The Student Room Group

Anyone else concerned about the living wage?

This does not seem to be getting much scrutiny and yet it is a huge risk.

From the data I've seen most of those earning minimum wage tend to be partners in second jobs/students/part time retirees.

The people who actually need it tend to be earning slightly above the min wage and will lose out of because of tax credit cuts.

A few years a go I was on min wage in a restaurant. Where would I have been if they HAD to pay me a living wage? At home sitting on my arse because what I was doing was not worth £9 an hour.

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Reply 1
Avatar for TheNote
TheNote
3
The living wage will hardly increase the minimum wage at all from what i've heard, and even if it did it isn't really combatting the biggist issue which is buying power.
The trouble with the minimum wage and living wage is that it depends how many hours you work. So basing everything off the 40 hour work week doesn't make sense when some people could want to work 60 hours a week for 50p an hour less than the minimum wage, or someone else could have only worked 20 hours a week. They could be getting paid more than the minimum wage, but because other employee's are also getting the same wage they can't get paid more. The minimum wage or living wage only solves a problem if the government nationalises and mandates employment. However the minimum wage kills any lower level employment competition in the economy and basically coincides with the up tick in youth and older unemployment since its introduction. So in the end it doesn't help lower earners at all.
(edited 8 years ago)
Original post by skeptical_john
This does not seem to be getting much scrutiny and yet it is a huge risk.

From the data I've seen most of those earning minimum wage tend to be partners in second jobs/students/part time retirees.

The people who actually need it tend to be earning slightly above the min wage and will lose out of because of tax credit cuts.

A few years a go I was on min wage in a restaurant. Where would I have been if they HAD to pay me a living wage? At home sitting on my arse because what I was doing was not worth £9 an hour.


I'm concerned about the cost of living as well for good housing they need to build millions of homes, control migration and bring wages to about 12 quid an hour if they want to sort this issue


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Original post by paul514
I'm concerned about the cost of living as well for good housing they need to build millions of homes, control migration and bring wages to about 12 quid an hour if they want to sort this issue


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Yes I agree. They could do so much more to help those on low income by improving the housing supply instead of constant stoking of demand.
Reply 5
Avatar for L i b
L i b
19
Original post by skeptical_john
A few years a go I was on min wage in a restaurant. Where would I have been if they HAD to pay me a living wage? At home sitting on my arse because what I was doing was not worth £9 an hour.


The Treasury admits this will cost 60,000 jobs. However since we have two million extra since 2010, and are on course to have many more, it's rather seen as pissing in the ocean.
Reply 6
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L i b
19
Original post by TheNote
The living wage will hardly increase the minimum wage at all from what i've heard


I'm not even sure what that's supposed to mean. It's an enormous increase to over £9 an hour by 2020.
Reply 7
Avatar for L i b
L i b
19
Original post by william walker
However the minimum wage kills any lower level employment competition in the economy


Which would be great if there was that lower-level competition, but there isn't. People on low incomes need to survive, and there is a minimum level at which they can do that. Having a low minimum wage simply passes the cost onto the state, who then have to compensate for these poverty wages by paying out billions on in-work benefits.
Reply 8
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TheNote
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Original post by L i b
I'm not even sure what that's supposed to mean. It's an enormous increase to over £9 an hour by 2020.


what would the minimum wage be by 2020 anyway?
Original post by TheNote
what would the minimum wage be by 2020 anyway?


Depends who you want to listen to but 7.50-8.50 would have been the likely sort of rise.

For me there is a balancing act to be made to raise the minimum wage as fast as possible over the next decade without losing TOO MANY jobs.

The eventual aim should be the end of the tax payer supplementing low wages.

However and this is a key point.

The higher the cost of labour the faster automation will come and more importantly the less attractive we are for foreign investment.

We need to crack down on the costs of living so leaving the EU will help by lowering the cost of the average families food bill by 1000 pounds a year.

Saves on the eu payments and brings competition for workers as we don't have a never ending stream of migrants for low paid jobs. Fine, whatever.

The most important thing is housing.

Who honestly believes we have enough council homes? Not many when you see the waiting lists!

Who honestly thinks a home costs anywhere near what it does to buy in building costs ? Some but not many.

We need to go out and build millions of GOOD homes. There no need to build loads of flats and tiny new houses. We should be building homes for the middle classes to satisfy demand and it will all trickle down to stop prices rising further.

The aim isn't to reduce house prices but to keep them at the same level for a long time so we can make them cheaper as wages inflate.

There are really simple common sense solutions to the housing and low pay issues we have today in the uk that will take a decade or more to be fixed but if we take that approach it is a long term fix rather than a sticking plaster which is what tax credits and first time buyer mortgage guarantees are.


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Original post by L i b
I'm not even sure what that's supposed to mean. It's an enormous increase to over £9 an hour by 2020.


Maybe from 2020 to 2025 they can increase it from £9 to £12. If the Tories do that they might win back some votes.
Yes. Wages rising lead to inflation, which leads to more wage increases, leading to more inflation.
Original post by JessThomas6
Yes. Wages rising lead to inflation, which leads to more wage increases, leading to more inflation.


Inflation in the economy doesn't solely come from wages.....




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Original post by paul514
Inflation in the economy doesn't solely come from wages.....




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It's a large factor. either way, this increase in wages will lead to companies putting prices up, meaning people who aren't paid minimum, but just above living wage will suffer, as their disposable income is reduced.
Original post by JessThomas6
It's a large factor. either way, this increase in wages will lead to companies putting prices up, meaning people who aren't paid minimum, but just above living wage will suffer, as their disposable income is reduced.


Silly me I thought international commodity prices were the main factor in inflation once the housing market is taken out of the equation.


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The biggest problem (as far as I can see) with the living wage, is that it doesn't really address the issue of who it's a living wage for. The minimum wage of £6.50 an hour would, after tax, give me just under £900 a month (assuming a full time 36 hour work week), that provides me with actually more than I'm living off right now as an undergraduate. So for me at least, the minimum wage absolutely equates to a living wage (I don't have an uncomfortable lifestyle per say), if I had kids etc. it's a completely different story and I can't see how the minimum wage would be enough.

What counts as a living wage is incredibly variable, it depends on where I live whether I have a family etc. And what's sufficient for me as a single, childless student, will not be for others.
I don't understand the living wage or even minimum wage crying from people. I work for min. wage four days a week only and rent my own flat alone. I still have surplus money of over 120gbp per month. Why are people who are typically on min. wage so bad with money?
Original post by skeptical_john

A few years a go I was on min wage in a restaurant. Where would I have been if they HAD to pay me a living wage? At home sitting on my arse because what I was doing was not worth £9 an hour.


Yep, exactly right.

The problem with a national living wage is that the economy differs regionally. I don't imagine employment, even at checkouts and coffee shops, will become too much of a problem for many employers at £9 an hour in central London. In much of the north, though, where wages are lower, many businesses will struggle to pay £9 per hour. There simply isn't enough money sloshing around locally to make that possible for everyone, and declaring that wages shall be at least £9 per hour isn't going to magic substantial amounts of extra money into the local economy. Nor do you need that much money to live reasonably in much of the country.

Imho the minimum wage should ultimately be devolved to the regions. In the meantime, it should at least be set on a regional basis.

Original post by limetang

What counts as a living wage is incredibly variable, it depends on where I live whether I have a family etc. And what's sufficient for me as a single, childless student, will not be for others.


This is also an important point. It's worth noting that even some people over 25 don't have a family to support. Some people just want basic work to support themselves. This law makes this much more difficult. Much of the work they could do will be uneconomic at £9 per hour.

The law will also make it more difficult for over 25s to get basic employment in general. If you're 25 and applying for a job that a 20 year old could do, this is a pretty clear obstacle.

So I'm basically unconvinced by this as a policy. I think it's smart politics though.
I certainly agree with it being done on a regional basis. Part of the attractiveness for business for moving to lower income areas is they can save on wages (hence why you see so much offshoring). With this they are going to lose one of their key reasons for a business moving their.
If a business can't afford to pay its staff a living wage then it shouldn't be in business. Just like if they can't afford to pay their gas and electricity or rent then they shouldn't be in business.

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