Living Wage Debate

[crazybaby]

But surely if Labour bring in a living wage (don't get me wrong I would be better off) won't the cost of goods & in return interest rates go up, where will it leave us then? Maybe better to cut tax altogether on low earners.

[barleycorn]

But surely if Labour bring in a living wage (don't get me wrong I would be better off) won't the cost of goods & in return interest rates go up, where will it leave us then? Maybe better to cut tax altogether on low earners.

 

The money will have to come from somewhere, there will be no hard and fast rule and every company will be different. There are however a number of possibilities open to each:

 

Take the hit in profits on the chin and make no changes.

Increase the cost of their goods and services.

Make redundancies.

Close shop as all profit has gone out the window.

Increase efficiency and productivity (they should be doing this anyway)

Freeze pay higher up the ladder (or even reduce it, for example cutting executive pay).

Use various tax dodges/avoidance strategies to mitigate the loss.

Sack some staff and bring then rehire on self employed contracts and pay commission only.

Reduced hours for certain staff.

Replace certain workers with back to work drones.

 

... I suspect most companies would use a combination of the above, plus any others I haven't though of.

 

Improvements in progressive taxation, or even universal credit, would IMO be better than a living wage. Taking tax revenue off people only to give it back to them as benefits/tax credits is a waste of time and resources. While they're at it sorting out the housing market would do both the general public's purse and the governments a lot of good.

 

jb

[SevenRivers]

There has been lots of talk recently about employers not paying enough to meet the modern limits of inflation.

 

There has been call to introduce a living wage in to law and replace the existing national minimum wage with that.

 

Our current national minimum wage is around £6 per how, but a lot of employers even fail to pay that.

 

So some have been saying a living wage should be over £7, even £9, but I say the national minimum wage should be a flat £10 per hour.

 

This would easily meet the modern world, with ever increasing taxes and prices and if the economy will need to grow, at least people will have the money to spend on things instead of £6 being chicken feed and just having enough to scrape by every month. Also, what about people on commission or receive tips as part of their job, should they give that back so they are in line with everyone else, is that fair?

 

So, what do you think or suggest on this subject?

 

If you think £18,000 - £20,000 for a full time job doing the most unskilled of jobs should be the going rate, I think you're crazy.

[poppet2]

 

Edit - there is no expectation in a company that the government will top up the wages of the low paid, why should there be? It's not their business. They pay what the law and/or the market requires. How much the government take and then return is really not their concern.

 

Yes there is expectation that the govt will top up people's wages with tax credits. The catering industry is notorious at paying staff less than the minimum wage, with the excuse that their tips & tax credits will make up the difference. Employers are also using tax credits as an excuse for zero hour contracts as well.

 

---------- Post added 07-11-2013 at 18:51 ----------

 

As I understand it the gap between earning for those at the top of a company and those at the bottom is an ever widening one. In an ideal world that gap would reverse so you didn't have upper management/directors etc on ten times the salary of the staff at the bottom.

Quick question, if you were in upper management and earning £100K/yr would you give up £20K/yr so those at the bottom could have a few quid extra a week?

 

jb

 

I see no reason why I should even want to pay myself a salary that attracts the 40% tax rate band. Just how much do people really NEED to live on?

 

---------- Post added 07-11-2013 at 18:53 ----------

 

Genuine question...do you think wages would be higher if the government didn't give tax credits?

 

I think there would be anarchy without the govt throwing this crust.

[Cyclone]

But surely if Labour bring in a living wage (don't get me wrong I would be better off) won't the cost of goods & in return interest rates go up, where will it leave us then? Maybe better to cut tax altogether on low earners.

 

Yep, I'd agree with both those statements. Raising the minimum wage to such a level will create a spiral of wage and price inflation.

Raising the tax allowance is a better step, one that the lib dems have been proposing for a long time.

[truman]

I think there would be anarchy without the govt throwing this crust.

 

You haven't really answered the question asked....

[Cyclone]

Yes there is expectation that the govt will top up people's wages with tax credits. The catering industry is notorious at paying staff less than the minimum wage, with the excuse that their tips & tax credits will make up the difference. Employers are also using tax credits as an excuse for zero hour contracts as well.

I don't think they need or make any such excuse.

Paying less than minimum wage is of course illegal and they should be prosecuted for such behaviour.

 

I see no reason why I should even want to pay myself a salary that attracts the 40% tax rate band. Just how much do people really NEED to live on?

 

Ha.

Firstly what has NEED got to do with it? If you own a successful company then you probably don't need a 5 bedroom detached house in the country, or a new Jaguar, or 4 foreign holidays a year. But you certainly won't have those things if you don't pay yourself more than the 40% tax threshold!

Obviously as a company owner you would avoid paying such a large salary though and instead pay dividends.

[poppet2]

Genuine question...do you think wages would be higher if the government didn't give tax credits?

 

I don't know.

However, if companies paid people a living wage, the government would benefit as a whole as more people would pay tax or more tax. At the moment you pay no tax if you earn less then 10K.

[Hairyloon]

When everyone is paid a tenner an hour will you be happy to pay the higher prices that will come from there being more money in the system...

Is it not fair and proper to charge for a thing based on what it cost to produce?

If wages are too low, then those things have been produced through exploitation, and/or subsidy from the taxpayer.

[Cyclone]

Is it not fair and proper to charge for a thing based on what it cost to produce?

If wages are too low, then those things have been produced through exploitation, and/or subsidy from the taxpayer.

 

No, it's fair and proper to charge as much as you can get away with.