But, but, how could this be?

Firms supporting 880,000 older and disabled people have warned that the costs of introducing a “national living wage” could trigger “catastrophic failure” in the homecare market.

Without increased funding to meet the increased staff costs of the national living wage (NLW), businesses caring for people in their own homes could go bust, the UK HomeCare Association (UKHCA) warns in a letter to the chancellor George Osborne.

You mean that someone, somewhere, has to cough up the money to pay the higher wage?

There isn’t a magic money tree?

My word, that is a shock.

17 thoughts on “But, but, how could this be?”

  1. Perhaps we just need to find the golden fleece.

    Even the ancient Greeks knew about the magical money tree. In fact the modern Greeks seem to be still looking for it in the legendary land of Brussels.

  2. Thought experiments. Really useful things.

    Effect of minimum wage if it was set at £1,000 per hour.

    Quite.

  3. Not to mentioned all the Local Authorities who are having their budgets squeezed, how are they going to afford the increase?

    Basic income is the simple answer imv…

  4. It would be interesting to see how many of these local authorities have pious commitments to a “living wage”, and how many of those are now moaning about it.

  5. In my (limited) experience the colossal margin on labour charged by the care companies is pivotal in this… I mean – £25 ++ charged …. vs. £6-7 paid to worker???

  6. Members of the UKHCA could employ more people under-25.

    “Not to mentioned all the Local Authorities who are having their budgets squeezed, how are they going to afford the increase?”

    By focussing on their priorities.

  7. I’m sure the Diversity Officers, Climate Change Enforcers, Media Spinnerati and similar moral ornaments are paid above the minimum wage. May I suggest they take a cut to fund the carers?

  8. I’m in Los Angeles, so I’m about to witness the idiocy of $15/Hour minimum wage. Not to be outdone, State of New York decided to join the fun, but ONLY for fast food worker right away. The previous mayor’s attempt at soda size ban was overturned due to selective enforcement will probably prevent this as well, but still…

  9. Bloke in Costa Rica

    All the usual suspects clamoured for a “living wage” and then they got it. Now there is wailing and gnashing of teeth. It brings to mind Mencken’s dictum that democracy is the idea that people know what they want, and deserve to get it good and hard. It’s really rather fun.

  10. Probably not about money . More lilkely the opening propaganda about mass euthanasia.
    After all there is now mass abortion , matrimony is staggering under the attacks etc. The cry about the aging population being a terible burdon has been going on for a while.
    Soon a ‘standard life span’ will be presented as both fair and logical.

  11. @ TomO
    Firstly The Grauniad says £13.66 charge-out rate to local authorities versus £7.20 minimum wage.
    Part of the difference is Employers NI contributions and the compulsory employer’s liability insurance but the key difference is that the local council pays per hour that the care worker is in the home and the employer pays per hour that the person is working, including travelling time (so often 50% more and occasionally in remote villages 100% more) and grossed up by 260/232 for holidays plus travel expenses for the care worker, office overheads etc.
    Now if you’re paying £25/hour that must be because the care company is using you as a sucker to cross-subsidise a miserly local authority payionmg less than the £13.66 average at which it barely breaks even.
    There are certainly a few offensively greedy care companies but they have to be in sheltered niches with ultra-hard-sell marketing departments ‘cos competition prevents the others being able to rip off the local authorities who are local monopsonists.

  12. @John 77 I am encouraged to hear that local authorities in this area at least are acting as monopsonists and pricing accordingly. Now if only they could extend that principle to the rest of their spending.

  13. @TomO:

    My place of work uses a factor of 2.5 as a rough scale between employee’s salary/wage and full economic cost of having that employee (this includes the taxes that the employer pays, the insurance, and some allowance for the back-room costs: secretaries, administrators, lawyers and so on).

    On that metric, if you’re paying someone £7.20 and charging less than £18, you’re losing money. Perhaps you can get away with a bit less than £18 because you don’t need to pay for the building for an in-house care worker.

  14. Sam,

    That ratio you quote depends entirely on the particular business / business model.

    To go to one end of the spectrum, simply to illustrate, there are recruitment companies, charging out contractors to clients. Then off in the other direction, there are professional partnerships for example that might charge 4 x salary. And all sorts of other variations on that..

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