Monday 29 October 2012

The living wage fallacy

When are you poor or not?

This is a favourite topic of our class obsessed media and even more a favourite topics of right on left wing political think tanks. Fresh from the success of pushing the 'relative poverty' mantra about a sate of poverty that could never be esapced even if you made the lowest paid multi-millionaires, we now have the 'living wage' concept.  20% of people are too underpaid, amazing how the statistics come up with an 80//20 division eh? Are the top 20% 'overpaid' too?

Apparently someone else can decide how much money you need to live on (see the problem here? Anyone else married?) happily in various parts of the UK. of course, this is then compared to average hourly wages and hey presto there are literally millions of us below the breadline, all it would take it a measly pay rise to make everyone comfortably off.

There are too many flaws in this sort of conceptualising to even try and point out; where do people live? what stage of their life are they at? (by way of example, I remember being a student and could go out 2 nights for £10 easily - its not that long ago) what are they trying to do? Are they working part-time because someone else is full time? Are they immigrants or others with poor skills?

There are a whole multitude of reasons why people take on poorly paid jobs. Rarely is it because of pure desperation. Even this study finds that the worst paying job is waitressing - and htis is the most causal labour of all, students, overseas visitors, all different types of people and very few making a career at it. Which incidentally does have a causal link to why it is so badly paid; there is demand for this kind of work so employers pay less. In a way they can't manage with say computer programmers.

it makes me long for the study into whether we should even have a minimum wage, I don;t recollect it has ever been done satisfactorily since we introduced that concept; these days of course we are onto the living wage - what next the "comfortable wage"?


L fairfax said...

A living wage for someone who lives in a subsidised council house is a poverty wage for someone who has to pay market rent.
The living wage campaigners seem to ignore this details

Blue Eyes said...

It's an absurd concept. Calling it the "living" wage implies that if you work for less you will not live. Clearly that market won't survive long one way or another.

As others have pointed out, the "living wage" is calculated net, whereas the minimum wage is specified gross. If a full-time employee on minimum wage was not taxed he/she would earn a living wage.

I grew up in a home which by today's terms would be defined as overcrowded, unhealthy and unfit to house even the most abhorrent illegal immigrant. My mum sold it for £950k in 2007.

It's just claptrap to try and get the government to redistribute more than it already is.

Bill Quango MP said...

I loathe these constructs.
BQ Industries is , a living wage employer. and a minimum wage employer.

if we paid the minimum wage pickers and packers the same as the supervisor, which is roughly what is proposed, then , in order to keep the payment for responsibility, everyone would have to have a pay rise.

2011 was the worst year yet. A further 15% redundancies were made and many of the workforce lost 4 hours plus each. About 1/5 of their week. The orders were not there to pay them. It was cut back or clear off.

If this pay scheme had come in in 2011 or even now, the immediate response is a 33% cut in jobs.

Labour always, always respond that this didn't happen in 1997.
That is true. 1997 was a boom year.One of the best ever and it lasted to 2001.
And the minimum wage , for the southeast and london was below what was already being paid. No one was working for £2 p/h.
In the North west and south west and Wales you did see a rise in the real wage.
yet the boom allowed this to be swallowed up.

However there is no mistaking the loss in low paid retail jobs numbers between '97 and 2007.
The average River Island or next or whatever would employ 10-15 people in '97.
By 2007 that would be, on average, 5.

When I first worked for a jewelers in 1982 there were 11 of us. The same jewelers today, now in private hands, not chain, employs 3.
That owner/employer would surely have extra if it wasn't for
1. cost
2. all the associated crap that goes with.

BQ-ind has just started recruiting for Xmas as orders are in {hurray}
but if the wage had increased we would not have done so. There would be no point.
Living wagers don't think that will happen.
they are wrong. It isn't 1997 anymore.

{And I write as someone who was all in favour of the minimum wage, although not in its biased universal form and not increasing every year regardless.}

James Higham said...

what next the "comfortable wage"

Everyone a prince?

Anonymous said...

From the Daily Heil -

British people believe they need £1,722.50 a month to survive, and £4,413.50 for a life of luxury, it has emerged.

Most thought £1,922.75 a month before tax was the optimum amount for a comfortable lifestyle, a survey of 2,000 adults revealed.


To survive: £20,670 P.A.
To live comfortably: £23,073 P.A.
To live in luxury: £52,962 P.A.

Weekend Yachtsman said...

Just make the minimum wage £25 per hour.

Problem solved! All problems solved!

What could possibly be wrong with this argument?

Electro-Kevin said...

British people believe they need £1,722.50 a month to survive

Sounds about right, but I don't know if that includes people who have had to take out a 200k mortgage (or more) for their first home.

A take home pay of around £430 pw ... just to survive !

What low skilled jobs pay that without the need of a tube of KY ?

Budgie said...

And no.

I would scrap the minimum wage. And every special maternity/paternity statutory perk (particularly the return to your old job provision).

However, my experience indicates that very many at, or near the top, are vastly overpaid (and over-rated). They appear to have got there by politics (not party politics, though that too), the old boy network or sisterhood, together with an unhealthy dose of braggado, bullying and bullshit.

These people claim they are highly paid because they are rare and special. But only because they spend their productive time on preventing anyone else competing effectively for their positions. They relish their lucrative positions and by hook or by crook they will stay there.

There is a sclerosis, a lack of a free market, at the top in British industry. Over paying merely encourages the venal.

Blue Eyes said...

Budgie, spot on. The "professions" in particular have been very successful at pulling the ladder up by enforcing restrictive practices masquerading as quality control.

"Chartered Accountants" managed to avoid spotting Enron practices. I bet few were struck off or went to jail, yet business are forced to buy their services.

GPs are glorified and extremely expensive triage nurses.

There there are the corporate "execs" who get paid off even if the company goes to the wall. How does that work?

CityUnslicker said...

Budige/BE - I totally agree, Corporatism is the enemy of capitalism and it is deeply entrenched in the UK.

Except that it is even worse in virtually every other country in the world.

Electro-Kevin said...

Blue & Budgie - There is a lot to be said for 'professional' training but from the professional's point of view rather than the client's.

The client pays for rarity of talent. This rarity is created artificially from the requirement of institutions for members to have a vast amount of knowledge and training - most of it unlikely to be of use to the client base. The knowledge is really there to constrict the supply of professionals.

Doubtless the relevant skills could have been achieved with a fraction of the training but the whole point of professionalism isn't quality control but to construct a barrier to the free market.

My own 'trade' - train driving - has elected to commit suicide in the name of political correctness.

Not enough minorities or women were passing the mechanical comprehension tests and so they've scrapped them. Ditto the English comprehension tests which were ditched some while ago.

As it happens, this is one of the rare cases where exclusion IS warranted. A need to understand the fundamentals of electricity, friction, thermodynamics, turning forces etcetera is highly desirable.

The chap in charge of my union is paid an incredible £186k per year.

Doubtless he thinks it was his 'table banging' skills that got us our pay rises.

And so, it seems, do my fellow members. Despite a two year campaign I was unable to get this through to them.

The scrappage of testing continues.

Electro-Kevin said...

The rarity in our case comes from being smart enough to do our job and dumb enough to take it.

Blue Eyes said...

"whole point of professionalism isn't quality control but to construct a barrier to the free market. "

Yes, absolutely.

To do my job I require quite a high level of skills. That is what the clients want to pay for. To pass the exams I need gold plated skills and the client then pays for the rarity "value" while my employer can underpay me because he knows full well I have nowhere else to go until I've leaped that hurdle.

"smart enough to do our job and dumb enough to take it"

That applies to a lot of jobs!

Anonymous said...

Yep, I made a strategic blunder in choice of profession, which hasn't maintained the barriers to entry like the MBA and ACCA have.

Tactical reaction is to move into a sector which needs security clearance and only open to English nationals.

N.B. I see Apple have sacked their VP of Retail, recently recruited from Dixons. Maybe they expected results not memos!