A couple of weeks ago, your humble Devil horned in on a debate between @keeprightonline and @keziadugdale (the latter being some sort of NuLabour apparatchik of the Scottish persuasion).
My main contribution to the debate was this:
@kezdugdale Re: the tax problem, would you lobby for a higher personal allowance—£12,000, say? Then those on MNW would pay no income tax...
I thought that this would be a no-brainer. After all, surely the point of socialist policy is to ensure that the poor are not so... well... poor?
OK, I admit it: given NuLabour's continued hammering of the poorest in our society, I fully expected to get some excuse explaining why taxing the lowest-earners in our society is absolutely tickety-boo.
And I wasn't disappointed, for Kezia promptly got onto her Soapbox.
Labour’s MSP for Glasgow Shettleston, Frank McAveety is hosting a Members' Debate tonight on the campaign for a Living Wage – a campaign that I fully support.
Anyway, @DevilsKitchen soon got involved as well. He said if I was so concerned about poverty, why didn’t I support raising the personal tax allowance so that no one earning the national minimum wage would pay any income tax.
I disagree with that idea because I think that sends the wrong message about the national minimum wage. Branding it as more of a benefit than a right.
For fuck's sake...
[Cue Devil speaking slowly and clearly, as though explaining a simple point to a small and slightly doltish child.]
Kezia, your mission is, supposedly, to redistribute wealth so that the poorest in society are able to feed and clothe themselves—this is the desired, or at least professed, outcome of your economic engineering policies. It is not to make those people feel good about the fact that they are living off charity; which the National Minimum Wage (which uses the force of the law to net workers more money than they would otherwise have) most certainly is.
Now, one can argue that we, as a society, have decreed that x amount is the minimum that someone should decently earn. We can even say that we, as a society, benefit from them earning this minimum wage because it provides an incentive for people to work rather than lie around, rotting on benefits.
However, as Timmy pointed out at Comment Is Free, if we—as a society—think that people should earn a minimum wage then we, as a society, should pay the price.
Rather, it is that if we as a society decide that a certain price is immoral, then we have to pay for that price to change. As you can see from the numbers above, the burden of the minimum wage falls on three groups. Those who employ low-skilled labour see their profits shrink. Those who buy goods made with such labour see the prices rise. And of course many low-skilled workers lose their jobs (or have their hours reduced). But if we really think that wages of below £5.73 an hour are immoral then we should all be dipping into our pockets to increase wages to that sum. That means that we all get taxed and the money redistributed.
In other words, we should not force one particular group—in this case, business shareholders—to pay for our collective conscience. The price should be paid by all of us, through the redistribution of taxes (of everyone earning more than our positied minimum).
So, Kezia supports something that she calls the Living Wage; she does not explicitly state what amount she considers this to be, but I think that we can make an educated guess from the following section.
If we’re talking about tackling the poverty of those in work, I’m utterly convinced that a living wage is the answer.
700,000 Scots are low paid. Some facts:
- Around 70% of workers in the hotel and restaurant sector earns less than £7.00 per hour. Three fifths of these are women.
- Almost 60% of workers in the retail and wholesale sector earns less than £7.00 per hour. Again three fifths are women.
- 20% of directly employed staff in the public sector earns less than £7.00 per hour with over three quarters of these being women.
Now, I am not going to get into the equal pay based on sex debate here—that has already been comprehensively covered elsewhere.
However, I think that we can conclude, from the list cited above, that Kezia's Living Wage would be £7 per hour. So, let's do the maths on this, shall we?
- A full-time worker on the current National Minimum Wage earns £5.80 x 40 hrs per week x 52 weeks in the year = £12,064. Your humble Devil would like to see this entirely untaxed, and so the net yield for the worker is £12,064.
- A full-time worker on £7 per hour earns £7 x 40hrs per week x 52 weeks in the year = £14,560. Given Kezia's original answer to me, one can assume that she would levy tax on this, so the net yield for the worker is £11,970.05.
- In this specific instance, the policy of the eeeeeevil right-wing libertarian would ensure that our worker was better off by nearly £100 per year, compared to the policy of the bleeding-heart socialist.
Of course, there are a number of papers that have researched just what the minimum living wage should be—one of the most recent (and comprehensive) was that published by the very-definitely-not-eeeeevil-right-wight Joseph Rowntree Foundation.
A single person in Britain needs to earn at least £13,400 a year before tax for a minimum standard of living, the Joseph Rowntree Foundation (JRF) says.
Note, please, that the JRF's estimate is pre-tax: after tax, the net yield is £11,169.65. The conclusion here, of course, is that both Kezia and I are being far too generous.
And such generosity does, of course, have unintended (though quite predictable) consequences: workers get laid off, or their hours are reduced and suchlike. Or, of course, the business goes bust.
None of these consequences are mentioned by Kezia in her fascinating post—and nor is the provenance of the money to pay for her proposal. However, since she wishes to tax the income of our toiler, one can assume that she means to make businesses pay the higher wage rate—please bear this in mind as we continue dissecting this truly extraordinary post.
Ensuring that more workers receive a living wage will not alone end income inequality, but it will provide some justice for those who work in essential jobs, ones that everyone relies on, but which few people value.
And that's the point, Kezia: these jobs are low value. They require little training, no degree and, as a consequence, any monkey could do them. As such, they are low-paid jobs.
And it's not just about individuals and poverty—it's good for business.
Oh, this is going to be good...
Employers in the private and public sectors who pay a Scottish Living Wage will help lift the pay of thousands of low paid workers and increase an employer’s productivity, reduce staff turnover and absenteeism, meet Corporate Social Responsibility standards and contribute to boosting the economy more generally.
And how the fuck is all of this going to happen, precisely?
- Businesses do not exist in order to "help lift the pay of thousands of low paid workers": they exist to provide a return to their shareholders. In fact, the directors of the business have a fiduciary duty to provide as good a return to the shareholders as possible. And if they don't do this—through making a profit—then they will cease to be a business and their workers will be workless.
- And how, exactly, does forcing a business to pay its workers a higher wage for the same outcome "increase an employer’s productivity"? It doesn't: in fact, it does the very opposite. Quite obviously, paying a worker more for doing the same does not increase productivity—it decreases it.
One could argue that the worker will work harder if promised a higher wage but even this falls down in this case. For when said worker knows that the employer must pay this higher wage, by law, then the worker sees the higher wage as his right: why should he work harder and thus be any more productive?
- And the idea that a higher minimum wage across the board will "reduce staff turnover and absenteeism" is absolute crap. It won't reduce staff turnover in the slightest; if someone leaves a company to go to another one, it will often be because that company is offering higher wages. Upping the minimum that companies are reuiqred to pay does not reduce the incentives to find a new job at all: how could it when the current minimum wage has not?
And reduce absenteeism—how? Again, all employers must pay the same legal mimimum, so staff are not likely to be any more inclined to show up for work. If they don't show for work, then they will be sacked. In many jobs, this would represent a cost to the employer in training new recruits but, as we have already pointed out, these are low-value jobs.
- And who cares that employers "meet Corporate Social Responsibility standards": this is just more government-imposed red tape—red tape that stifles job creation.
- Having been through the above, I think that we can dispense with the idea that the Living Wage will "contribute to boosting the economy more generally".
What it will do is to make goods and services far more expensive for everyone, thus wiping out any possible gains for the £7 an hour worker anyway. Plus, of course, fuelling inflation.
So, having concluded that Kezia has fuck all understanding of economics, business drivers or worker psychology, let us plough on manfully to the end of this missive.
None of this is an attack on the national minimum wage or what it has achieved. In fact, there has not been nearly enough recognition of the fact that Labour has increased the national minimum wage year on year since 1997. Gordon Brown pledged this week at the TUC conference that he would continue to do so.
And for the reasons that I have outlined above, the National Minimum Wage "achievement" should be thrown as Gordon—along with the rotten fruits and turds—when he is finally driven out of Downing Street.
And the unemployed should be on the front line because, of course, the NMW has had another effect: someone whose labour is worth less than £5.80 per hour will now never, ever get a job. And that means that they cannot get either the experience or finance to better themselves—and that means that they are condemned to a life rotting away on benefits, a seam of potential destroyed.
And Kezia's Living Wage would destroy yet more lives, for there will be far more people whose labour is worth less than £7 per hour. That's yet more thousands of people consigned to the scrapheap of life, thanks to Kezia Dugdale.
Some people might say that is "in spite" on the current economic difficulties. I would say that it is even more important that we increase the NMW "because" of the recession.
Then you are a moron.
Particularly as low paid workers face more risk during this time. They are more likely to be less secure at work, face a higher risk of unemployment and have fewer resources to fall back on. Whether that may redundancy pay or personal savings.
Uh-huh. So, tell me, Kezia, do you think that forcing cash-strapped businesses to pay workers £7 per hour will make said workers' jobs:
- more secure, or
- less secure.
If you answered "1", then you really are a complete idiot. If you answered "2", there may just be a small sliver of hope that you might actually understand what I am talking about—all hope is not lost (unlike the poor souls that you Living Wage would fuck up).
It just makes sense and it requires bold and confident governance from the powers that be.
Kezia Dugdale, ladies and gentlemen, pushing compassionate policies for a more bankrupt and miserable Scotland. It's almost worth moving back to the 'Burgh, just so that I can spend my time hunting Kezia through the streets and wynds of Edinburgh, that I might pelt her with neeps, turds and tatties.
UPDATE: on this subject, the lovely Bella has constructed a simple model showing how
Worst-case scenario? My partners and I sack our 100 employees and sell the factory. My employees are now earning £0/hr. My partners and I go off to teach maths to left-wing dunderheads who, despite our efforts, will never understand that occasionally, just occasionally, raising the costs of a business means it is no longer worthwhile to operate that business.