Helping the Poor

For John, BLUF:  Notwithstnding the beliefs of AOC, et al, there is no free lunch, or as The Little Flower, upon becoming Mayor of New York, said:  "È finita la cuccagna!".  Nothing to see here; just move along.

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Who should pay for the Living Wage?

Here are the bullet points:

• Many employers simply can't afford another hike in the Living Wage
• Most minimum wage workers are not in poverty - so help should be targeted on those who are
• Bankers and footballers should pay for the minimum wage hike, not struggling small businesses

From CapX, by Mr Sam Dumitriu, 30 October 2020.

Here is the lede plus two:

It will have escaped no one’s notice that the UK is in an employment crisis.  In the OBR’s Central Estimate, unemployment is set to rise to record levels, surpassing even the peak of joblessness in the 80s.  At the same time, social distancing measures have hit productivity hard.  It’s not their fault, but a waiter is simply less productive in a world with the Rule of Six, Tier Two measures, and general customer unease about eating out.

To his credit, Rishi Sunak has been willing to act to protect jobs.  At first with furlough and now with the recently expanded Job Support Scheme.  But both policies are premised on employees working fewer hours.  They’re badly suited to, for example, pubs who need more staff on call due to the switch to table service but are still seeing fewer customers through the door.

Labour markets, like all markets, are governed by the laws of supply and demand.  When workers become less productive, demand for them falls.  The typical consequence of a drop in demand is a fall in price.  Think of how you can pick up bargains in the January sales when consumer demand inevitably slumps.  But this isn’t possible in all markets.  In labour markets, wages are sticky.  Unlike petrol prices, wages don’t change daily in response to shifts in demand.  Employers are hesitant to slash wages as it can damage employee morale and attract bad press.  On top of that, bosses are legally prevented from employing any worker for less than the National Living Wage.

The article is worth the read.  And the source is an alternative worth sampling.

Regards  —  Cliff