Nice discussion of tax credits, but efficiency wage argument requires you to forget entire theory of the firm, and personnel economics too.
Despite all the rhetoric about the Conservatives becoming the workers’ party, George Osborne’s masterstroke National Living Wage (NLW) is really just another deficit reduction policy. The government has realised that the deficit is a labour market thing and that the only way to take big lumps off social security costs is for a lot of people to earn a lot more than they do now. Solution? Get employers to pay more, so fewer people will need in-work benefits and the welfare bill will go down. Or, to put it another way, get employers to cover some of the cost of deficit reduction. That way, you can cut welfare costs without causing social unrest and, with a falling benefits bill, you don’t have to cut as much off public services. Simple eh?
Why it won’t work
This won’t work, says just about everybody. Among others, the Institute for Fiscal Studies…
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Utopia, you are standing in it! 
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