This is becoming an increasingly common mantra, that the payment of in work benefits is a subsidy to the profits of companies.
Who wins, when the government makes up the shortfall, between the poverty pay a shelf-packer earns and what he or she needs to live on? Not the worker, evidently; not the taxpayer, who may get a certain empathy boost from the fact that nobody\’s starving, but reaps no economic advantage from this bizarre system; not the supplier to the supermarket, who often has his or her own case to make about deals so bad they often amount to a mugging.
The only winners are the chains themselves….
How has anyone managed to get themselves so 180 degrees the wrong way around?
OK, so let us take it as being true in each and every particular. The solution is thus very simple. Stop all in work benefits , the supermarkets will pay their workers more and their profits will fall.
Is anyone actually suggesting this? No.
Therefore they obviously don\’t believe their own diagnosis.
Which is correct: the diagnosis is wrong. In work benefits are not a subsidy to the supermarkets (or any other employers). They are a subsidy to our own consciences.
Here is the market value of labour. It is what it is. We don\’t have monoposony at this end of the labour market. Retailers aren\’t able to deliberately hold down wages. However, we as a nation, a culture, say that (however hard some of us scream that it shouldn\’t be so etc, this is the general view) to be left to live on that market value of labour is unfair. So, we\’ve a system by which we all chip in a bit from our higher earnings to send money to those with a low value to their labour.
This comes in gradations of course: no one at all objects to the subsidy of the short bus riders whose labour value is near zero, who would be starving in the streets without some subsidy. Many object to the excesses of the other end of the spectrum, where some people gain more than the median income in purely housing subsidies.
But these transfers, these benefits, are subsidies to our sense of what is right and wrong, not subsidies to the profits of the corporations. It\’s compensation from those of us who have a high value assigned to our labour by the market system to those who have a low value so assigned. We might well argue about how much compensation is due, about the effects on incentives, about marginal tax and benefit withdrawal rates, but you\’ve got to get well over into Ayn Rand style stuff before you find anyone who thinks that there shouldn\’t be any such compensation flowing at all.
Thing is though, you can see many people nodding their heads when this \”benefits are subsidies to corporations\” line being trotted out. And what\’s needed is some punchy point to show the absurdity of it. Which I\’ve not really found yet.
If in work benefits are a subsidy to employers, then out of work benefits must be a subsidy to unemployment?