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Osborne Minimum Wage Plan To Reduce Welfare Might Have A Problem....

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http://www.zerohedge.com/news/2015-07-22/obamas-minimum-wage-utopia-just-hit-brick-wall

And so, as Fox News reports, it is no surprise that the sudden gains in income from a government-mandated $15 minimum wage would tip some over the edge of their handouts entitlement... and thus dicincentize work altogether...

Seattle’s $15 minimum wage law is supposed to lift workers out of poverty and move them off public assistance. But there may be a hitch in the plan.

Evidence is surfacing that some workers are asking their bosses for fewer hours as their wages rise – in a bid to keep overall income down so they don’t lose public subsidies for things like food, child care and rent.

Full Life Care, a home nursing nonprofit, told KIRO-TV in Seattle that several workers want to work less.

“If they cut down their hours to stay on those subsidies because the $15 per hour minimum wage didn’t actually help get them out of poverty, all you’ve done is put a burden on the business and given false hope to a lot of people,” said Jason Rantz, host of the Jason Rantz show on 97.3 KIRO-FM.

The twist is just one apparent side effect of the controversial -- yet trendsetting -- minimum wage law in Seattle, which is being copied in several other cities despite concerns over prices rising and businesses struggling to keep up.

The notion that employees are intentionally working less to preserve their welfare has been a hot topic on talk radio. While the claims are difficult to track, state stats indeed suggest few are moving off welfare programs under the new wage.

Despite a booming economy throughout western Washington, the state’s welfare caseload has dropped very little since the higher wage phase began in Seattle in April. In March 130,851 people were enrolled in the Basic Food program. In April, the caseload dropped to 130,376.

At the same time, prices appear to be going up on just about everything.

Some restaurants have tacked on a 15 percent surcharge to cover the higher wages. And some managers are no longer encouraging customers to tip, leading to a redistribution of income. Workers in the back of the kitchen, such as dishwashers and cooks, are getting paid more, but servers who rely on tips are seeing a pay cut.

Osbornes minimum wage plan to be sabotaged by people simply deciding to work less? Welfaretraprus.

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We need some draconian measures to deal with stuff like this.

In work benefits should only kick in once you've worked 37.5 hours.

If you can't get 37.5 hours work, then you should have to volunteer for a charity for the difference.

My sister is an occupational therapist*. She cut her hours dramatically when tax credits were introduced. Incentivising people not to work was a ridiculous idea to start with.

*she's also about the best example of a sanctimonious self entitled public sector worker that you could ever hope to meet.

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There are more fit healthy people than there are productive full time good jobs....good meaning jobs that will repay housing debt or rent and support a family....that is why we have so many two for the price of one jobs....either that or more unemployment......how many hours need to be done to qualify as employed status?.....any job is better than no job?

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There are more fit healthy people than there are productive full time good jobs....good meaning jobs that will repay housing debt or rent and support a family....that is why we have so many two for the price of one jobs....either that or more unemployment......how many hours need to be done to qualify as employed status?.....any job is better than no job?

If you work it out, under the current regime, it costs almost as much to keep a family of two adults and two kids at home as it does to pay one of them £18k a year as a public sector worker.

So why not, with a stroke of the pen, make them all public sector workers?

It sounds like socialism gone mad but if the cost is the same....

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http://www.zerohedge.com/news/2015-07-22/obamas-minimum-wage-utopia-just-hit-brick-wall

Osbornes minimum wage plan to be sabotaged by people simply deciding to work less? Welfaretraprus.

I saw this and thought about posting it but since I'm always moaning on about Effective Marginal Tax Rates, I thought I wouldn't this time.

However, since you have posted it, I can no longer resist going all Eric.....

"High EMTR kills motivation" (once you can be bothered to work it out)

welfare%20cliff_0.jpg

In Osbornes case, I think he is hoping that he simply won't have to pay it and that employers end up picking up the bill.

I'm spending way too much time pondering the effects of EMTR these days. My conclusion so far is that the absolute priority is keeping housing costs down so you can optimise your income vs free-time and avoid the student loans tax.

With house prices so high, this is obviously rather tricky. The only way round it seems to be :

A - Don't buy a house and don't pay rent (e.g. squat, live in an adapted vehicle - caravan/motorhome)

B - Bypass planning, e.g. build temporary structures in relatives gardens (ask nicely!)

Which basically means "cheat".

Edited by VeryMeanReversion

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If you work it out, under the current regime, it costs almost as much to keep a family of two adults and two kids at home as it does to pay one of them £18k a year as a public sector worker.k

So why not, with a stroke of the pen, make them all public sector workers?

It sounds like socialism gone mad but if the cost is the same....

Unfortunately the country is not wealthy enough to afford that....reached the overdraft limit......now it is payback time.

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There are more fit healthy people than there are productive full time good jobs....good meaning jobs that will repay housing debt or rent and support a family....that is why we have so many two for the price of one jobs....either that or more unemployment......how many hours need to be done to qualify as employed status?.....any job is better than no job?

That was true fifty years ago too. The difference is that back then 50% of the population stayed at home and raised families while the other 50% earned enough to support that family.

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16 hours a week of work and you continue to claim JSA..from gov website "There is no specific number of hours that makes someone full or part-time, but a full-time worker will usually work 35 hours or more a week."

Income-based Job Seekers Allowance

To get income-based JSA:

  • you must work less than 16 hours per week on average
your partner (if you have one) must work less than 24 hours per week on averagemust have £16,000 or less in savings

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I've wondered about this, but cant the dole office force you to look for full time work / a second job if you are working less than full time hours?

Yes, I think so. If you work less hours you have to make up the 35 hours required with job searching/jumping through hoops on the threat of sanctions. I think this applies to parents particularly who can share the 35 hours between them??

I might be wrong as I'm no expert on the benefits system, it's mind bogglingly complicated.

Edited by Solitaire

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We need some draconian measures to deal with stuff like this.

In work benefits should only kick in once you've worked 37.5 hours.

If you can't get 37.5 hours work, then you should have to volunteer for a charity for the difference.

My sister is an occupational therapist*. She cut her hours dramatically when tax credits were introduced. Incentivising people not to work was a ridiculous idea to start with.

*she's also about the best example of a sanctimonious self entitled public sector worker that you could ever hope to meet.

Same think happen when my mum worked in coop. No one would work more than 16hrs because of tax credits. I wish someone would point that to the labour party a bit more. Just put them on the spot. Allways love it when they squirm.

I dont descriminate about which colour you belong to. a tory would do just as good

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Unfortunately the country is not wealthy enough to afford that....reached the overdraft limit......now it is payback time.

There's no such thing.

It's quite bizarre how apparently 80% or even 40% or 35% of output borrowed by a sovereign country which prints its own money, controls its own legislature, can raise taxes at will and defines its central bank mandate is somehow abritrarily decided to be "reaching the overdraft limit" but it's perfectly normal for a household without all those powers to borrow 300,400,500% of their output to buy a house and the same person (Osbourne) who says 40% is excessive for a country, thinks nothing of increasing household debt to 150% of income in aggregate.

Doesn't even pass the smell test.

Edited by R K

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That was true fifty years ago too. The difference is that back then 50% of the population stayed at home and raised families while the other 50% earned enough to support that family.

.....meaning in other words, then saw part time jobs or half time jobs for all.......in recent years debt has taken up the flak, meaning debt has covered up the reality of the truth helping to hide the real position where we all stand.

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There's no such thing.

It's quite bizarre how apparently 80% or even 40% or 35% of output borrowed by a sovereign country which prints its own money, controls its own legislature, can raise taxes at will and defines its central bank mandate is somehow abritrarily decided to be "reaching the overdraft limit" but it's perfectly normal for a household without all those powers to borrow 300,400,500% of their output to buy a house and the same person (Osbourne) who says 40% is excessive for a country, thinks nothing of increasing household debt to 150% of income in aggregate.

Doesn't even pass the smell test.

....overdrafts at 0% or 0.5% fair enough......how much overdraft interest does greece pay? ;)

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Our welfare system already had this problem with the 16 hours rule in tax credits.Its a very difficult area to get right.Labour got it as wrong as you can of course.

You need a lower starting level to get people into jobs who perhaps have been away from the workplace for a while/low skills etc.However you also need to limit it in some way to stop it being the "sweet spot default".

What you really need is to make sure benefits encourage people into work but are means tested away quickly.This makes very high marginal loss rates of course and people avoid those.Its for that reason the quicker you can means test away the better.

The two child tax credit limit coming in and changes will make all tax credits end at roughly £20k for one child,£25.5k for two or more.Thats getting close to the right level.It would probably be better if they went at £17k/£22k but a longer term freeze will see to that.

The changes are quite big,and they do the job or removing a lot of people from tax credits.The people in work full time/couples etc who now might get £30/£50 a week.They will be means tested off tax credits now.

Once they are off there is then less support for the system.The biggest demographic of people who hate benefits are those just above the means test level.

The final stage of reform would be after this stage is reached.Then you introduce higher hours rules.24 once a child is 5 ,30 once a child is 12.You have to be very careful though that you dont encourage people then to go back on out of work benefits.The best way to stop that is to make a very engaged out of work system where job search etc is done in Jobcentres and people sent on mandated 30 hour courses for 3 months out of every 6.

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Our welfare system already had this problem with the 16 hours rule in tax credits.Its a very difficult area to get right.Labour got it as wrong as you can of course.

You need a lower starting level to get people into jobs who perhaps have been away from the workplace for a while/low skills etc.However you also need to limit it in some way to stop it being the "sweet spot default".

What you really need is to make sure benefits encourage people into work but are means tested away quickly.This makes very high marginal loss rates of course and people avoid those.Its for that reason the quicker you can means test away the better.

The two child tax credit limit coming in and changes will make all tax credits end at roughly £20k for one child,£25.5k for two or more.Thats getting close to the right level.It would probably be better if they went at £17k/£22k but a longer term freeze will see to that.

The changes are quite big,and they do the job or removing a lot of people from tax credits.The people in work full time/couples etc who now might get £30/£50 a week.They will be means tested off tax credits now.

Once they are off there is then less support for the system.The biggest demographic of people who hate benefits are those just above the means test level.

The final stage of reform would be after this stage is reached.Then you introduce higher hours rules.24 once a child is 5 ,30 once a child is 12.You have to be very careful though that you dont encourage people then to go back on out of work benefits.The best way to stop that is to make a very engaged out of work system where job search etc is done in Jobcentres and people sent on mandated 30 hour courses for 3 months out of every 6.

Isn't this why the Swedish welfare works.

You have to go out and get a job and work. If you don't then the the welfare system will occupy your time for 40 hours a week.

There's no real choice - you work 35+h/week either way.

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There is no particular limit to the number of jobs. Just look around. As long as money is circulating and not stuck in the hands of the few then demand should be sufficient.

Quantify demand........no fridge to having a fridge, yes there is a demand for people to have fridges.......from having a fridge to having a fridge with an ice drinks making compartment, no or very little demand for that minor upgrade.......once all needs are met everthing else makes a very minor or no benefit at all to the quality of life.....so for the extra work and time to gain very little or nothing at all has no benefit....that is what has to be evaluated......have we reached the stage where needs for far many more of us in the western world have been met....only wants are required to be paid for using time, work and energy?

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Isn't this why the Swedish welfare works.

You have to go out and get a job and work. If you don't then the the welfare system will occupy your time for 40 hours a week.

There's no real choice - you work 35+h/week either way.

This seems a very sensible system. There is plenty that could be constructively done and there's no need to treat people as cheap labour, which unfortunately is what would happen here which would undermine the system.

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There are more fit healthy people than there are productive full time good jobs....good meaning jobs that will repay housing debt or rent and support a family....that is why we have so many two for the price of one jobs....either that or more unemployment......how many hours need to be done to qualify as employed status?.....any job is better than no job?

The problem however is not the jobs, its the housing debt/rent.

And indeed, removing the props is one way to fix the underlying problem - distortion due to subsidies.

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Yes, I think so. If you work less hours you have to make up the 35 hours required with job searching/jumping through hoops on the threat of sanctions. I think this applies to parents particularly who can share the 35 hours between them??

I might be wrong as I'm no expert on the benefits system, it's mind bogglingly complicated.

This is what i find...in the few times i've claimed in the past, the staff end up offering me completely different benefits than the ones the online calcultors come up with.

I think the chavs have it right. Just throw a tantrum and the staff will generally give you what you want to get you out of their hair.

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There's no such thing.

It's quite bizarre how apparently 80% or even 40% or 35% of output borrowed by a sovereign country which prints its own money, controls its own legislature, can raise taxes at will and defines its central bank mandate is somehow abritrarily decided to be "reaching the overdraft limit" but it's perfectly normal for a household without all those powers to borrow 300,400,500% of their output to buy a house and the same person (Osbourne) who says 40% is excessive for a country, thinks nothing of increasing household debt to 150% of income in aggregate.

Doesn't even pass the smell test.

A peculiar post for someone on a website that generally berates the idea that people have to borrow 300,400,500% of their output to purchase something that, but for past credit creation, could be purchased for little more than 100% of their output, and bears distinct similarities to a ponzi scheme.

The question surely isnt is something possible, rather is it desirable. Japan's government has illustrated quite a lot is 'possible' if thats the way you want to head. Debt money is surely a rent seeking concept, so why have it. Why have a national debt at all? Why burden future generations with interest payments to rent seekers when money can be created without debt?

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There are more fit healthy people than there are productive full time good jobs....good meaning jobs that will repay housing debt or rent and support a family....that is why we have so many two for the price of one jobs....either that or more unemployment......how many hours need to be done to qualify as employed status?.....any job is better than no job?

Have you heard of this?

https://en.wikipedia.org/wiki/Lump_of_labour_fallacy

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The problem however is not the jobs, its the housing debt/rent.

Bingo. There are plenty of things that aren't being done which are worth paying people to do. They just aren't worth paying people enough to buy or rent a house at current prices.

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