We'll all be rich!

[Workingman]

Labour has promised that the national minimum wage will be, wait for it, £8....... by the end of the next parliament. At a £1.50 rise over five and a half years I think I'll crack open the champagne. It's not as much as the troughies pay for a starter in their subsidised refectory/cafe/canteen/restaurant.

I wonder what other gems they will offer to tempt me to vote for them?

[Aggers]

When I heard the glad news, I immediately thought that, by the time that increase
is awarded,the cost of living will probably have gone up by about the same amount.

They must think we are all as stupid as they are.

[Workingman]

Precisely, Aggers, let's move forward to stand still, but some people are stupid enough to fall for it.

[TheOstrich]

I've always regarded the National Minimum Wage as a bit of a double-edged sword. On the one hand, it is absolutely vital to enshrine some sort of living wage in legislation to protect the poor, but on the other hand, there are too many firms out there who pay the minimum wage and that's it, like it or lump it.

The National Minimum Wage ought to be set in the same way that they deal with railway fares. Every year, there should be an increase of the annual inflation rate + a given percentage.

And that blatant loophole, the zero-hour contract, must be outlawed.

[Kaz]

Zero hours contracts are a disgrace, and should not be allowed!

[Aggers]

Zero-hour contracts may be ideal for some people such as retirees and students who want
occasional earnings and are able to be entirely flexible about when they work but I agree,
they should not be allowed otherwise.

[Suff]

The National Minimum Wage ought to be set in the same way that they deal with railway fares. Every year, there should be an increase of the annual inflation rate + a given percentage.

So let's look at what that really means. Let's start from this postulated "end of the next administration".

So, right now, we are running around 1.5% inflation. Or is it 2.5% inflation, which is the goal? Because it's really important. If we look at the BBC inflation stats we get the two figures. I note the critical importance for low wage earners.

There are two main measures: the Consumer Prices Index (CPI) and the Retail Prices Index (RPI). These are, in effect, two baskets comprising different goods and services, and different methods are used to calculate them. There are many differences, but the biggest is that RPI includes housing costs such as mortgage interest payments and council tax, whereas CPI does not

So the Government always uses CPI for their calculations not RPI. But these low wage earners always have to pay council tax.... Bit of an unfairness there isn't there??? But let's use CPI.

OK so what does my spreadsheet tell me? Let's take the average budget hotel. For instance a Travelodge charging £40 a night in off season for 40 rooms. Let's make that £40 on average over the whole year and average 30 rooms let every night to set the scene.

Now even a 40 room Travelodge requires one desk staff 24x7 and 3 cleaning staff about 6 hours a day, plus a manager at around £25,000 per year. Under the legislation proposed by the Labour government, the bill for those 5 roles, at a minimum wage will be £147,000 per year. OK so the hotel will generate, if we assume 75% occupancy at 365days per year, at the postulated £40 per night, £430,000. This means that the wage costs are now 33% of the actual (potential) revenue of the hotel. Given that reality says you will never fill the hotel for every room for every night and taking the average of £40 per night.

This hotel will have to also pay council tax, electricity, water, laundry, sundries such as coffee/tea etc. Plus services such as plumbing and television (including license to broadcast to 40 rooms), basic redecoration every few years, etc.

Now let's fast forward that under the rules you propose ossie.

Let us assume the current CPI of 1.5% plus, for arguments sake, 0.4% increase over the top of inflation. Let us also assume that we're going to hit some point where the economy does bubble and we hit inflation of 3% for 10 years.

Now let's fast forward 25 years. Let us take those same roles. Remember these are not people, just the roles that are required to make the hotel function.

Ok so now+25 years and the minimum wage is £30,000 based on someone who only takes the public holidays +2 weeks leave per year. So we now need to assume that the manager is getting more than the minimum wage, let us assume £50,000 per year. Where are we now? Well our staff bill has just reached £293,000 or 67% of our income of our £40 per night hotel. Of course now that council workers also cost the council £30,000 per year to clean the streets, our council taxes will have quadrupled to cover the shortfall. Plumbers will charge £150,000 per year and costs will be so high that trying to get a simple room when we're on a long journey, will cost us a minimum of £200 for the night if we're lucky.

Of course this will not be reality will it. They will release one of the cleaners, the cleaners and check in staff will be just off the boat and working 4 hours per day at half minimum wage and they're going to love it because it will be riches they can send home. Whether we can understand them or not to check in is another matter. Or we'll see a return to the bad old days where the staff live in pokey quarters and they are charged "rent and board" at half the price of their wages.

And what are the poor going to do with all this money they have? Buy British goods produced by staff working for £30,000 per year? Like hell.

It gets better though doesn't it. At £30,000 per year minimum wage, they're going to have to raise the higher tax rate to £150,000 or more. And why would anyone pay more than the minimum wage when it's £30,000 a year? So those who work in offices and, today, habitually work 10 or 12 hours a day for twice the minimum wage, are going to be working 10 or 12 hours per day for the minimum wage (paid as salary so they don't get the hourly advantage). Whilst the shop and factory workers (the poor), knock off at 8 hours exactly and go home for exactly the same money.

Then you get the Asda effect. The true cost of Labour's minimum wage has been to the very poorest who need the most for their young families. Asda employees now are contracted for 3 days a week with 2 days of their normal 5 day week as overtime. That means these young families with two parents at work (the poorest), only get holiday entitlement and SSP payments for 3 days a week. I'm sure that if Labour get's their way the employment will change again and they will get 3 month rolling contracts with a 1 day engagements.

Then we'll have the perfect Soviet state. Everybody but the senior managers getting the minimum wage. Perhaps we'll see 3rd class tickets on the train again? Hard wooden benches on the London Edinburgh run, for, perhaps, £200 return. A snip.

Now let's contrast that with a little bit of reality. Over the last 10 years we've run about 1.5% inflation on average. My income has gone down in actual terms by 25%. In real terms by much more because my accommodation and services have increased by more than 50%.

This talk of "the poor" is relative. I'm all for social justice, but in a society which requires humans to do work that could be done by machines in a more advanced society is always going to have those who work for smaller wages. The alternative is a mass of people who simply are not able to work as the demands of the working environment are above them. Whilst I would not want to see any British person living in the state that I see in Africa or Asia or South America, there has to be a balance. Where do we set the barrier? Is poor a household that doesn't have 3 large flat screen TV's a PS4 plus an xBox One plus 2 live gaming contracts, superfast internet and 2 holidays to the sun every year?

Raising the minimum wage to £30,000 per year is a simple way of causing inflation, destroying working contracts and unbalancing our balance of payments when 70% of the rest of the world has an average pay of around £3,000 a year.

The Labour Party, a Solution looking for a Problem. Or a Solution looking to convince people we have a problem so they can gain power.....