Would anyone like a sensible discussion about low pay?

[UKSBD]

I find it impossible to find anywhere to try to have sensible discussions now without it resorting to snarky comments, people set in their ways refusing to even discuss, people getting abusive if they disagree with things said, people quoting statistics to suit their agenda, etc.

Do you think it's possible to have a sensible discussion here on UKBF?

If so, I would like to ask some questions without being accused of either being a looney leftie or a typical Mail reader

Is there anyone here who would like to join a hopefully sensible discussion?

 

[Herper]

I find it impossible to find anywhere to try to have sensible discussions now without it resorting to snarky comments, people set in their ways refusing to even discuss, people getting abusive if they disagree with things said, people quoting statistics to suit their agenda, etc.

Do you think it's possible to have a sensible discussion here on UKBF?

If so, I would like to ask some questions without being accused of either being a looney leftie or a typical Mail reader

Is there anyone here who would like to join a hopefully sensible discussion?

Sure, I love a good discussion and I've got some time before bed for night shift.

 

[UKSBD]

Thanks.

My 1st question is,

I read a lot of people saying that it is crazy that Universal Credit is used to subsidise low wages.

Do you think it is wrong that Universal Credit is used to subsidise low wages or do you think it is a good idea/system? Edit to add: Or something in-between.

 

[Herper]

UC subsidising low wages is in my opinion a good thing, many people I know are on low incomes, myself included. It certainly helps gives a better sense of stability when you know that you're getting some help.

I'm not speaking purely from a financial aspect either. If a low income household is having to spend all of it's low income on essential utilities and bills then the children in those homes often go without, or if the parent decides to make sure the child doesn't, then bills start getting unpaid and so on.

Having UC to give you that break is more than just topping up a wage, it's providing a stable home and meals to children of those households which sets them up for a significantly brighter future.

Of course it doesn't always work out that way. Bad parents will always be bad parents and make bad choices but abolishing it because of misuse by a few is detrimental to the wellbeing of very many more.

 

[Newchodge]

Thanks.

My 1st question is,

I read a lot of people saying that it is crazy that Universal Credit is used to subsidise low wages.

Do you think it is wrong that Universal Credit is used to subsidise low wages or do you think it is a good idea/system? Edit to add: Or something in-between.

You do start with the easy questions!

I think there has been support for the low paid ever since the welfare state was introduced. I believe it was called supplementary benefit in the 60/70's. It was calculated by assessing the actual needs of a family - a couple with 2 people working and no children need substantially less than a family with 1 adult working and 3 children. The big difference now is that a lot of people in full time work need support because the amount they earn does not meet their reasonable needs, even if they have no children.

The problem arises now when employers pay the lowest wages possible. It must be morally indefensible for an employer who pays the staff who make their profits for them at a level that means they need state support to live. If the employer can genuinely not afford to pay more, and takes a similar level of income from the business as their employees, then maybe that business is not viable. But if the employer pays managers 20 times more than the shop floor staff and pays dividends in excess of their wage bill, then state support is actually supporting the managers, owners and shareholders, at least as much as the staff. To me that is unacceptable.

 

[MBE2017]

Personally I disagree with the idea of WTC and UC subsidising employers paying decent salaries.

I hadn’t considered the stability argument before, so thank you Herper for bringing up that point. My own point of view is with these benefits available, there is even less reason for many employers to increase their salaries.

I have mentioned before I believe Governments like such benefits, since it means the voters are ever more reliant on the state, possibly paving the way towards a standard universal benefit in the future.

 

[japancool]

Do you think it is wrong that Universal Credit is used to subsidise low wages or do you think it is a good idea/system? Edit to add: Or something in-between.

In an ideal world, everyone would earn enough to not need a wage subsidy. However, that's simply not the case in Britain because the minimum wage doesn't cover basic needs.

In a sense, UC is a means of wealth redistribution. In theory, it redistributes wealth from the rich to the poor, since UC is funded through taxes. In practice, it redistributes wealth from the middle classes to the poor. That's a function of the tax system.

UC should be funded from corporation tax, but again, the UK's tax regime highly favours large corporations who pay proportionately less tax but receive the greatest benefit from wage subsidies.

 

[UKSBD]

It must be morally indefensible for an employer who pays the staff who make their profits for them at a level that means they need state support to live

Different members of staff have different circumstances.

The pay for one member of staff (call them A) may be perfectly acceptable and enough for them to have a very comfortable lifestyle.

They exact same pay for another member of staff (call them B) may mean they are on the breadline and have to use foodbanks and top ups from the state.

Are you saying the pay rate should be determined by person B?

 

[Herper]

EDITED FOR ACCIDENTAL DOUBLE POST.

Personally I disagree with the idea of WTC and UC subsidising employers paying decent salaries.

I hadn’t considered the stability argument before, so thank you Herper for bringing up that point. My own point of view is with these benefits available, there is even less reason for many employers to increase their salaries.

I have mentioned before I believe Governments like such benefits, since it means the voters are ever more reliant on the state, possibly paving the way towards a standard universal benefit in the future.

Oh governments love anything that makes the people dependant on them, less likely to rock the boat and more willing to accept abuse of their rights.

I'm not 100% against universal benefit or UBI. I would just keep it to a level that covers essentials like rent of a reasonable sized home, a basic internet package because almost all job searching and applications are done online, employers require email addresses and things like signing into work web portals to check schedules and update details and help with energy costs. Basically just food, heat, shelter and the ability to look for work.

I would make active job applications an eligibility criteria though. Not looking? Not getting.

Different members of staff have different circumstances.

The pay for one member of staff (call them A) may be perfectly acceptable and enough for them to have a very comfortable lifestyle.

They exact same pay for another member of staff (call them B) may mean they are on the breadline and have to use foodbanks and top ups from the state.

Are you saying the pay rate should be determined by person B?

Aim for the middle basically, you can't tailor wages to individual staff.

Not naming any names here but I'm a burger flipper for a "restaurant" managed by a clown who can't fix an ice cream machine. My wage is good for the zero skill required but horrible for the toxicity of the place, insane demands and my personal situation. So I'm saving everything I can to get my own IT thing going.

If I was paid higher than other staff just because I think i need it more because I want to do things in my personal life outside of work there would be uproar.

 

[UKSBD]

I'm not 100% against universal benefit or UBI. I would just keep it to a level that covers essentials like rent of a reasonable sized home, a basic internet package because almost all job searching and applications are done online, employers require email addresses and things like signing into work web portals to check schedules and update details and help with energy costs. Basically just food, heat, shelter and the ability to look for work.

The problem with Universal Benefit is again peoples circumstances
For some it would be like winning the pools, for others it would be seen as much too low

In my opinion a Universal Credit system where people receive help based on circumstances rather than flat rates is far more sensible.

The same with low pay
If person A in my example above is living very comfortably, I think it is far more sensible for person B to receive state support if their circumstances are a lot different rather than the employer having to pay them more than person A

The current Universal Credit system may be naff, but the reasoning behind it appears very sensible to me.

 

[Newchodge]

Different members of staff have different circumstances.

The pay for one member of staff (call them A) may be perfectly acceptable and enough for them to have a very comfortable lifestyle.

They exact same pay for another member of staff (call them B) may mean they are on the breadline and have to use foodbanks and top ups from the state.

Are you saying the pay rate should be determined by person B?

No, the pay should be the appropriate rate for the job, bearing in mind the profit level of the employer.

My first para was meant to deal with the fact that different peoples' needs differ.

 

[Herper]

The problem with Universal Benefit is again peoples circumstances
For some it would be like winning the pools, for others it would be seen as much too low

In my opinion a Universal Credit system where people receive help based on circumstances rather than flat rates is far more sensible.

The same with low pay
If person A in my example above is living very comfortably, I think it is far more sensible for person B to receive state support if their circumstances are a lot different rather than the employer having to pay them more than person A

The current Universal Credit system may be naff, but the reasoning behind it appears very sensible to me.

I'm agreeing with you.
UBI would be a benefit, someone making a good wage and a comfortable living wouldn't be eligible.
A flat rate to cover the essentials I listed.

No employee should be paid more than another for the same job. Ever.
The difference from UC is that it wouldn't be a cash deposit benefit or means tested.
You get these specific things, to cover these specific needs so you can look for work.

 

[japancool]

UBI would be a benefit, someone making a good wage and a comfortable living wouldn't be eligible.

The whole point of UBI is that it's universal and not means-tested.

 

[Newchodge]

The whole point of UBI is that it's universal and not means-tested.

Yes, but you would then set tax levels to remove all of the benefit from those whose income means they do not need it.

 

[japancool]

The same with low pay
If person A in my example above is living very comfortably, I think it is far more sensible for person B to receive state support if their circumstances are a lot different rather than the employer having to pay them more than person A

UC already takes circumstances into account, up to a point. If you have children, or you're a couple, or you've got disabilities, you receive more than if you're single, healthy and with no children (although the disability thing only kicks in if you're actually in work).

The government has to make a decision somehow on how much people receive. Its criteria may not be ideal but it's better than nothing.

 

[japancool]

Yes, but you would then set tax levels to remove all of the benefit from those whose income means they do not need it.

Effectively yes.

Unfortunately, UBI really only exists as a theory. It's not been trialled on a wide scale or for a sustasined period of time to test its effects. The effects would be, I suspect, vary according to culture and other non-economic factors, so it's unlikely to be a panacea.

 

[NickGrogan]

The problem arises now when employers pay the lowest wages possible. It must be morally indefensible for an employer who pays the staff who make their profits for them at a level that means they need state support to live. If the employer can genuinely not afford to pay more, and takes a similar level of income from the business as their employees, then maybe that business is not viable. But if the employer pays managers 20 times more than the shop floor staff and pays dividends in excess of their wage bill, then state support is actually supporting the managers, owners and shareholders, at least as much as the staff. To me that is unacceptable.

Actually is very defensible. You are assuming that all employees or potential employees are capable, physically and mentally of earning enough income for the company to cover the minimum wage.

Assuming a minimum wage of ~£10 per hour, this means that staff must generate more than that - to cover tax, NI, other benefits, time off, required equipment, office space, etc, etc, etc. If the staff member is generating £20 to £30 per hour, all good.

But what about those who can't? If the best they can do makes the employer less than minimum wage, they immediately become unemployable. As the minimum wage increases, more and more people fall into this trap.

Set a minimum wage of £15 and they need to be generating closer to £50, and so on.

We already have a large number of people who cannot be employed, and every increase in minimum wage increases this number.

Support for low paid staff means that the employee can generate a lower rate of return for the employer and still have a job.

Being employed greatly improves people's well-being, gives a sense of purpose and allows them to learn skills and progress.

A company I worked for years ago used to employ "unemployable" people at really low wages - it topped up the benefits a bit but was nowhere near enough to live on. The goal was to give people opportunities.

 

[NickGrogan]

Yes, but you would then set tax levels to remove all of the benefit from those whose income means they do not need it.

So not universal and means-tested then? I'm not sure you understand what UBI means.

 

[Newchodge]

So not universal and means-tested then? I'm not sure you understand what UBI means.

Universal Basic Income. Paid to everyone regardless of means. What the tax system does to the recipient afterwards does not affect it being UBI.

 

[UKSBD]

UC already takes circumstances into account, up to a point. If you have children, or you're a couple, or you've got disabilities, you receive more than if you're single, healthy and with no children (although the disability thing only kicks in if you're actually in work).

The government has to make a decision somehow on how much people receive. Its criteria may not be ideal but it's better than nothing.

Yes, I agree

But what appears to be a hot topic at the moment in a lot of press and particularly on the likes of Twitter is that it is wrong that some low paid workers are subsidised by UC.

Try to ask anyone why and you normally get shot down or accused of being a Gammon, Mail reader, etc. and no one answers the question.

 

[japancool]

Try to ask anyone why and you normally get shot down or accused of being a Gammon, Mail reader, etc. and no one answers the question.

I can't say I've ever read the Gammon.

 

[UKSBD]

No, the pay should be the appropriate rate for the job, bearing in mind the profit level of the employer.

What is an appropriate rate for the job, bearing in mind the profit level of the employer, may still not be enough for some to live on, and to me it makes perfect sense that their income should then be subsidised by the state and not the employer.

 

[Annoying Donkey]

No employee should be paid more than another for the same job. Ever.

So no reward for the individual who is twice as efficient...?

 

[NickGrogan]

Universal Basic Income. Paid to everyone regardless of means. What the tax system does to the recipient afterwards does not affect it being UBI.

What tax rate would you apply to achieve this? UC has a taper which means that the poorest are paying a marginal tax rate of 80%.

Do you think this will increase the chances of people looking for work?

 

[NickGrogan]

So no reward for the individual who is twice as efficient...?

Or disincentive for the individual who works half as hard?

 

[Herper]

So no reward for the individual who is twice as efficient...?

Performance bonus isn't base pay.

 

[NickGrogan]

Performance bonus isn't base pay.

Of course, it is. How is it paid, and how is it taxed?

 

[japancool]

What tax rate would you apply to achieve this? UC has a taper which means that the poorest are paying a marginal tax rate of 80%.

Do you think this will increase the chances of people looking for work?

What I would do is, for example, if UBI was £15k, have a tax rate of 50% for the first £5000, at which point it falls, before rising again at high income.

That way, someone earning £20000 would pay £2.5k tax, compared to now around £1.4k. That sounds high, but earning £5k from a job shouldn't be onerous (even assuming UBI will cause wages to fall).

 

[UKSBD]

Aim for the middle basically, you can't tailor wages to individual staff.

Aiming for the middle means the employer is effectively overpaying the going rate and subsidising the state.

Should it not be the states responsibility to look after people who can't live on the going rate rather than the employer taking on the states responsibility?

Extreme example using a good employer paying a fair wage

Person A is single, no children, small 1 bed flat 2 minutes from work, doesn't need a car, is paid £14 an hour and is very comfortably of.

Person B, single, 3 kids, 3 bedroom flat, 20 miles from work, has to drive to work, has to pay for parking paid £14 an hour, but can't afford to live on less than £18 an hour equivalent.

Should the good employer put both of their rates up to £16 an hour (Middle) or should the state subsidise person B so they can live?

 

[Herper]

Of course, it is. How is it paid, and how is it taxed?

Base pay would be your hourly pay. If you've performed well you get a little extra on top. It's obviously still taxed the same as it is income but your hourly pay won't be higher than another employees.

I used to work for a company, a terrible place that would put bonuses and such into your payslip with different pay codes. I've never done payroll so I'm not sure how it works but oh boy was that place a riot with outrageous turnover.

One of the performances bonuses was turning up to work on time everyday and completing your scheduled hours. Man that place was...special.

 

[japancool]

Person B, single, 3 kids, 3 bedroom flat, 20 miles from work, has to drive to work, has to pay for parking paid £14 an hour, but can't afford to live on less than £18 an hour equivalent.

Should the good employer put both of their rates up to £16 an hour (Middle) or should the state subsidise person B so they can live?

Well, ultimately in that case, it's a choice made by person B to work and live there. He has a choice to move closer, take public transport or find a job closer to home.

Equally, if the employer can't find a suitable employee closer to home, he has to pay a suitable rate to hire the person, rather than expecting the Government to subsidise him. That might mean paying him the same basic rate but providing a travel allowance, for example. If he can't afford that, then you have to question the viability of a business that can't get suitable employees.

Now, this will make me sound like a Daily Mail reader but you have to question people who have children and can't afford to look after them. There are, of course, circumstances like divorce that cause this, but both parents should still be involved in the costs of their children.

 

[NickGrogan]

What I would do is, for example, if UBI was £15k, have a tax rate of 50% for the first £5000, at which point it falls, before rising again at high income.

That way, someone earning £20000 would pay £2.5k tax, compared to now around £1.4k. That sounds high, but earning £5k from a job shouldn't be onerous (even assuming UBI will cause wages to fall).

60%+ margin rate.

The lowest paid are now paying the highest tax rate.

 

[japancool]

60%+ margin rate.

The lowest paid are now paying the highest tax rate.

Yes, that is the effect, although it depends on how you set the highest tax rates. But given that the idea is to eliminate poverty, that may be the price that needs to be paid.

It's also an incentive to get better paid jobs. Like I said, earning £5k from a job shouldn't be difficult.

 

[Newchodge]

Of course, it is. How is it paid, and how is it taxed?

Performance bonus does not count towards the National Minimum Wage, so it does not count as base pay.

 

[Newchodge]

What is an appropriate rate for the job, bearing in mind the profit level of the employer, may still not be enough for some to live on, and to me it makes perfect sense that their income should then be subsidised by the state and not the employer.

Absolutely. Provided the employer is paying a reasonable rate, bearing in mind their profit levels.

 

[NickGrogan]

Does it reduce poverty, or just move the levels around?

Poverty in the UK is relative poverty, defined as 60% of the average salary.

If you increase everyone's income by £15k, you just move the average up a bit.

 

[Herper]

Aiming for the middle means the employer is effectively overpaying the going rate and subsidising the state.

Should it not be the states responsibility to look after people who can't live on the going rate rather than the employer taking on the states responsibility?

Extreme example using a good employer paying a fair wage

Person A is single, no children, small 1 bed flat 2 minutes from work, doesn't need a car, is paid £14 an hour and is very comfortably of.

Person B, single, 3 kids, 3 bedroom flat, 20 miles from work, has to drive to work, has to pay for parking paid £14 an hour, but can't afford to live on less than £18 an hour equivalent.

Should the good employer put both of their rates up to £16 an hour (Middle) or should the state subsidise person B so they can live?

"Person A is single, no children, small 1 bed flat 2 minutes from work, doesn't need a car, is paid £14 an hour and is very comfortably of."

This is me. I am person A. Single, one bed flat, I walk to work down the street from me and don't need a car, I'm on £12 an hour for night shift. I am nowhere near very comfortable lol.

Person B should get a better job frankly if they can't afford to get by on their wage. Until then, budget better.

I said you can't give someone a higher base pay because their life outside work is different than someone else's. That's not related to the business. Not an employers role to fund their lifestyle and life choices.

 

[NickGrogan]

Performance bonus does not count towards the National Minimum Wage, so it does not count as base pay.

Yes it does.

When calculating gross pay for minimum wage purposes, the employer can
include:
• Incentive, merit or performance-related pay;
• Bonus payments;

https://www.unison.org.uk/content/uploads/2021/11/National-Minimum-Wage-0322.pdf

 

[Newchodge]

Yes it does.

When calculating gross pay for minimum wage purposes, the employer can
include:
• Incentive, merit or performance-related pay;
• Bonus payments;

https://www.unison.org.uk/content/uploads/2021/11/National-Minimum-Wage-0322.pdf

You're right. It is shift allowances that don't count.

 

[Ian J]

But what appears to be a hot topic at the moment in a lot of press and particularly on the likes of Twitter is that it is wrong that some low paid workers are subsidised by UC.

I have a bee in my bonnet about the low paid workers quoted by the media as they all appear to be single mothers. In the old days fathers were obliged to continue to support their children even after they had pushed off but this is something that has since gone by the wayside and it is now the role of the state to finance the upbringing of their children.

Perhaps if the hardline Child Support Agency was bought back and more fathers were made to pay for their children the reliance on the state would be much reduced