Over the last decade or so, the minimum wage in Britain has been increasing as a measure to try and combat the cost of living crisis for Britain's most vulnerable workers. Of course, getting by on a minimum wage is still a very difficult task and the resurgence of food banks only reiterates the current state of affairs in this country. However, there is absolutely no evidence to suggest raising the minimum wage - or indeed having a minimum wage - will provide a springboard for people to escape poverty and the cost of living crisis. Let me explain:
1) It is a basic economic principle that workers and their pay are deduced by supply and demand. If there is a demand for workers, employers will have to offer a higher salary to fill the vacancy out of necessity. Similarly, if there is a shortage of supply for workers, employers will have to offer a higher salary to attract workers to the profession. In the case for jobs pertinent to the minimum wage, there is often a lack of demand and a surplus of supply; so to artificially increase the wages for these workers, you are distorting the mechanisms of market economics which in itself has immediate and long-term consequences.
2) If you increase the minimum wage, it is employers who will have to bear the burden of government intervention. Consequently, profit margins will decrease and this will force employers to invest in alternative technologies to reduce overall operating costs, such as automated checkout machines to replace checkout assistants or robotised computer algorithms to replace call-centre operatives. Employees are often the largest expense for businesses, and that expense increases, employers will look for alternatives which will result in unemployment and redundancy.
3) Even if workers are not replaced by robotics, employers might be forced to reduce bureaucracy or cut down on employees' hours. This might include changing workers from full-time to part-time contracts, abolishing middle-management positions or outright sacking employees because their services are no longer need as the business is forced to rework its business-model.
Before I go on and on, I think this video perfectly summarises the points made:
Let me know your thoughts!
I think the minimum wage is a necessity to uphold the structure of employment. However, zero hour contracts should be abolished indefinitely.
I support the NMW at this moment in time because it has allowed young people to get jobs.
When I was looking for jobs at 17/18 years of age, since I got paid less than older (and more experienced people) it is attractive to employers to get young and motivated people into work.
If everyone gets paid lets say £10 an hour regardless of age, that competitive advantage that younger people have with employers from being paid less is gone. And at that age you have little to no experience.
Food prices would go up. Employers would employ less people as it would be expensive.
It's quite straightforward really, well in my head... I'm sure you will all beg to differ.
Nice info except this debate was settled in 1997, it was won in favour of the NMW and the tories even came to their senses.
There’s a difference between having the NMW as a protection barrier as it was intended - to stop workers being exploited, to tackle work poverty, to make sure people were paid fairly for work. When introduced Blair made it clear his stance was to be sensible about it, it should not be used a force to tackle bigger economic issues, his emphasis was always on education and training when it came to that.
So yes you make good points, but it’s an arguments that’s already been made and agreed upon, although the argument has somewhat faded with the rise of Corbyn... most still view today’s minimum wages as sensible and because of age differentials, younger people are more likely to be hired. Most supermarkets pay above the minimum wage across age groups.
Your argument was the extremes of what could’ve happened, that extreme is only possible in 2 events: the introduction of the minimum wage (which it didn’t happen) or with a drastic increase (this is against the principal of using it sensibly.) so the basis on which the NMW is used today is mostly beneficial in UK. As for the USA, I won’t get into it because it’s too complex.
We both know economic systems rely on exploitation to make the most money, it’s practically rule #1 which is why government intervention is needed.
A worker who is desperate can have that used against them, and the minimum wage is one of the rights afforded to all workers so that nobody can undercut them at that price.