Time to scrap the minimum wage

[Cyclone]

The lion's share of the profits of course. But there's something we need to acknowledge here. Not every business in operation today has been set up, at full risk, by the people who currently own it. A lot of these businesses, or at least the wealth that controls them, have been inherited by family members, cutting out the most significant aspects of risk most start up businesses face today. There is a huge difference between the two as far as risk goes.

It doesn't actually matter if it was set up by the current owners, the current owners have capital invested in it somehow, be that inherited wealth or shares purchased. They stand to loose that capital if it fails, an employee merely walks away and finds another job.

Profit share and bonus schemes can be used as good motivational tools, but they are no more or less valid a motivational tool than a fairly agreed fixed salary.

[epiphany]

It doesn't actually matter if it was set up by the current owners, the current owners have capital invested in it somehow, be that inherited wealth or shares purchased. They stand to loose that capital if it fails, an employee merely walks away and finds another job.

Profit share and bonus schemes can be used as good motivational tools, but they are no more or less valid a motivational tool than a fairly agreed fixed salary.

 

I consider the employee's labour an intrinsic part of that capital, just a different form of contribution. An employee has built up assets through their labour that stagnant (or "fixed") wages conveniently ignore. The fact they may be able to just leave and join another company does not negate that. Besides, if you're living paycheck-paycheck, the personal risk of leaving a job should not be underestimated.

 

As business in general cannot be trusted to treat their workers as capital rather than rented tools, many economists suggest a citizens dividend as a safety net more preferable than the minimum wage.

 

In respect of the above, I would definitely like to see some kind of distinction being made between inherited ownership and a small business start up. Surely we can all appreciate how much more daunting it is for the first generation small business man/woman with very little capital, no inheritance, no "help from daddy's friends" etc.

Edited June 8, 2010 by epiphany

[Cyclone]

I consider the employee's labour an intrinsic part of that capital, just a different form of contribution. An employee has built up assets through their labour that stagnant (or "fixed") wages conveniently ignore. The fact they may be able to just leave and join another company does not negate that.

they haven't built up anything, they've exchanged labour for money. They do gain experience, but the employer can't take that away from them and needs to increase compensation if it makes them more valuable.

They may also built up goodwill, a known good worker is a better bet for a business than having to replace them with an unknown.

 

As business in general cannot be trusted to treat their workers as capital rather than rented tools, many economists suggest a citizens dividend as a safety net more preferable than the minimum wage.

Maybe, but that's not the same as forcing companies to run profit related bonus schemes.

 

In respect of the above, I would definitely like to see some kind of distinction being made between inherited ownership and a small business start up. Surely we can all appreciate how much more daunting it is for the first generation small business man/woman with very little capital, no inheritance, no "help from daddy's friends" etc.

Sure, but I'm not sure that that is an argument to force non new companies to share their profit like they are some kind of co-operative.

[GordonBennet]

I gather you will be the first to volunteer to work for £160 a week then?

 

Another "Do as I say, not as I do" merchant!

 

You misunderstand. Scrapping the minimum wage would not mean everyone would have to work for low wages - those with skills that are both in demand and scarce (such as me!) would receive higher wages. The scarcity of the skills would decide the rate of pay, as it does in other countries.

 

The point is that if you're unskilled, if you haven't bothered to work hard to gain decent qualifications and therefore are not very much in demand, why should companies be forced to pay you an artificially-inflated wage which puts their own survival at risk?

[Cyclone]

Piracy can't be that lucrative a field, outsourcing it to Somalia must be all the rage at the moment.

[epiphany]

they haven't built up anything, they've exchanged labour for money. They do gain experience, but the employer can't take that away from them and needs to increase compensation if it makes them more valuable.

 

How have they not built up anything? What does their labour ultimately produce? If they didn't build up anything they wouldn't even be considered worth a wage. The fact is they do build up assets but those assets are then wholly owned by the shareholders. In other words the worker's contribution is not considered a capital stake, but rather another resource cost on the balance sheet.

 

I don't think all businesses should or could be run as co-ops, but governments would do well to reward those that voluntarily share their profits during times of growth via tax breaks.

[Cyclone]

They've already formed a contract to exchange their labour for money. That's how they've not built up anything (except a healthy bank balance if they choose to save).

They build something. They don't build up something. At least not unless they are stealing the products of their labour from their employer.

 

Edit - paying someone is a form of sharing profit, it's just one that removes the risk from the equation, or the uncertainty.

I don't think many people would be happy to work for a tiny % of net profits if they realised that it could actually be a loss and mean they end up having to pay the company.

They'd expect a fixed salary in addition to a +'ve only % of profits.

Edited June 8, 2010 by Cyclone

[foxy lady]

I note today the treasury announce that revenue from last years new "non dom" tax was only a little over £100million and not the £ billion forcast when Darling introduced the tax. The reason is quite obvious. The non doms became ex doms and no longer subject to UK tax at all. What the figures don't tell us is how much tax was lost as these people took their millions and spent them elsewhere at the expence of UK tax, UK VAT and UK jobs.

[epiphany]

They've already formed a contract to exchange their labour for money. That's how they've not built up anything (except a healthy bank balance if they choose to save).

They build something. They don't build up something. At least not unless they are stealing the products of their labour from their employer.

 

I know they've signed a contract, but that's just a legal representation of how business currently operates. It doesn't tell us anything about the process that actually occurs. I could sign a contract that states I'm willing to eat nothing but custard for 30 days. It's just an agreement and not necessarily based on logical principles.

 

Besides, you seem to contradict your own stance. You mentioned "products of their labour". So you agree they produced something. Now it seems to me you don't consider the value of that product as a potential part of the assets of the company.

 

In response to your edit, yes I would expect a profit share worker to ride the same waves the company as a whole does. That's why I specifically mentioned the citizens dividend as a safety net.

[Cyclone]

The point is though that you are free to sign or not sign that contract. If you agree to it then what basis do you have for complaining that it's not fair.

What business does government have in interfering in the labour market to force people and businesses into altering their private contracts?

And, since some companies do offer profit related bonuses, is there any evidence to suggest that these contribute in some 'better' way to the economy?

 

Companies generally sell the produce of their employee's labour, it's only a temporary asset. But I never said that they don't produce something, I said that they don't build up something, which strikes me as a phrase that is very different to building something.

 

So the employee has a safety net (although not that safe if they have to pay back to the company in times of a loss), but the people who actually invest money instead of just exchanging labour for it, where's their safety net.

 

Maybe every employee should have to buy into a company, I don't doubt that people would then be shouting about how unfair it was though to have to find the necessary amount. Investing in the company somehow is the only way they gain a right to a share in the profit beyond what they choose to negotiate for in their contract.