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Minimum Wage Going Up To £6.50/hr

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Woo Hoo!!

http://uk.finance.ya...-104331418.html

The minimum wage will be going up to £6.50, business secretary Vince Cable's confirmed.

It's currently £6.31 for those 21 and over. The changes will come into effect from October.

A confirmation was expected with the chancellor's budget statement next week. George Osborne has repeatedly called for a rise to £7.

The planned hike, recommended by the Low Pay Commission, has been backed by David Cameron.

While advocates of minimum wage increases often stress that higher price floors for labour haven't seen proportionate job losses, focus should probably be on job growth, or better still growth in labour hours.

One study published last December, "Effects of the Minimum Wage on Employment Dynamics" finds that the minimum wage reduces net job growth, "primarily through its effect on job creation by expanding establishments."

"These effects are most pronounced for younger workers and in industries with a higher proportion of low-wage workers", say the paper's authors.

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Trying to engineer some wage inflation so the penny doesn't drop that the boomer HPI fest of the 80's & 90's was a one off and isn't going to happen for this generation who've bet the farm on the loaded ponzi dice.

It's a good thing for the low paid but working tax credits was just taking up the slack anyway.

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George Osborne has repeatedly called for a rise to £7.

He's like some 80s union boss. W..T...F...? the world is surely on its facking head.

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So more compression for those doing higher skilled jobs and no wage increase?

Might as well take a load paid job and then have govt subsidies.

A substantial increase in the minimum wage would have been inflationary, potentially imperiling Osborne's bogus austerity in the run up to the GE. Plus he almost certainly intends to announce tax cuts for the loadsas in next week's budget, which will also have to be funded. I'm guessing that he thinks he'll obtain a bigger GDP impulse from tax cuts, perhaps by loading them into the housing market directly through the abolition of stamp duty?

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Minimum wage needs to be about £8.50, minimum.

BTW is it this April that the first 10k becomes tax free?

I've got mixed feelings as if the minimum wage was 8.50, i'd be very close to it.

There's no guarantee that other wages will rise.

I think my mixed feeling come mostly from pride,

How could it be bad to give the poor a little more?

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How could it be bad to give the poor a little more?

Because companies will not hire a person if they are being forced to pay them more than the marginal value that person produces. Minimum wage hikes are good for the poor who remain in their jobs, but bad for the poor people who lose their jobs since it is no longer profitable for companies to employ them.

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Because companies will not hire a person if they are being forced to pay them more than the marginal value that person produces. Minimum wage hikes are good for the poor who remain in their jobs, but bad for the poor people who lose their jobs since it is no longer profitable for companies to employ them.

unfortunately true!

Truth is, i know people who live in cambridge with 3 children earning about 6.50 and they are doing quite well. Designer clothes etc.

Unfortunately some things they say make me believe they are in alot of debt to fund that lifestyle.

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Because companies will not hire a person if they are being forced to pay them more than the marginal value that person produces. Minimum wage hikes are good for the poor who remain in their jobs, but bad for the poor people who lose their jobs since it is no longer profitable for companies to employ them.

illiterate nonsense. Wages are not set by how much value you produce but by individuals/groups ability to enforce their wage demands. Given that you are a banker, and have benefited from this as it is why your income has doubled relative to other professions over the last 30 years, I would have thought you had known it.

I am now waiting for you to explain how the marginal value the financial sector has added to society has doubled vs 30 years ago......

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illiterate nonsense. Wages are not set by how much value you produce but by individuals/groups ability to enforce their wage demands. Given that you are a banker, and have benefited from this as it is why your income has doubled relative to other professions over the last 30 years, I would have thought you had known it.

Wages are set by marginal productivity. If hiring a worker increases a firm's profits by £5/hour but they have to pay £6/hour to hire the worker, then they will not hire them. This is just basic logic/economics.

Substantially increasing the amount that companies have to pay to low-skill workers is likely to increase the cost of hiring workers beyond the value/profit they bring to the company. This ultimately leads to responses like outsourcing (i.e. replacing the workers with those from other countries which do not enforce minimum barriers), replacing workers with technology (eg the rise of automated checkouts in supermarkets), and so on.

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unfortunately true!

Truth is, i know people who live in cambridge with 3 children earning about 6.50 and they are doing quite well. Designer clothes etc.

Unfortunately some things they say make me believe they are in alot of debt to fund that lifestyle.

Living on £6.50/hour isn’t as bad as it sounds, because the amount of benefits you will be getting is substantial. An average earning family with 3 kids will typically need a 3-4 bedroom house, for which the mortgage will be substantial. In contrast, the low earning family will typically be given either social housing or housing benefits which essentially removes the need to pay rent/mortgage. In addition, they will be eligible for a wide range of additional help such as child tax credit, working tax credit, and so on.

If you actually look at the figures (which you can do here: http://www.entitledto.co.uk/), a two-children family with a single earner who makes £15k while the other partner stays at home, are entitled to an amount of benefits which is equivalent to an additional £25k of gross salary. So there is basically no difference between making £15k/year and making £40k/year from a net income perspective, at least in a single-earner household.

Poverty basically doesnt exist in the UK, at least in the sense of people going hungry.

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Wages are set by marginal productivity. If hiring a worker increases a firm's profits by £5/hour but they have to pay £6/hour to hire the worker, then they will not hire them. This is just basic logic/economics.

Substantially increasing the amount that companies have to pay to low-skill workers is likely to increase the cost of hiring workers beyond the value/profit they bring to the company. This ultimately leads to responses like outsourcing (i.e. replacing the workers with those from other countries which do not enforce minimum barriers), replacing workers with technology (eg the rise of automated checkouts in supermarkets), and so on.

Again illiterate nonsense. But I know you have to believe this to self-justify your financial sector salary and your own self-worth......it's hard for an individual to accept truths that would shatter their own self-image.

So if I am wrong then answer this simple question. We all know that allowing in large scale cheap migrant labour has reduced wages at the bottom end. If you are right, then how has allowing in these workers lowered the marginal productivity of the british born who do these jobs?

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So if I am wrong then answer this simple question. We all know that allowing in large scale cheap migrant labour has reduced wages at the bottom end. If you are right, then how has allowing in these workers lowered the marginal productivity of the british born who do these jobs?

Largely because the marginal net income you get from working a minimum wage job is very low - your government benefits are gradually taken away as your earnings increase, so by the time you factor that in, youre looking at around £1-2/hour in your pocket maximum for many people. As a result, the wages associated with low-skill jobs were artificially high because employers had to overpay people in order to persuade them to work rather than simply collect benefits. Immigrants from ultra-low wage countries usually assign more value to small sums of money since they often want to save up a bit and move back home (or send money to family), so they are much more likely to be happy to work a minimum wage job with a marginal salary of £1-2/hour than a British person is (ie they are less likely to want to simply collect benefits). Therefore, what you are now seeing is unskilled wages actually drop to their 'true' (in the sense of marginal product) level. They are still artificially high though - if the government was to stop all benefits programs tomorrow so that people who didnt work got absolutely nothing, you would see a lot of British people suddenly become very happy to work for £2/hour if thats all they could get. I'm not saying that the government should actually do this, but it is undoubabtly true that unskilled wages are being inflated due to the benefits system, and that immigrants are helping to lower them to equilibrium.

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Largely because the marginal net income you get from working a minimum wage job is very low - your government benefits are gradually taken away as your earnings increase, so by the time you factor that in, youre looking at around £1-2/hour in your pocket maximum for many people. As a result, the wages associated with low-skill jobs were artificially high because employers had to overpay people in order to persuade them to work rather than simply collect benefits. Immigrants from ultra-low wage countries usually assign more value to small sums of money since they often want to save up a bit and move back home (or send money to family), so they are much more likely to be happy to work a minimum wage job with a marginal salary of £1-2/hour than a British person is (ie they are less likely to want to simply collect benefits). Therefore, what you are now seeing is unskilled wages actually drop to their 'true' (in the sense of marginal product) level. They are still artificially high though - if the government was to stop all benefits programs tomorrow so that people who didnt work got absolutely nothing, you would see a lot of British people suddenly become very happy to work for £2/hour if thats all they could get. I'm not saying that the government should actually do this, but it is undoubabtly true that unskilled wages are being inflated due to the benefits system, and that immigrants are helping to lower them to equilibrium.

Or rather the pitchforks would come out at last. No amount of X-voice Strictly would stop that. Crumbs like this are mostly used as rabble-pacifiers.

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You lack ambition - why not raise it to £50/hour so that we can abolish poverty and everyone can be rich!!

(hint: here is why http://www.nber.org/papers/w12663)

£50/hr or £1200/wk after tax and NI, for a typical 37.5hr week, assuming you're not still paying back your student loan. Abolish poverty? You'd barely have enough to cover the rent on the average London 2 bedder (£1650/mnth) on that pittance.

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Or rather the pitchforks would come out at last. No amount of X-voice Strictly would stop that. Crumbs like this are mostly used as rabble-pacifiers.

If I could only earn £2 per hour and see no prospect for improvement on that I think I would choose to checkout from Planet Earth!

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