A misconception about raising the minimum wage is that everyone benefits from it, while in truth it causes more problems than it solves. By raising the minimum wage the more money the employer has to spend. The more money an employer has to spend the smaller their profit margin. The smaller the profit margin the higher the chance that the employer chooses to make employees redundant.
However, no matter what I think about wage increases, I am massively opposed to the idea of wage-capping how much a person who lives within the country can earn. Jeremy Corbyn’s latest proposal to cap the amount of money you can earn is massively intrusive into people’s lives, no matter who it is, and could end up harming the economy more than it would benefit it.
An example of an industry that would be fundamentally crippled by wage-capping is Football. With the amount of money available in China, British Football would not be able to compete and could trigger an exodus of talent from Britain to different leagues across the globe. A major point I have to make is that these Football clubs earn the money that they get to spend on anything they want. The money that clubs’ make is theirs to spend, after tax of course, and if an employer is willing to pay them these high wages
Another point, I have to make, is that what is the purpose for this scheme? Who will it benefit? This scheme will alienate the wealthy and will benefit nobody. All this does is lower the amount of earning that are taxable – the money that funds Government schemes and supports the poor.
All in all, there are times where increases in the minimum wage are needed to match the cost of living. However, these intrusive schemes could cause an existential crisis in the UK and bring with it a major ‘brain-drain’ .