The Missing Link In The Conservative Jigsaw

The Minimum Wage is at a high point in the USA – $7 since 2009.  In Britain it is $9.50. 

The problem with the IDS get-Britain-back to work campaign is going to be the internationally uncompetitive high level of the minimum wage. ‘

We are hopelessly uncompetitive with the MW at $9.50 an hour, compared to the USA’s $7, which was jacked up from $5 in 2007, and has caused widespread unemployment there. US workers produce 50% more than British. Our rate should be about $4.50 if we want to be competitive and get the 6 million idle hands back to work in Britain.

If tax is removed for lower paid workers, people on GBP 3.50 an hour could take home GBP 140 a week, and be able to find starter jobs and contribute to their household.  This indeed is the ratefor 18 year olds who’ve completed their education.  But the rate gets jacked up to the full amount by age 21.

In US tipped Labour has MW of $2 an hour. Britain could do the same and get millions back to work.
If we want to get people off welfare we have to set minimum pay rates which enable people to get jobs more easily.
It’s obvious.
This will not be easy to sell, but should be part of IDS’ programme of helping people to help themselves, and getting free of state dependency.
Business will only invest in jobs if the investment stands a chance of paying off.  It is pointless doing all the other things the government is talking about doing, unless they halve the minimum wage and let the market set the right rate for the job of getting Britain back to work.  For some reason this fact has escaped everyones’ notice.  It could prove to be a costly oversight.

http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country

Britain has a minimum wage 20% higher than the USA, when our national productivity is 30% lower.  There should be a far lower national minimum wage in any case, as wage rates in some areas need to be lower as businesses are less profitable in slower parts of the economy and cannot afford the same levels as, for example, the south east.  The higher wages and benefits have enabled supermarkets to set higher prices nationally, and suck money from the social security system, when retail prices could be set far lower.

They imagined they were redistributing wealth.  In fact they’ve simply redistributed inflation and unemployment by interfering in the marketplace,. 

The Tap Blog is a collective of like-minded researchers and writers who’ve joined forces to distribute information and voice opinions avoided by the world’s media.
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8 Responses to “The Missing Link In The Conservative Jigsaw”

  1. Anonymous says:

    The problem is not getting people back to work, it’s not that simple. Take housing costs, with weekly rents just doe a two bed house of £100.00 per week, then council tax, utilities etc just what money are these people expected to live on? This is before transport costs, tv licence, house insurance et al. So a minimum wage giving £140 per week is no where near adequate, hence the refusal to come off benefits!

  2. Tapestry says:

    Why argue that a wage has at all times to cover the whole costs of running a modern household?

    One point is that there are usually more than one earners per household.

    Also that if that is not the case, the benefits system will be adapted so that if someone takes on lower paid work they will not lose all their benefits, so that household costs could still be covered.

    If poverty is catered for through state benefits payable in addition to work, or through people sharing household costs, as more and more are doing e.g. kids not leaving home til later and later, then wages need not be used as a device for social levelling.

    It would be better for the economy if work was priced at its market rate, so that there are more jobs available, and businesses have more chance of surviving and growing in a globally competitive economy.

    Why price the whole of the unskilled population into idleness? It is through working that more skills acrue so that a person’s value in the marketplace increases. The minimum wage acts as a massive regulatory blockage on the marketplace. And it needs hammering down to size.

  3. Robin says:

    No mention from the Tories about cutting what we pay to the EU .
    A good government would cut the costs that its citizens have to pay, mainly by taxes .
    I`d be quite happy for the deficit to defeat this wet Tory admin.Why should a government keep needing to borrow anyway, except at very exceptional times.
    UKIP look the only way to go .

  4. Tapestry says:

    All governments are irresponsible with money. Private wealth and independence from the state are the way to go. Put all governments in their place.

  5. Twig says:

    @Tapestry
    Private wealth and independence from the state…

    It’s easy to say when you’ve spent time outside the UK building up some capital, but for the average Joe inside this tax system it’s not easy. The system is designed to prevent it.

    In this country you work hard all week and are then forced to hand over wads of hard earned cash to the workshy (Such as this woman) who have done nothing to earn it.

    You will be aware fom yr time in the PI that having worked all week, when it comes to the weekend paid helpers will mow the lawn, clean the car, and do the housework. Their system may not be perfect, but at least they don’t expect something for nothing.

    Osborne’s announcement on child allowance has proved that Dave’s Tories are as clueless as I always suspected. They’re a busted flush. How did they ever pass the eleven plus?

  6. Tapestry says:

    Twig, I built my independence when I was young in the UK. I realised very quickly that I would never be welcome in a normal workplace as I was overly verbal in criticising managements!

    I started my own business aged 21, lived in my parents’domain til nearly 40, spent but little living in the middle of nowhere, and saved everything I earned.

    The idea I worked from was that if my sales grew by 20% a year every year, the business would double in size every four years. I did that five times until I was exhausted, physically and mentally. Sales in 1981 were GBP 100,000. By 1992 they were GBP 2.8 million. By 1997 they were GBP 9 million.

    Business that grow by 20% or more every year are called supergrowth companies. Normally they do this for ten years then subside. I did it for twenty years, then moved on into writing and politics and other arenas.

    I got sick of all the comments like ”you inherited all this” etc. I inherited nothing. I actually supported my parents for thirty five years, and bought everything I own.

    My comments on taxing fast growing businesses is that it is counterproductive. All the government does is limit the number of jobs being created. But that’s another topic.

    I came to Asia as I find my nervous disorder, multiple involuntary brain stem activations, (not too dissimilar to epilepsy but without the fits) probably caused by farm sprays absorbed on Dad’s farm as a kid, give me less trouble here. I find the winter over there makes things far worse. Actually I get a bit bored out of the UK, but I have to try to survive the condition I have as best I can.

    As for the Conservatives, big political parties, especially those in coalition, are bound to be a bit cumbersome. Overall they seem to be setting the direction they are going in very well. The details are, as usual, the tricky bt, but a little work by the civil service in the background, and many of the blips will be ironed out.

  7. Twig says:

    @Tapestry
    When it comes to tax and benefits I think most people who understand wealth creation will agree what we need to do to achieve a sustainable economy, but what was Osborne thinking when he announced his plans for child allowance. It just made them look like a bunch of amateurs.

    He could have limited the number of kids that qualify after a certain cut off date, or based it on household income, or put a freeze on the amounts paid or a whole bunch of other options which would have achieved the same objective without creating the unfairness that will undoubtedly result from his big idea. Don’t they have a plethora of advisors to review their policies before they are announced?

    I would recommend that they ask someone like John Redwood to approve any further bright ideas before they’re made public in future.

    As for their policies on prison – prison only works if it keeps career criminals off of the street and if it’s such a boring unpleasant place that the criminals are reluctant to risk returning. Forget about early release, good behaviour should be expected not rewarded. Bad behaviour should result in extended sentences. It’s not rocket science.

  8. Tapestry says:

    I agree with your points, except one. Would you prefer a Labour government? The problem is that the level of expectations is now so low that even relative incompetence seems like a miracle of brilliant achievement.

    But yes they could do a lot better than this for implementation. It looks like massive inexperience to me, not of political manoeuvring, but of simple management.

    They have good managers like Redwood but such are too intelligent to be trusted, and might start speaking the truth. Until the economic boom is finally buried and fear takes over, will people want to hear the real truth. Right now the public wants a watered down less stupid version of Blair and Brown. Events will soon drive politics out of this decades long comfort zone.

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