put us forever at odds. It seems a tricky subject, and I've barely scraped the surface but I'm personally in favour of an even higher minimum/living wage myself
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    (Original post by entershikari)
    I don't think so but thought i'd open it up for debate
    my parents as small business earners can't afford to pay their staff the living wage so the only solutions would be to crank up their pricing or go bust, right now they're thinking it's better off to go bust (my dad has a job outside of the business so they'll still have income from that)
    costa coffee have chosen to put their prices up and I am sure many other businesses will too, so really we'll be spending the same % of our wage on our consumables, and will probably see a big decline in small/independent businesses..

    edit: I can't edit the title but I meant to say minimum wage, which is changing to living wage etc etc I think you all got what I meant
    If a business can't afford to pay a wage its workers can comfortably live off it shouldn't be in business.

    The government has been subsidising low wages for a long time out of the public purse.

    The rides to come in the living wage will go some way to rectifying this and if they are given a third term you can expect them to raise it to about 12 pounds or so.

    This kind of figure will compensate for low wage benefits which they are slowly phasing out making work actually pay for the worker and not just half of what it pays topped up with benefits.

    The same idea applies to the universal credit a flexible system which encourages people with few or no hours to work more by taking less benefits from them........ When they finally get the system right hence the slow roll out


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    (Original post by entershikari)
    I don't think so but thought i'd open it up for debate
    my parents as small business earners can't afford to pay their staff the living wage so the only solutions would be to crank up their pricing or go bust, right now they're thinking it's better off to go bust (my dad has a job outside of the business so they'll still have income from that)
    costa coffee have chosen to put their prices up and I am sure many other businesses will too, so really we'll be spending the same % of our wage on our consumables, and will probably see a big decline in small/independent businesses..

    edit: I can't edit the title but I meant to say minimum wage, which is changing to living wage etc etc I think you all got what I meant
    No, basically. This article is worth reading: http://www.adamsmith.org/blog/econom...-our-problems/

    Government mandated wages are just totally pointless and destructive. The groups who are least capable need flexible wage rates because this allows them to competitively sell their labour. For instance, people who have no experience can get jobs nonetheless because they can agree to work for lower pay than other workers. Because the government mandates a minimum (and now 'living') wage though, this is impossible which means that these people are just never hired, because each employer has no incentive to choose them over more experienced workers. This is just one of many examples of the way in which wage laws undermine the condition of the worst off, but it is generally applicable. The same principle applies to those who have no education, and therefore need some way to sell themselves to companies to avoid ending up in a poverty trap - minimum and living wages take that away, so a higher one just exacerbates the problem.

    Obviously, the other side of the problem is that everything becomes more expensive. Ultimately, the newly mandated wages are not good for anybody on either side of the equation.
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    (Original post by tomfailinghelp)
    No, basically. This article is worth reading: http://www.adamsmith.org/blog/econom...-our-problems/

    Government mandated wages are just totally pointless and destructive. The groups who are least capable need flexible wage rates because this allows them to competitively sell their labour. For instance, people who have no experience can get jobs nonetheless because they can agree to work for lower pay than other workers. Because the government mandates a minimum (and now 'living') wage though, this is impossible which means that these people are just never hired, because each employer has no incentive to choose them over more experienced workers. This is just one of many examples of the way in which wage laws undermine the condition of the worst off, but it is generally applicable. The same principle applies to those who have no education, and therefore need some way to sell themselves to companies to avoid ending up in a poverty trap - minimum and living wages take that away, so a higher one just exacerbates the problem.

    Obviously, the other side of the problem is that everything becomes more expensive. Ultimately, the newly mandated wages are not good for anybody on either side of the equation.
    Sorry mate but employers paying wages that eventually the tax payer doesn't have to subsidise people to live on is the way forward along side sensible housing policies of course.


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    (Original post by paul514)
    Sorry mate but employers paying wages that eventually the tax payer doesn't have to subsidise people to live on is the way forward along side sensible housing policies of course.

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    No, it isn't. So long as employers are forced to pay their employees more, the 'tax payer' and people more generally suffer because the provision of goods is less efficient. If you don't want the taxpayer to be subsidising people then the way to achieve that is to remove tax payer-funded subsidies rather than creating a greater number of indirect ones.
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    (Original post by tomfailinghelp)
    No, it isn't. So long as employers are forced to pay their employees more, the 'tax payer' and people more generally suffer because the provision of goods is less efficient. If you don't want the taxpayer to be subsidising people then the way to achieve that is to remove tax payer-funded subsidies rather than creating a greater number of indirect ones.
    Sorry that makes no sense. You can't remove tax payer subsidies without raising wages as people wouldn't be able to pay their bills.

    Raising wages either eats into profits or leads to higher prices for goods either way doesn't matter much


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    (Original post by tomfailinghelp)
    No, basically. This article is worth reading: http://www.adamsmith.org/blog/econom...-our-problems/

    Government mandated wages are just totally pointless and destructive. The groups who are least capable need flexible wage rates because this allows them to competitively sell their labour. For instance, people who have no experience can get jobs nonetheless because they can agree to work for lower pay than other workers. Because the government mandates a minimum (and now 'living' wage though, this is impossible which means that these people are just never hired, because each employer has no incentive to choose them over more experienced workers. This is just one of many examples of the way in which wage laws undermine the condition of the worst off, but it is generally applicable. The same principle applies to those who have no education, and therefore need some way to sell themselves to companies to avoid ending up in a poverty trap - minimum and living wages take that away, so a higher one just exacerbates the problem.

    Obviously, the other side of the problem is that everything becomes more expensive. Ultimately, the newly mandated wages are not good for anybody on either side of the equation.
    spot on, my thoughts exactly +1
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    (Original post by paul514)
    Sorry that makes no sense. You can't remove tax payer subsidies without raising wages as people wouldn't be able to pay their bills.

    Raising wages either eats into profits or leads to higher prices for goods either way doesn't matter much

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    Have you really thought about this? If the government stopped paying subsidies to workers, and their employers did not pay them enough to 'pay their bills', the workers would die and the companies would go under. Therefore, it is in the interest of those companies to raise wages, and they will do.

    Your argument does not make sense.

    (Original post by tinyflame)
    spot on, my thoughts exactly +1
    xx
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    (Original post by tomfailinghelp)
    Have you really thought about this? If the government stopped paying subsidies to workers, and their employers did not pay them enough to 'pay their bills', the workers would die and the companies would go under. Therefore, it is in the interest of those companies to raise wages, and they will do.

    Your argument does not make sense.



    xx
    But the government won't stop subsidies for reasons just like that unless wages go up first.

    Like I said you're point of view makes no sense because it is so unrealistic


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    (Original post by paul514)
    But the government won't stop subsidies for reasons just like that unless wages go up first.

    Like I said you're point of view makes no sense because it is so unrealistic

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    I'm really confused by your response. The government won't stop subsidies because people keep voting for them, so they need to stop voting for them, which is the argument I'm making. Are you saying that I am being unrealistic in expecting people not to vote for them?
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    (Original post by tomfailinghelp)
    I'm really confused by your response. The government won't stop subsidies because people keep voting for them, so they need to stop voting for them, which is the argument I'm making. Are you saying that I am being unrealistic in expecting people not to vote for them?
    The government keep the policy of paying the difference between the minimum wage and enough to live on because the public demands this.

    That will NEVER change.

    Ergo the only way to get rid of subsidies is to raise the minimum wage or lower the cost of living.

    As the only major cost that can be lowered is housing the way to deal with it is to raise the minimum wage and lower subsidies simultaneously


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    The business community should welcome the raise in the min wage. This is because it incentivises businesses to compete on things like efficiency in production. Businesses which cannot do so must go bust to be replaced by new blood which can. Of course most businesses only pretend to care about anything other than favourable metrics in the next accounting period so they will either put up prices and trust to customer loyalty to tide them over or reduce the hours of their workforce.

    This said I would like to see almost every aspect of tax and company law including minimum wages be set up to favour small British domiciled businesses rather than apploed equally to all types of businesses, which allows large multinationals to consolidate their advantage

    Strong free market dogma ITT which is all well and good but ignores the fact that we generally like to keep people alive and under a roof. For Tom's model to work he must factor in the misery of people who are forced by the need to eat to undersell their labour and who thus cannot pay the bills, rent etc. Free market fundies need to get out of the textbooks and into the real world
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    (Original post by scrotgrot)
    The business community should welcome the raise in the min wage. This is because it incentivises businesses to compete on things like efficiency in production. Businesses which cannot do so must go bust to be replaced by new blood which can. Of course most businesses only pretend to care about anything other than favourable metrics in the next accounting period so they will either put up prices and trust to customer loyalty to tide them over or reduce the hours of their workforce.

    This said I would like to see almost every aspect of tax and company law including minimum wages be set up to favour small British domiciled businesses rather than apploed equally to all types of businesses, which allows large multinationals to consolidate their advantage

    Strong free market dogma ITT which is all well and good but ignores the fact that we generally like to keep people alive and under a roof. For Tom's model to work he must factor in the misery of people who are forced by the need to eat to undersell their labour and who thus cannot pay the bills, rent etc. Free market fundies need to get out of the textbooks and into the real world
    YAY someone who gets it


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    (Original post by paul514)
    The government keep the policy of paying the difference between the minimum wage and enough to live on because the public demands this.

    That will NEVER change.

    Ergo the only way to get rid of subsidies is to raise the minimum wage or lower the cost of living.

    As the only major cost that can be lowered is housing the way to deal with it is to raise the minimum wage and lower subsidies simultaneously

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    Why will it never change? The public just needs to realise that if 'the difference' isn't paid off by government the companies involved will necessarily pay it - this should not be especially difficult since it is a common-sensical process. There is nothing inevitable about the public voting for this sort of thing.

    (Original post by scrotgrot)
    The business community should welcome the raise in the min wage. This is because it incentivises businesses to compete on things like efficiency in production. Businesses which cannot do so must go bust to be replaced by new blood which can. Of course most businesses only pretend to care about anything other than favourable metrics in the next accounting period so they will either put up prices and trust to customer loyalty to tide them over or reduce the hours of their workforce.

    This said I would like to see almost every aspect of tax and company law including minimum wages be set up to favour small British domiciled businesses rather than apploed equally to all types of businesses, which allows large multinationals to consolidate their advantage

    Strong free market dogma ITT which is all well and good but ignores the fact that we generally like to keep people alive and under a roof. For Tom's model to work he must factor in the misery of people who are forced by the need to eat to undersell their labour and who thus cannot pay the bills, rent etc. Free market fundies need to get out of the textbooks and into the real world
    Enshrining inefficiency in law will increase efficiency = obviously nonsense.

    How can forcing businesses to be inefficient by overpaying their employees "incentivise them to compete on efficiency of production"? Even if it did, the initially enforced efficiency would counterbalance any increase in efficiency of production.

    Why favour local businesses of 'multinational' ones? Are you forgetting that there are two sides to this equation? Why should the ordinary British consumer pay more for his goods when someone is offering them at an appropriate price? That is unpatriotic and makes no sense in terms of improving well-being overall.

    Your criticism doesn't deal with anything I've actually said. I have already pointed out that businesses in a free market would fail if they did not provide sufficiently to feed and house their employees.
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    (Original post by tomfailinghelp)
    Why will it never change? The public just needs to realise that if 'the difference' isn't paid off by government the companies involved will necessarily pay it - this should not be especially difficult since it is a common-sensical process. There is nothing inevitable about the public voting for this sort of thing.



    Enshrining inefficiency in law will increase efficiency = obviously nonsense.

    How can forcing businesses to be inefficient by overpaying their employees "incentivise them to compete on efficiency of production"? Even if it did, the initially enforced efficiency would counterbalance any increase in efficiency of production.

    Why favour local businesses of 'multinational' ones? Are you forgetting that there are two sides to this equation? Why should the ordinary British consumer pay more for his goods when someone is offering them at an appropriate price? That is unpatriotic and makes no sense in terms of improving well-being overall.

    Your criticism doesn't deal with anything I've actually said. I have already pointed out that businesses in a free market would fail if they did not provide sufficiently to feed and house their employees.
    A market clearing rate for labour would eventually be found, but the free market is quite as indifferent to the death of people as it is to the death of businesses. Given that there is not enough demand for work even at current wages, let alone higher wages which would actually pay enough to live on, the population will have to prune itself to suit the work available - which would reduce demand, and further jobs would be lost, and so it would go on. All civil societies since the dawn of civilisation have required wealth redistibution of some sort and this is why.

    Your position might have some validity if the supply of housing in particular - but in principle all the basics and things needed to do your job - was also both commensurate with the population and one hundred per cent instantaneous to build, in which case provision and value could vary freely with incomes. But it is neither.

    Indeed, hypocritical libertarians love invoking the state to defend the same property rights which incentivise rent-seeking and speculation and in turn political lobbying against building houses, or allowing them to be built.
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    (Original post by entershikari)
    I don't think so but thought i'd open it up for debate
    my parents as small business earners can't afford to pay their staff the living wage so the only solutions would be to crank up their pricing or go bust, right now they're thinking it's better off to go bust (my dad has a job outside of the business so they'll still have income from that)
    costa coffee have chosen to put their prices up and I am sure many other businesses will too, so really we'll be spending the same % of our wage on our consumables, and will probably see a big decline in small/independent businesses..

    edit: I can't edit the title but I meant to say minimum wage, which is changing to living wage etc etc I think you all got what I meant
    Why can't they afford to pay the living wage? Are the workers unproductive?

    They need to find a way to make them more productive - perhaps invest in better equipment or better training so that the workers are able to get more done in the same amount of time.
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    (Original post by scrotgrot)
    A market clearing rate for labour would eventually be found, but the free market is quite as indifferent to the death of people as it is to the death of businesses. Given that there is not enough demand for work even at current wages, let alone higher wages which would actually pay enough to live on, the population will have to prune itself to suit the work available - which would reduce demand, and further jobs would be lost, and so it would go on. All civil societies since the dawn of civilisation have required wealth redistibution of some sort and this is why.

    Your position might have some validity if the supply of housing in particular - but in principle all the basics and things needed to do your job - was also both commensurate with the population and one hundred per cent instantaneous to build, in which case provision and value could vary freely with incomes. But it is neither.

    Indeed, hypocritical libertarians love invoking the state to defend the same property rights which incentivise rent-seeking and speculation and in turn political lobbying against building houses, or allowing them to be built.
    The free market itself may be indifferent to the deaths of people, and cannot necessarily provide the initial conditions for entry into the workforce - but why imply that the market is all that there is? This is just manifestly false. There was a period of relatively greater economic liberalism in the United Kingdom and, unsurprisingly, individual charity, the church, and the local community (voluntarily) provided for those people who could not care for themselves. Equally, the family is a very successful institution in terms of preparing individuals for entry into work. There is a clear and prominent precedent for all of these things being managed by the free market in our own country. It is ridiculous to imply as you do that something similar could not provide for the future.

    Since Libertarians reject the intervention of the government in the housing market or excessive regulation of housing, clearly there is no hypocrisy in the position. Perhaps there is a stronger case for contradiction, but even that makes little sense since it is only in the context of a bloated state that such political lobbying is effective.
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    (Original post by tomfailinghelp)
    No, it isn't. So long as employers are forced to pay their employees more, the 'tax payer' and people more generally suffer because the provision of goods is less efficient. If you don't want the taxpayer to be subsidising people then the way to achieve that is to remove tax payer-funded subsidies rather than creating a greater number of indirect ones.
    A minimum wage incentivises a shift along the production curve to a higher capitalisation level and greater labour productivity, leading to increased efficiency and an expanded economy as real terms wealth is transferred to those with the greater marginal propensity to consume. This is basic economics, how can you not see that?
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    (Original post by cole-slaw)
    A minimum wage incentivises a shift along the production curve to a higher capitalisation level and greater labour productivity, leading to increased efficiency and an expanded economy as real terms wealth is transferred to those with the greater marginal propensity to consume. This is basic economics, how can you not see that?
    I cannot see that because encouraging consumption is a waste of resources when readily-existing demand exists to be satisfied. How can you not see that creating demand for the sake of satisfying it is a pointless and destructive exercise?
 
 
 
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