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On the subject of benefits benefiting the employer

In an earlier discussion, many pointing out that the benefits system benefits the employer.

Well, sorta.

Benefits that you get whether you work or not – child benefit, housing benefit – and are either fixed or dependent upon income do not benefit the employer. Because they’re not reliant upon you being in work or not.

Benefits dependent upon your being in work could benefit the employer. Say, working tax credits from Gordon Brown. They’re based upon the EITC in the US and the usual thought is that about 30% benefits the employer – they can pay lower wages as a result – and the other 70% benefits the employee.

7 thoughts on “On the subject of benefits benefiting the employer”

  1. I suppose you could look at it that way. We cost accountants considered benefits a cost.

    Regardless, ‘they can pay lower wages as a result’ works only if the cost to the employer of the benefit is less than the cost of the wages, which cannot be known. The benefit to the employer would only be the difference.

  2. Another possibility – just as out of work benefits trap people in unemployment (because the marginal benefit of working can be low), might in- work benefits trap people in low-paid jobs because it isn’t worth the effort and training to get another one? Anyone know of any studies on this?

  3. Bloke in North Dorset

    I thought the idea was to try to get a certain class of people eg single parents, out of the benefits trap and back to work, or kept in work in some cases.

    If we want single mums, for example, to go back to work and maintain their skills it shouldn’t be up to the employer to have a range of pay scales for single men/women, single mums with 1 child, single mums of 2 children, carers of the elderly etc and intrude in to their employees lives. And we are talking about the least productive people at the lower end of the socio-economic pile.

  4. I wonder if bungs (20k/unit iirc) to Housing Associations and insistences that some % of private developments are ‘affordable’ so made available at below market rates operate as a subsidy to employers. Especially in Zone 1 – so there’s a pool of low skilled labour housed nearby that can take the really shitty jobs. You would have to pay more to hire your low-skilled staff if London housing was un-affordable defined as being available at market rates apparently. Centres of excellence should have un-affordable housing and no other type.

  5. Bongo said:
    “I wonder if bungs to Housing Associations and insistences that some % of private developments are ‘affordable’ so made available at below market rates operate as a subsidy to employers“

    Also a cost to private buyers and renters, since the private supply is reduced and overall demand in London is increased. “Generation Rent” don’t seem to want to understand why their rents are so high.

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