Why the minimum wage cannot be risen.
Day 530, 00:48
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Published in United Kingdom 
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by
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by eUK Home Office
This is a repost of a very important article from the forums, written by Lukcia. All credit goes to him for this. This is really a message for the less experienced congressmen who keep proposing an increase of the minimum wage.
Using a productivity formula from the Wiki, I have worked something out.
At £1, hiring a Skill 0 worker for a MANUFACTURING firm makes:
A £1.08 loss per product sold at Q1.
A £4.42 loss per product sold at Q2.
A £7.75 loss per product sold at Q3.
And so on.
A RAW MATERIALS firm makes:
A £4.42 loss per product sold at Q1.
A £5.16 loss per product sold at Q2.
A £6.08 loss per product sold at Q3.
And that is when the minimum wage is £1, and wellness is 50 and they are fully staffed. Now, if the minimum wage is £2?
At £2, hiring a Skill 0 worker for a MANUFACTURING firm makes:
A £4.42 loss per product sold at Q1.
A £11.08 loss per product sold at Q2.
A £17.75 loss per product sold at Q3.
And so on.
A RAW MATERIALS firm makes:
A £11.08 loss per product sold at Q1.
A £12.56 loss per product sold at Q2.
A £14.42 loss per product sold at Q3.
And so you see, there are massive losses to be made on hiring Skill 0 workers. Right now, if you are lucky enough to have a full work force and they have exactly 100 wellness, you make £0.03 per product made if you are in manufacturing. So you may all think you are helping the newbies by getting them a better wage, but they already get £5 at the start, and by the time they get to skill 1 or 2 they have got about £3 left as they still get paid. However, if the minimum wage gets raised to £2, I'm sure firms won't like these mega losses, and so there will be no Skill 0 jobs, and so from trying to help newbies, you will just drive them away in hoards.
Please stop trying to increase the minimum wage to £2, as it is awful for companies, and could be devastating for newbies too. Thanks.
Using a productivity formula from the Wiki, I have worked something out.
At £1, hiring a Skill 0 worker for a MANUFACTURING firm makes:
A £1.08 loss per product sold at Q1.
A £4.42 loss per product sold at Q2.
A £7.75 loss per product sold at Q3.
And so on.
A RAW MATERIALS firm makes:
A £4.42 loss per product sold at Q1.
A £5.16 loss per product sold at Q2.
A £6.08 loss per product sold at Q3.
And that is when the minimum wage is £1, and wellness is 50 and they are fully staffed. Now, if the minimum wage is £2?
At £2, hiring a Skill 0 worker for a MANUFACTURING firm makes:
A £4.42 loss per product sold at Q1.
A £11.08 loss per product sold at Q2.
A £17.75 loss per product sold at Q3.
And so on.
A RAW MATERIALS firm makes:
A £11.08 loss per product sold at Q1.
A £12.56 loss per product sold at Q2.
A £14.42 loss per product sold at Q3.
And so you see, there are massive losses to be made on hiring Skill 0 workers. Right now, if you are lucky enough to have a full work force and they have exactly 100 wellness, you make £0.03 per product made if you are in manufacturing. So you may all think you are helping the newbies by getting them a better wage, but they already get £5 at the start, and by the time they get to skill 1 or 2 they have got about £3 left as they still get paid. However, if the minimum wage gets raised to £2, I'm sure firms won't like these mega losses, and so there will be no Skill 0 jobs, and so from trying to help newbies, you will just drive them away in hoards.
Please stop trying to increase the minimum wage to £2, as it is awful for companies, and could be devastating for newbies too. Thanks.
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so how do companies make money then!?
Killermarine, they hire people with skill 1 or more, who make a big profit. So actually, at the moment companies hiring skill 0 workers are being very nice, and raising the minimum wage to £2 would be insulting their kindness and it would run out.
Point.
Aren't skill 1's at 1 GBP as well though ?
Good article. Voted.
Rather than a major jump to 2 gbp why not a smaller raise to 1.2, enough to help but not enough to cripple.
You only stay on minimum pay for 2 days anyway. I did at least.
Despite having this informative article, I have a feeling there still will be people that propose a wage increase.
Firejohn: Game's rules prevent this, must rise by a whole unit, no decimals.
it makes good economic sense, and is a good article
but it should be 'raised' instead of 'risen' in the title
Good article, I'm fed up of people continuously trying to raise the minimum wage when it is already bad for GMs.
I know it is frustrating to start the game earning 1 GBP a day but that is only the start. Get through the start and the rest of the game is a lot better.
"it should be 'raised' instead of 'risen' in the title"
Hmmm. I think you're right. I'll change it in due course.
well it still sucks when your new to the game lol
Agreed (Y)
Companies should not be "nice" and hire level 0 workers if they cannot afford to do so. Shouldn't a company have a commercial self-interest in profit?
There's not enough jobs for Q0 workers, so don't increase minimum wage, its just common sense.
Great research, keep up the good work.
As long as the minimum wage is greater than the cost for Q1 food I see no problem, and I can't see why new players would need any more than this.
how much profit,loss do these companies make when they pay near minimum wage to level 2,3,4 workers? and far from being nice is it not a direct investment in the available workforce by taking on a 0 level worker and levelling him up? or do you want the state to do it for you, and then send him away to fight to get his wellness back up?
It's all very well levelling up a 0 level worker, however you have no guarantee that they will in fact remain working for you once they become a profitable worker, or whether they'll leave for pastures greener.
Granted taking a level 2, 3 or 4 worker on at minimum wage would be profitable, but most level 2, 3 or 4 workers who would accept a minimum wage job would probably be at extremely low wellness - personally as soon as it becomes profitable to raise a workers wage I do so, however this does take until about level 2 or so anyway so there is a rather large loss of money taking on level 0 workers.
Taking them on at 2GBP/day would be an extremely bad business plan and unless it was state subsidised I couldn't really see it happening.
Is it at all possible to set a maximum wage?
I really would like to have more flexibility. Higher % income taxes for higher earners - that way the NHS can provide more wellness for those struggling on minimum wage when they join the game.
True that. Companies that hire 0 skilled people should be regarded highly.
but you invest in the general workforce.you lose when one you levelled up quits, you gain when one another company levelled up joins - that is an investment in the pool of workers, not being 'nice'. unless someone leaves the country or becomes inactive, hes still there. the above article is very skewed - level 0 doesnt last long, and level 1, 2, 3 wages are not much better, but you have to work for your hard worker medal and the gold.
That should clear all less expereinced Congressmen's doubts. Already two people have proposed that bill in this term!
And yet, we somehow have minimum wage over 3ESP in eSpain, that right now buys for Q3 food at market prices. I don't see our economy spiraling down...
It's interesting how this minimum wage debate mirrors that of real life - namely, the argument that it actually reduces the wellbeing of the poorest in society because managers are less willing to hire unskilled workers and because companies are less able to afford them.
I completely agree with asahelnettleton, and this article is only one side of the coin. The last line says it all: "Please stop trying to increase the minimum wage to £2, as it is awful for companies...".
have you noticed it was mostly UKRP trying to get a minmum wage increase, hope this post stops the madness
I want to buy a Q5 house, i'm waiting for offers.
What would be the point anyway? Lower level players generally have little to spend the money on and can't unlck many features from the start. I know that I worked hard to level up my skill etc THEN moved to a higher paid job. At lower levels I only needed money for food while while I was getting the hang of how things worked. Why should other players be any different?
Comandanta Ramona made a good point. What does Spain have that we don't?
Scotspirit, hiring a skill 2-4 worker at the minimum wage would bring in lots of profit. At the average salary at 50 wellness they still make a profit. Skill 2-4 workers don't need to be paid the minimum wage.
if they try to pass this minimum wage then sell your companys before they are devestated cripplin the market so you can open a business in another sector of the market after the PM realises he has passed an act which will have severly damaged the countrys market both finacialy and people wise because if they pass this act i am moving
They are not passing it Matt.
its coz your skill rises after just one days work. your only on 0 for the first day
Colt, you're on 0 skill for 2 days. By the end of the second day/start of third you're skill 1.
Then in my area of the market there are no jobs currently for 1-2 Skill workers with a higher wage. The only other place i COULD go is to annother company. With the same pay. So i have to stay at minimum wage with my wellness spiraling down. And no real way of getting it back up yet.
Until I read this article I guess you could say I was a little bit ignorant to the business point of view, though maybe some government funded initiatives might be nice for new players to get a little bit of extra income so we can spend, or even invest in banks for the future.