The National Minimum Wage

Dr Lobster* · Mon 19 Mar, 2012 20.28

the national minimum wage goes up by a wallet burning 11p per hour, but what is your view of the national minimum wage?

in my view, it's set far, far too low and because it's set too low, people like me and you end up subsidising the pay of thousands of people by topping up their salary with tax credits and benefits.

how can it be fair that the burden of labour costs of the big chains falls to the tax payer to make up?

how can it be right that big companies like tesco, which made a pre-tax profit of almost £2 billion relies on the government to plump up it's menial wage?

is it time that the minimum wage becomes a living wage (possibly weighted on a per-area basis) and but an end to the absurdity of the public subsidy of big business?

Nick Harvey · Mon 19 Mar, 2012 23.24

In my view, the most important part of your post is the bit in brackets in the last paragraph.

If it turns out to be true that national pay rates get scrapped in the budget on Wednesday, to be replaced by region/local variations, then a national minimum wage is a total stupidity.

As to the more general point, being somewhere to the right of Ghengis Khan, I'd leave the whole thing to market forces and get rid of the Minimum Wage altogether.

However, I rather suspect I'm about to find myself in the minority with that view.

all new Phil · Tue 20 Mar, 2012 11.24

I agree with Nick.

Gavin Scott · Tue 20 Mar, 2012 15.07

I don't know what Tax credits are actually worth, being single and childless.

I expect its a fair few quid - can anyone tell me?

I take the view (unsurprisingly) that, in order to leave things for the "markets to sort out", you have to hope that there's an ethical bone between industry leaders or that they're guided by more than profits.

In this time of scant opportunity, where unemployed people would be harshly condemned for NOT taking an offered job, for profitable corporations to ask them to work for £3 an hour is unethical.

Do ethics play a part in the free market economy, or are they purely a matter for the individual?

I'd ask this of Nick and Phil - just so I understand their view more clearly.

In the interests of fairness, I do think that public sector jobs, in many, many cases, are grossly overpaid. I say this because I saw enough P60s and pension projections in my time at the IFAs.

Gross overpayment is annoying. Gross underpayment is shameful.

barcode · Tue 20 Mar, 2012 15.19

Any thing less than £6 hour in ANY part of the country is SHITE!

Tax Credits are all different and depend on each person situation, and can go and or down each year. some people get £21 a month other can get up to £400 a month!

Gavin Scott · Tue 20 Mar, 2012 15.22

Do you work, barcode?

I've wondered for a while. I'm sure you said you did at some point, but I forget.

all new Phil · Tue 20 Mar, 2012 15.24

The reason I'm against it is that I think it keeps wages lower than they would be otherwise. I had a part time job when the minimum wage was introduced, for which the pay was, at the time, above the minimum wage rate. Gradually, however, the minimum wage was allowed to catch up to it. This seems to be the case for most similar jobs.

Gavin Scott · Tue 20 Mar, 2012 15.37

all new Phil wrote:The reason I'm against it is that I think it keeps wages lower than they would be otherwise. I had a part time job when the minimum wage was introduced, for which the pay was, at the time, above the minimum wage rate. Gradually, however, the minimum wage was allowed to catch up to it. This seems to be the case for most similar jobs.

I'm having a senior moment - I can't work out what you mean.

You feel your wage was held back because of it?

I was referring to folks who are (or would be) offered jobs at £4 per hour and such. Do you take a view on those?

cwathen · Tue 20 Mar, 2012 19.43

The minimum wage was not designed to guarantee a minimum standard of living, it was designed to stop it being technically legal to employ someone for 1p/hour, or unscrupulous practices like half wages during trial periods etc given that trade unions were no where near as big as they once were and particularly badly treated workers often had no one to fight their corner for them.

At the time it was introduced the rate was only £3.60 / hour for fully grown adults aged 22 or more - yet if you were over 18 I can't think of any ethical employer who wasn't already paying more than that.

The problem we have is that it has been allowed to rise unchecked and we are now stuck in a vicious circle where the huge increase in labour costs employers have to face to cope with NMW increases pushes inflation up and devalues it for people stuck on the minimum.

The pay gap between the most junior and higher level positions in a company now seems to be vastly decreasing where retail supervisors/junior managers get paid only a little bit more than the plebs on NMW - because the companies are using the salaries of those in higher positions to pay for the wage increases which the law has entitled those lower down to have.

It wasn't that long ago that in any half-decent retail job you could be expected to be paid well *above* the minimum wage, now pretty much all basic tier jobs are paid *on* it.

I suspect part of the reason for the skills shortage in this country is that NMW levelling pay out in this way has removed the primary motivator for most people to get ahead - more money. If I was in retail working for £5 / hour and had the opportunity to become a supervisor for £7.50, then that would be something worth aspiring to. But working for £6.08 with the possibility of maybe getting £6.35 if I do a ton of extra shit to get promoted? No way.

In my own case, I suspect that because of the NMW many 18-20 years olds are actually paid *less* than I was at that age. When I was 18 in 2001/02 I could get some bog standard factory work for £5 / hour when by law I only had to be paid £3.50 / hour - a whole £1.50 / clear of minimum. Yet now because it's risen so much I'd more than likely be paid the development rate of £4.98 as my employer would have to shell out so much more to meet the £6.08 that the older adults would be entitled to. Not even allowing for inflation, I'd be worse off.

The 'Living wage' suggested above is a pipe dream - just what would this rate have to be? £8 an hour? More? Who's going to pay for that? And if it did happen, it still wouldn't be enough because everything would just cost more to pay for the wage increase.

My view is that the wage should have been frozen long ago before we ended up in this situation, but whilst I wouldn't advocate actually decreasing it, a line certainly should be drawn now and it should not be allowed to go any higher for a long time. This is a capitalist society and not a socialist one. Getting on and earning more money means that unfortunately some people have to struggle and survive on not very much. The challenge is to make sure that you are sufficiently skilled for it not to happen to you - and if you are one of those people, the better lifestyle you'd have if you bothered to try and progress was incentive enough. That model is what made this country great. Trying to make it a right to be well paid is part of what is dragging it down the pan.

marksi · Tue 20 Mar, 2012 20.42

cwathen wrote:working for £6.08 with the possibility of maybe getting £6.35 if I do a ton of extra shit to get promoted? No way.

I think you'll find that's an issue these days no matter what level of the pay scale you're on. "Promotions" are hardly worth going for because the pressure on wage inflation is such that the next level up is virtually no more money, but loads more shit.

cdd · Tue 20 Mar, 2012 21.47

To those who believe in the NMW, what do you say to the argument that you are stripping people of the right to sell their services for the price they are willing to?