Of coruse a trade union living wage would reduce the welfare bill but it would not last for long if it didn’t come with full employment which can be achieved via the sharing of the available productive work.

Problem is that the minimum wage for 19 year olds is already too high, resulting in a lack of job opportunities. If you raise the minimum wage further, there will be fewer jobs offered, as it will not be worth the employer’s while.

If you combine this with rent control, there will also be fewer houses available for said 19 year olds to live in.

This is an idea which would have the effect of squeezing the young and the low paid out of London, or have them living at home complaining there are no opportunities.

… who is going to pay for this increase? With companies having to cut back on staff as it is increasing wages further just makes it less attractive to employ aditional staf… Fuckwits.

If there’s 700,00 people in London managing to live on less than the ‘Living Wage’ then they are are in fact earning a living wage, otherwise they wouldn’t be able to live there surely ?

Well, yes, if lots of poorer people were paid more, then the Government’s tax revenues would increase.

An alternative and simpler approach would be to tax poor people less.

people are clearly ignoring the effect of people earnings within the economy we are no longer an export nation our focus should be on consumption and services. decreasing wages benefits neither of these.

people continue to ignore the effect of peoples spending within the economy we are no longer an exporting nation the focus should be on consumption and service sectors. cutting wages only hurts the growth of the consumer economy

This article was quite interesting up until the point where it became clear that Darren Johnson expects the reduction in state benefit costs to be paid for by… employers.

We have been bumping along in a recession/stagnation for about four years now. What world does Darren Johnson inhabit where he imagines that employers – all employers: not just big bad villainous offshore-tax-avoiding multinationals and public-subsidy-guzzling banks, but the medium, small and micro businesses who employ voer half the woring population, right down to the ones who only employ one or two other people – are simply awash in cash?

My guess is that he and those supporting his ‘idea’ inhabit the world of people who have little or no experience of working in the private sector, having instead always worked either in big, probably public, organisations where money is just something that’s around on tap, not something you have to generate by getting clients and doing work for them and often in rcent years barely scraping by in paying the wages bill.

And lo and behold it turns out that Darren Johnson has indeed no experience of the world of the medium, small or private sector, having gone almost straight from university into a position as a member of the London Assembly – as you do.

This is another piece of pie-in-the-sky economic ‘thinking’ on Liberal Conspiracy from someone who doesn’t understand how the economy actually works and thinks that increasing its growth and health is just a matter of taking large amounts of money from this part of it and dishing it out in that part of it. Money that other people have actually generated through risk and hard work. You’ll just supervise the fair distribution of it, and get paid out of that into the bargain.

“full employment which can be achieved via the sharing of the available productive work.”

Fine. Let’s start with members of think tanks, the London Assembly, trade union positions, provostships of universities, all public sector positions etc. Somehow I don’t think you’ll get many takers for that. Mind you, that would be stretching the definition of ‘productive work’ an awfully long way…

“With companies having to cut back on staff as it is increasing wages further just makes it less attractive to employ additional staff… Fuckwits.”

Quite.

What a novel idea, wacky,a living wage!

Ah yes, here is the world Darren Jones inhabits:

“For the current financial year Assembly Members salaries are £53,439.”

http://www.london.gov.uk/mayor-assembly/london-assembly/members

That is an obscenely large amount of money from the public purse. I’m on less than a fifth of that. If the state wants to save money it should start by cutting the pay of fat cats like Darren Jones himself.

Or alternatively we could just use cloud cuckoo Land economic thinking and pay everyone £53,439 per year from the public purse by massively increasing corporation tax from all those micro, small and medium businesses who have all those billions of pounds just lying around. what could possibly go wrong?

With companies having to cut back on staff as it is increasing wages further just makes it less attractive to employ aditional staf… Fuckwits.

Corporate savings are actually at an all-time high…. corporate profits near an all-time high too. This idea that the government should subsidise low paid workers instead of companies paying them properly is pure stupidity.

again people are stuck within export centric economic thinking. the export economy with the exception of certain services the language knowledge and high technology is dead we will never compete with developing nations. we should be focusing on developing the consumer + service economies.

“This idea that the government should subsidise low paid workers instead of companies paying them properly is pure stupidity”

It may “pure stupidity”, but it’s also absolutely standard policy in all of the developed world.

“and the extra tax revenue would add up to £3.6bn a year. ”

I’m afraid that I find it morally objectionable to insist that people should be paid more simply so that they can be taxed more.

How about we start from the other end? If there is some morally correct minimum or living wage then how’s about the government not pundering that morally correct wage through income taxation?

After we’ve got that settled then perhaps we can reopen the conversation.

Sunny,

“Corporate savings are actually at an all-time high…. corporate profits near an all-time high too. ”

Once again you treat the private sector as if it consists entirely of corporations. It doesn’t.

Just over half of the working population works for micro and small businesses. Those are not, mostly, awash in cash. Many are struggling and barely surviving.

@Labia:
Right-wing employers can fuck off out of this country

That means you

Tory cunt

@Thornavis – Moronic thatcher logic.

@Lamia – Stupid greedy private sector cunt is right-wing and greedy.

@ 16

I am neither a Tory nor an employer. And for several years now I have been earning only around half of the average national wage. I work for a small business which is struggling so much to stay afloat that the owners get paid less than the junior staff, and have put their entire life-savings into it. I don’t have a pension, And I don’t own a house or a flat or even a car.

If you think that small and micro businesses in this country are currently rolling in money, you have no idea what you are talking about.

@17

No it’s not moronic Thatcher logic, whatever that is. It’s simply a fact that if people are managing to live on less than the ‘Living Wage’, as indeed I’m doing myself these days, then the definition of a living wage must be political rather than economic. There’s nothing necessarily wrong with that except that, as others have been pointing out who is to pay for making up the difference ? The Living Wage campaign is here being presented as a way to reduce the benefits bill by transferring its costs to the private sector which cannot but have a detrimental effect on employment and growth. It is right that employers should bear the cost of employing someone but that must mean that they are free to pay at the market rates, not act as a substitute benefits provider. if that leaves a section of employees short of cash the simplest way to remedy it, as has also been pointed out, is to reduce their tax payment, preferably to zero. Do you think that is wrong and if so why ?

I thought Chris Dillow had dealt with this: http://stumblingandmumbling.typepad.com/stumbling_and_mumbling/2006/01/against_the_min.html

@20, the problem with your final proposition is that somebody earning the minimum wage will pay almost no tax once the threshold is raised to £10,000. The scope for that policy to help them get by is more or less exhausted.

So it’s either tax credits/benefits, or higher wages with/without an even higher tax threshold.

“@20, the problem with your final proposition is that somebody earning the minimum wage will pay almost no tax once the threshold is raised to £10,000. The scope for that policy to help them get by is more or less exhausted.

So it’s either tax credits/benefits, or higher wages with/without an even higher tax threshold.”

What? What stupidity is this? Thre reason we shouldn’t reduce the taxation of the working poor is that after we’ve reduced the taxation of the working poor then we cannot reduce their taxation any more?

Jeez matey.

@Tim

“I’m afraid that I find it morally objectionable to insist that people should be paid more simply so that they can be taxed more.”

More morally objectionable than employers not paying a living wage and expecting the state to subside them? What a strange moral compass you have.

Tom @22

As it happens I think the tax threshold should be, considerably, higher than £10k also that taxes generally should be lower, that would do more for the low paid than any amount of state mandated tinkering with wage controls.

@24
Do you really think that’s how it works, employers work out their wage rates on the basis of what the State will pay in benefits ? OK what would happen then if the state just stopped those top up benefits, presumably, according to your logic, wages would immediately rise to make up the gap, shall we try it ?

are you sure the “struggling businesses” arent victims of their own economic system keep cutting peoples incomes then wonder why you have fewer consumers.

also the focus on income tax completely ignores many other problematic costs such as :
consumption based taxed
housing costs
health costs – prescriptions etc
travel

there are better ways to subsidize the working poor than income tax cuts

@Thornavis

No, I’m suggesting that some employers don’t give a shit and will employ people on as low a wage as they can.

@ 27

Keep taxing public and business alike to pay obscene salaries to public sector parasites like Darren Johnson and then you wonder why a lot of us don’t have much money to spend or live on.

There is no way a member of the London Assembly should get £53,000 a year from public money when millions of us are on a fraction of that.

@28

So you would punish all employers by making them pay wages that many couldn’t afford rather than enable their employees by reducing their taxes and letting them enjoy more of the fruits of their labour ?

Lamia

Come on now, what else will we do with all that extra tax money that the Living Wage will magically bring in, you surely can’t be suggesting that it be used for something less worthy than keeping our new nomenklatura in the style to which they are accustomed.

@27

People’s incomes aren’t constantly being cut, this is a myth and you have ignored the reduction in prices of a huge range of goods which also improves living standards. The extra costs of the things you mention are to some extent illusory as well, transport costs for instance haven’t risen significantly, those that are real, such as housing are largely caused by a combination of credit driven asset bubbles, encouraged by the last government and planning restrictions. Health costs are negligible for the population as a whole, other than the enormous cost of the NHS of course, payed for out of the taxes that you don’t want reduced for the poor. VAT is a burden, although many items which are important for the low paid are zero rated.
This sums up the mistaken thinking of so many regarding tax :

“there are better ways to subsidize the working poor than income tax cuts”

Tax cuts are not a subsidy.

i disagree tax cuts are very much a subsidy you continue to take that which is provided by the state while contributing less.

my point is that we need more people in a position to consume forcing people into an impoverished position wont suddenly turn us into an exporting nation

@Thornavis

My heart bleeds for those employers being “punished” by paying the minimum wage.

@33

I really ought not to bother as this is becoming the usual head on brick wall exercise but one last try. You’ve got it completely the wrong way round, it is the state that takes not provides. The state does not produce anything and the ‘provision’ is simply paying people with their own money, on the basis that the state is in a better position to judge what people need than they are themselves, an erroneous assumption. How can reducing the amount taken compulsorily from someone, for whatever ostensible reason the amount was taken, ever be regarded as a subsidy ?
As for needing more people in a position to consume, you’ve got that wrong too. You can only consume what has been produced, if what is being produced starts to decline because production is too expensive or become inflated in price due to too much credit being available then consumption must inevitably fall. You don’t increase people’s ability to pay for what they consume by removing wealth from the productive economy and just handing out to whoever you think worthy.

@34

It’s generally not employers who suffer from the minimum wage but employees. Those with very few skills especially the young are particularly vulnerable, they become priced out of the jobs market, they may not have had much of a job before but now they won’t have one at all. It also effectively sets a rate at the lower end of the market and actually acts as a disincentive to employers to compete for the best employees by offering better wages. The effects may not be very great but they are real.
The living wage is potentially different as it is much higher and will impact on businesses with small profit margins, Lamia has given you an example already. As most employment comes from SMEs then the impact on unemployment as well as growth will be that much greater than the minimum wage. It’s really only a way of enforcing the left’s subjective view of what amounts to a ‘fair’ wage – there is really no such thing – on society. I don’t know if you are old enough to remember the last time we had a prices and incomes policy, in that case it was to try and keep wages down, it didn’t work and trying to force them up won’t work either.

“I am neither a Tory nor an employer. And for several years now I have been earning only around half of the average national wage. I work for a small business which is struggling so much to stay afloat that the owners get paid less than the junior staff, and have put their entire life-savings into it. I don’t have a pension, And I don’t own a house or a flat or even a car.
If you think that small and micro businesses in this country are currently rolling in money, you have no idea what you are talking about.”
You need to get a new job and political party.
As for your employers, posting in the day Lamia means you have far too much time your hands. Therefore your employer should give you the boot. Your too much of an expense. That is the correct market decision. They might make a profit then. Acting like a parasite to your firm won’t help you or your employers. Fall on your sword.

Lamia
What are your politics ?

@38. p.diddy: “What are your politics ?”

Who cares.

It’s terribly simple really. Either you think that people struggling on low incomes can best be helped by the imposition of a “Living Wage”, paid for by employers (and resulting in a higher tax take by the State – I have no argument with the figures), or you think that poorer people can best be helped by allowing them to keep more of the money they earn by reducing the amount they have to pay in tax.

If anyone’s still in doubt about the issues involved, I would urge them to follow the link provided by Cherub @21.

“As for your employers, posting in the day Lamia means you have far too much time your hands.”

You know nothing about my job or working circumstances. I work in a creative industry, and I do not work 9-5, I work very flexibile hours including late night and weekends. Evidently my bosses think I am worth it. They know I am sitting at home now. In a while I will be going in and probably working till late tonight. Around 6 o clock we will open the beer while working, and later watch some television together. None of us earn much at the moment but we have a much more pleasant work environment than most people.

“Lamia
What are your politics ?”

What business is it of yours?

For what it’s worth, I am a former Labour voter. I don’t believe Labour or Tories care about the hard working lowpaid – and your own sneering remarks about how my bosses should sack me or how I should get a better job let your own mask slip.

Everyone at our business is struggling, because of cash flow problems. As I have said, the bosses are paid least, me a little more and the juniors the most. That is because although we are a private business we are not actually cut-throat ‘right wing’ bastards but people trying to get by and to make the business a success. We are very slowly getting there but it will probably take years.

What would help me personally most would be for the allowance before income tax to be higher and for VAT to be lower. And it would be a good idea to save some public money by cutting the grossly inflated slaries of people like Darren Johnson. He could be on £30,000 and still be doing very nicely.

“You know nothing about my job or working circumstances. I work in a creative industry, and I do not work 9-5, I work very flexibile hours including late night and weekends. Evidently my bosses think I am worth it. They know I am sitting at home now. In a while I will be going in and probably working till late tonight. Around 6 o clock we will open the beer while working, and later watch some television together. None of us earn much at the moment but we have a much more pleasant work environment than most people.”
All I am saying you need to retrain. If you cannot afford a car, you’re in the wrong job. Your bosses think you’re worth it because they are paying you peanuts.
Creative industry, pretentious moi
“For what it’s worth, I am a former Labour voter. I don’t believe Labour or Tories care about the hard working lowpaid – and your own sneering remarks about how my bosses should sack me or how I should get a better job let your own mask slip.”
I am no lefty that’s true. It is amazing how many ex labour voters there are. How did they lose elections ?
“As I have said, the bosses are paid least, me a little more and the juniors the most”
They need to in a new line of employment because their business model seems very strange. That or they are lying to you.
“It’s generally not employers who suffer from the minimum wage but employees.”
Yes bosses on £50,000 suffers more than someone on £5 a hour.
Love it

” Those with very few skills especially the young are particularly vulnerable, they become priced out of the jobs market, they may not have had much of a job before but now they won’t have one at all.”
Why, Mcdonalds still need employees but the low paid get extra money.

” It also effectively sets a rate at the lower end of the market and actually acts as a disincentive to employers to compete for the best employees by offering better wages. The effects may not be very great but they are real.”
Ah, The Indian model.

“All I am saying you need to retrain. If you cannot afford a car, you’re in the wrong job.”

I don’t drive. I don’t want a car, and I work in the next village. I walk. I actually like it. As for the retraining, I’ll treat that with the contempt it deserves.

“Creative industry, pretentious moi”

You seem eager enough to tell me about my job, what I should be doing, how much I am being paid, what the others are being paid, and yet you don’t actually know what I do and have ignored what I have said.

“They need to in a new line of employment because their business model seems very strange.”

It’s not a business model, it’s how things are of necessity just at the moment.

You are being really quite patronising and dense. Why not just accept that you don’t know all the ins and outs of my life any more than I would presume to know yours?

@p.diddy

If you are going to quote bits of my comments it’s a good idea not to mix them in with a response to someone else’s, that’s if you are bright enough to realise what you are doing which I doubt. Lamia has been very polite in answering you but I won’t be, you’re an agressive trolling cunt who isn’t worth a reasoned response.

Thorny
“If you are going to quote bits of my comments it’s a good idea not to mix them in with a response to someone else’s, that’s if you are bright enough to realise what you are doing which I doubt. Lamia has been very polite in answering you but I won’t be, you’re an aggressive trolling cunt who isn’t worth a reasoned response.”
Sorry Thorny, I am not that bright but you recognised your comment, that what counts. Also I thought you weren’t going to respond to my goading. Just couldn’t help yourself, and you love it. Also the use of C**t does show a lack of sensitivity towards ladies, which is a concern.
Lamia
“I don’t drive. I don’t want a car, and I work in the next village”
The only creative Tory in the village. Also you live in a village, how the hell you afford it.
“It’s not a business model, its how things are of necessity just at the moment”
It is a bad model, because their profit margins are far too low if they cannot make a sustainable profit. Also if an extra 50 p an hour to a group of low paid workers is going to make a difference then I am afraid the prospects don’t look good.
You might have to get real job, for tougher bosses and maybe live in a town.

Just a brief factual correction for the benefit of Lamia. You are wrong to label Darren Johnson as having gone straight from university to the London Assembly. I have no brief from him to write this, but I can tell you that I have known Darren for over twenty years and before becoming a full time politician he had several jobs and wide experience of the private sector. It is unfair to label him as one of those tiresome politicians that have never done a job in the ‘real world’ before entering politics. best wishes, Ray

The central issue facing the economy is that North Sea Oil and the Council House Sell off was squandered on a property bubble that supported and encouraged private landlords to charge ever higher rents. the IMF considers UK property 30% overvalued. This has been driven by the high rents of landlords who post 2002 have “Priced Out” the first time buyer and property ownership is declining towards 60% of the population.
A living wage is important but reducing rents would be a quicker way of releasing “spending power” and incentivising work, rebalancing the economy and reducing poverty.If landlords went bust who have misjudged the market, then the nationalised banks could rebuy their houses for fair rents via Housing Ass. or housing co-ops or even right to buy at 70% of current value.