The New Living Wage = No better off

[Shrek]

Sorry if this isn't the right forum or if it's already been covered.

The minimum wage went from £6.50 per hour to £6.70 per hour on 1st October last year and with the introduction of the new minimum wage from 1st April it will rise to £7.20 per hour.

My wife works part time in two jobs one that pays minimum rate and one that pays 20p above. She has had a meeting this week with both employers and has been informed that her hours will be cut to cover the pay rise but will be expected to complete the same duties. (the second job will only rise to the new rate not 20p higher)

This isn't isolated as I spoke to both the cleaning and catering supervisors at my work and they said the same situation was happening with them. Both said that their workers were paid more than minimum rate, but they will only get the new living wage rate and cuts in hours have to be made.

My wife was initially very pleased at the new pay rate but now she's a bit disillusioned. At least for us it's a second income, but for workers were it's the main income, it's a slap in the face. Ok, full time workers on a contract should be ok, but no joy for most part time.

The new living wage looked like a step in the right direction and for many it still is, but once again some of the people who need it most are screwed.

 

[11101]

I sympathise but i dont really see a way around it. The government cant force employers to give unsustainable wages/hours, and for many smaller (and bigger) businesses a 10% wage rise at the bottom end in a 6 month period will be a lot to bear.

The government would be better off focusing on controlling the rampant CPI imo.

 

[711]

I don't know how it's going to pan out at all. When the minimum wage was proposed the tories were vitriolically opposed, and said it would lead to a big loss of jobs, and that seemed sort of self-evident. Yet Labour said it worked in other countries, so I thought, ok, let's see. And Labour were right, it was indeed a big step forward for the low-paid.

Whether this further increase will work though, if implemented in full, I'm not so sure. I suspect it will lead to a lot of work on offer as part of the black economy, cash in hand, less than minimum, no tax, no insurance, no pension.

Trouble is, if a country goes down that lawless road it might be hard to turn round again.

I hope it works, everyone in a relatively rich country should have some share.

 

[Jippy]

It is grim. If Labour raise it further, it will exacerbate the problem, but what else are governments supposed to do tbf?

 

[Nick 0208 Ldn]

It would not be applicable for smaller firms i grant, but the larger ones could provide services in exchange for a slower rate of increase: on-site or company funded daycare for parents of young children, a car pool/group travel, even a school bus if it is a local employer.

Doubtless there are those who do this already on their own initiative, and if the government madeit official they'd need to employ a band of monitors or the like.

 

[Shrek]

It is grim. If Labour raise it further, it will exacerbate the problem, but what else are governments supposed to do tbf?

Although it affects us personally, I believe it was to much to fast. It would have been better to set a target over say 5years and raise the living wage incrementally. Also a massive problem is going to occur with people wanting to maintain a pay differential.

 

[Nick 0208 Ldn]

It would have been better to set a target over say 5years and raise the living wage incrementally.

That is what is happening, the NLW is intended to rise to £9.00 by 2020. The Labour leadership believe that £10+ would be a fairer amount, whereas the Greens spoke about £12+ during the election.

 

[Shrek]

That is what is happening, the NLW is intended to rise to £9.00 by 2020. The Labour leadership believe that £10+ would be a fairer amount, whereas the Greens spoke about £12+ during the election.

Is that £9 as an actual amount or is it in real terms as equal to £9 worth today?
If it's actual, I suppose it depends on inflation, but which ever, it still doesn't help people having their hours cut to cover the rate increase.

 

[Silva]

iirc it was going to rise to about £8.70 by 2020 anyway. All that happened is Gideon realised it would sound better if he started calling it the living wage rather than the minimum wage.

 

[Smores]

iirc it was going to rise to about £8.70 by 2020 anyway. All that happened is Gideon realised it would sound better if he started calling it the living wage rather than the minimum wage.

That's what I recall too, it was a rebranding exercise of the minimum wage that effectively got rid of the living wage that was actually higher I believe. They've done well adapting Labour policy to their own needs

Small businesses may have to go through a period of adjustment but if they're unable to make a profit paying a living wage then they'll end up being replaced by those that will.

 

[Jippy]

It's called the national wage isn't it? Big billboard ad about it on the platform at Hammersmith tube.

 

[711]

iirc it was going to rise to about £8.70 by 2020 anyway. All that happened is Gideon realised it would sound better if he started calling it the living wage rather than the minimum wage.

I thought I'd heard Osborne talking of over £10, I either misheard or was conned, but when I look at it properly you're right, with the timescale as well it's not the huge rise they've been shouting about

 

[Pexbo]

They'd be better off targeting corporation tax and providing tax relief to your average joe. The extra money your average joe is given always circulates back into the economy which can't be said for the money the corporations are holding on to.

 

[MTF]

Here's a funny one for those with leftist inclinations to grapple with: they like small businesses vs. big chains, right? So Starbucks vs. your local coffee shop, for example. Because of its scope, Starbucks buys its beans cheaper, equipment cheaper, more efficient supply chain, etc. The final ingredient is that it pays employees whatever the market rate for such labor is, which is likely the same the smaller shop pays. If the min. wage gets bumped (as it will to $15 here in NY eventually) Starbucks can probably take it, it'll eat into their margins but they'll live. The small coffee shop (and burger joints, and pizza stores, etc.), they're at risk of going into the red depending on their individual margins. Result: fewer small businesses.

 

[unchanged_lineup]

That's what I recall too, it was a rebranding exercise of the minimum wage that effectively got rid of the living wage that was actually higher I believe. They've done well adapting Labour policy to their own needs

Small businesses may have to go through a period of adjustment but if they're unable to make a profit paying a living wage then they'll end up being replaced by those that will.

Wasn't this rebranding stolen off an independent group who were campaigning for much more and are angry about the name being taken?

 

[sun_tzu]

Wasn't this rebranding stolen off an independent group who were campaigning for much more and are angry about the name being taken?

not exactly - the living wage foundation set their own criteria (I think £8.20 outside London at the moment) and companies sign up on a voluntary basis to abide by the increases they set each year.
From a company point of view there is an obvious cost though apparently staff retention is thought to be improved and it can be seen as a good thing to have when completing tenders and talking about what a good and fair employer you are
The minimum salary I pay an employee is 30-40K (depending on nights out etc) so its not of much relevance to me but we have a family friend who works in a call centre 8 hours a day and her company has signed up to this scheme so her salary will now be 17K and it was 14K a year ago so for her it has made a big difference (a 20% payrise) but of course if you earned say £16,500 before it would not make much difference.

 

[Snow]

Isn't this what unions are for?

There have been massive talks here the past 2 years because of wages. The pay certainly didn't follow the inflation. Doctors and nurses got raises through after 6 months of negotiation and that started a chain of event of strikes. Basically what came out of those pay rises is that if other costs rise (food taxes and other necessities) that would negate the deal or stuff like this, employers cutting down the hours, the deal would be off and they'd be back on strike.

 

[One Night Only]

It's stupid anyway.

Min wage wages goes up... Price of everything goes up so it makes no difference anyway. Just closes the gap to those who are paid higher. I also don't understand how it is a "living" wage. People live off way less than minimum wage now, its basically luxury wage, people think they're entitled to internet, sky sports, massive TV's and big cars.

 

[Silva]

It's stupid anyway.

Min wage wages goes up... Price of everything goes up so it makes no difference anyway. Just closes the gap to those who are paid higher. I also don't understand how it is a "living" wage. People live off way less than minimum wage now, its basically luxury wage, people think they're entitled to internet, sky sports, massive TV's and big cars.

That's a load of bollocks mate. And the internet isn't a luxury anymore, it's just something normal people use, like shoes and underwear.

 

[Blodssvik]

If a small business need employees but can't afford to pay a decent wage perhaps it is a good thing if resources are reallocated. It is not a right to run non profitable businesses. I wonder what net effect for pubs would be for example if people earning less than 8 pounds an hour suddenly could actually afford to frequent them.

 

[Don't Kill Bill]

Here's a funny one for those with leftist inclinations to grapple with: they like small businesses vs. big chains, right? So Starbucks vs. your local coffee shop, for example. Because of its scope, Starbucks buys its beans cheaper, equipment cheaper, more efficient supply chain, etc. The final ingredient is that it pays employees whatever the market rate for such labor is, which is likely the same the smaller shop pays. If the min. wage gets bumped (as it will to $15 here in NY eventually) Starbucks can probably take it, it'll eat into their margins but they'll live. The small coffee shop (and burger joints, and pizza stores, etc.), they're at risk of going into the red depending on their individual margins. Result: fewer small businesses.

I seem to recall they pay far more for their beans, so much in fact that they don't make any profit from their coffee shops and only their bean sales division which happens (by just good luck I suppose) to be located in a nominal corporation tax authority does. Thus they in fact undercut the local coffee shops which do pay business taxes.

Until they were recently embarrassed by the public outcry, Starbucks paid hardly any tax at all on its UK operations and tried to tell the select committee that its vast expansion in the UK was effectively a charitable enterprise.

 

[Member 5225]

Here's a funny one for those with leftist inclinations to grapple with: they like small businesses vs. big chains, right? So Starbucks vs. your local coffee shop, for example. Because of its scope, Starbucks buys its beans cheaper, equipment cheaper, more efficient supply chain, etc. The final ingredient is that it pays employees whatever the market rate for such labor is, which is likely the same the smaller shop pays. If the min. wage gets bumped (as it will to $15 here in NY eventually) Starbucks can probably take it, it'll eat into their margins but they'll live. The small coffee shop (and burger joints, and pizza stores, etc.), they're at risk of going into the red depending on their individual margins. Result: fewer small businesses.

Totally agree with this.

 

[Member 5225]

Hmm not sure about the mood in this thread.
The Govt tries to raise 'minimum wage' then they're 'doing it too fast' and get blamed for the effects.
If they don't, then the Govt is 'out of touch' etc.

Think a lot of people have issues with basic economics in general tbh.

 

[Don't Kill Bill]

Sorry if this isn't the right forum or if it's already been covered.

The minimum wage went from £6.50 per hour to £6.70 per hour on 1st October last year and with the introduction of the new minimum wage from 1st April it will rise to £7.20 per hour.

My wife works part time in two jobs one that pays minimum rate and one that pays 20p above. She has had a meeting this week with both employers and has been informed that her hours will be cut to cover the pay rise but will be expected to complete the same duties. (the second job will only rise to the new rate not 20p higher)

This isn't isolated as I spoke to both the cleaning and catering supervisors at my work and they said the same situation was happening with them. Both said that their workers were paid more than minimum rate, but they will only get the new living wage rate and cuts in hours have to be made.

My wife was initially very pleased at the new pay rate but now she's a bit disillusioned. At least for us it's a second income, but for workers were it's the main income, it's a slap in the face. Ok, full time workers on a contract should be ok, but no joy for most part time.

The new living wage looked like a step in the right direction and for many it still is, but once again some of the people who need it most are screwed.

I was told today that at Morrisons they intend to cut Sunday hours to normal rate and will stop paying breaks. Given the tax credit reductions I suspect very few people will end up being any better off at all.

 

[rcoobc]

Sorry if this isn't the right forum or if it's already been covered.

The minimum wage went from £6.50 per hour to £6.70 per hour on 1st October last year and with the introduction of the new minimum wage from 1st April it will rise to £7.20 per hour.

My wife works part time in two jobs one that pays minimum rate and one that pays 20p above. She has had a meeting this week with both employers and has been informed that her hours will be cut to cover the pay rise but will be expected to complete the same duties. (the second job will only rise to the new rate not 20p higher)

This isn't isolated as I spoke to both the cleaning and catering supervisors at my work and they said the same situation was happening with them. Both said that their workers were paid more than minimum rate, but they will only get the new living wage rate and cuts in hours have to be made.

My wife was initially very pleased at the new pay rate but now she's a bit disillusioned. At least for us it's a second income, but for workers were it's the main income, it's a slap in the face. Ok, full time workers on a contract should be ok, but no joy for most part time.

The new living wage looked like a step in the right direction and for many it still is, but once again some of the people who need it most are screwed.

How many hours was she on, and how many hours will be she on?

If she is getting the same money for less hours, then she is indeed better off regardless.

Also; I'd say its pretty standard as part of a rise in minimum wage. First hours get cut to pay the higher wage. Then the business passes the increase on to their customers. The hours probably increase again as things return to normal and every adjusts.

The major argument in the US against a rise in minimum wage is because of what you just said; the big companies would have to "cut hours" and "cut jobs". And of course that is probably true in the short term, but in the long term... maybe not.

 

[Drifter]

It's stupid anyway.

Min wage wages goes up... Price of everything goes up so it makes no difference anyway. Just closes the gap to those who are paid higher. I also don't understand how it is a "living" wage. People live off way less than minimum wage now, its basically luxury wage, people think they're entitled to internet, sky sports, massive TV's and big cars.

You already had companies saying just that the moment Osbourne mentioned the so called living wage.

 

[rcoobc]

It's stupid anyway.

Min wage wages goes up... Price of everything goes up so it makes no difference anyway. Just closes the gap to those who are paid higher. I also don't understand how it is a "living" wage. People live off way less than minimum wage now, its basically luxury wage, people think they're entitled to internet, sky sports, massive TV's and big cars.

Just think of it as a "decent standard of living" wage.

The living wage was a separate thing to the "national living wage" anyway

 

[711]

Here's a funny one for those with leftist inclinations to grapple with: they like small businesses vs. big chains, right? So Starbucks vs. your local coffee shop, for example. Because of its scope, Starbucks buys its beans cheaper, equipment cheaper, more efficient supply chain, etc. The final ingredient is that it pays employees whatever the market rate for such labor is, which is likely the same the smaller shop pays. If the min. wage gets bumped (as it will to $15 here in NY eventually) Starbucks can probably take it, it'll eat into their margins but they'll live. The small coffee shop (and burger joints, and pizza stores, etc.), they're at risk of going into the red depending on their individual margins. Result: fewer small businesses.

Your background is a bit off Marcelo. Presumably you are unaware, but British politicians of all hues have been complaining bitterly of Starbuck's tax evasion, I know it's only an example but your choice will make people smile over here. As for small v big chains, in Britain it's very much the right that incessantly claims to be the champion of small business, so your point would make more sense if you had said 'here's a funny one for those with rightist inclinations to grapple with'. Especially as the right is now proposing higher increases to the minimum wage than the left did when they were in power.

 

[MTF]

Your background is a bit off Marcelo. Presumably you are unaware, but British politicians of all hues have been complaining bitterly of Starbuck's tax evasion, I know it's only an example but your choice will make people smile over here. As for small v big chains, in Britain it's very much the right that incessantly claims to be the champion of small business, so your point would make more sense if you had said 'here's a funny one for those with rightist inclinations to grapple with'. Especially as the right is now proposing higher increases to the minimum wage than the left did when they were in power.

If they're increasing minimum wage, then they're acting like leftists!

Yeah, I clearly chose the wrong example from what you and @Don't Kill Bill said about their tax evading. Lack of context will do that to you. But its something that'll probably play out here in NY with min. wage for foodservice workers getting bumped to US$15/hr. The whole rhetoric around it has been that the big chains underpay these workers. They're ignoring that a lot of the chains aren't owned but rather franchised (Starbucks is company-owned stores though), and what it'll do to the ability of little guys to compete. To me its a classic case of public policy only thought out to its 1st level effects, not 2nd, 3rd, etc.

 

[Blodssvik]

Most franchisees who would be in trouble probably didn't think enough about the risks when they sold their asses either.

 

[711]

If they're increasing minimum wage, then they're acting like leftists!

Yeah, I clearly chose the wrong example from what you and @Don't Kill Bill said about their tax evading. Lack of context will do that to you. But its something that'll probably play out here in NY with min. wage for foodservice workers getting bumped to US$15/hr. The whole rhetoric around it has been that the big chains underpay these workers. They're ignoring that a lot of the chains aren't owned but rather franchised (Starbucks is company-owned stores though), and what it'll do to the ability of little guys to compete. To me its a classic case of public policy only thought out to its 1st level effects, not 2nd, 3rd, etc.

That is what the right said in Britain, however they now admit they were wrong, and are taking the levels on even further.
Given that evidence, I would suggest you swallow your instincts and give it a try.