Minimum wage is UK’s ‘most successful economic policy in a generation’
Minimum wage is UK’s ‘most successful economic policy in a generation’
Resolution Foundation study suggests lowest earners are £6,000 a year better off due to policy
The minimum wage has driven up the pay of millions of Britain’s lowest earners by £6,000 a year, making it the single most successful economic policy in a generation, according to a leading thinktank.
Since its introduction in 1999 by Tony Blair’s first Labour administration the policy has secured cross-party agreement, and should be seen as the basis for further improvements in the welfare of low wage workers, the Resolution Foundation said.
The minimum wage will increase on Monday 1 April as it rises from £10.42 to £11.44, in the third-highest annual change in its history – a rise of 9.8% in cash terms and 7.8% above inflation.
In a study released to mark 25 years since the policy’s introduction, the foundation said workers would have been £6,000 a year worse off since 1999 if their pay had only risen in line with average wages rather than the increases recommended by the independent Low Pay Commission.
Wasn't minimum wage only necessary because of Thatcher's war against unions?
Yes, that and increasing conditionality of benefits (which were originally designed to place a floor under which no employer could sink).
Minimum wage is a neoliberal policy, necessitated by the fact that capital would happily starve its own workforce to death and only then wonder why it could not find any more workers to exploit.
The Scandinavian countries are, I think, the only wealthy countries left with no minimum wage. Because sectoral bargaining still works there (hence Musk's travails in Sweden).
I haven't read this report but any research like this needs to also look at the proportion of the workforce who are at or close to the minimum wage, which has steadily increased since 1999. It has undoubtedly improved things for the most easily exploited workers but it has also meant that wages in general have pancaked downwards. Overall inequality has increased even as minimum wage improved things for the very lowest paid. This headline is reporting the good news while ignoring the bad.
That's because there haven't been any successful economic policies since then.
To be fair we've had various shades of unfettered neoliberalism for near on 50 years; so it's a policy without an awful lot of competition.
On one hand this is good news. On the other hand it represents a problem whereby employers exploit workers via low pay and causes low productivity.
That problem isn't going away too soon unless employers change their stance in paying better wages to get better productivity.
As the saying goes "minimum wage, minimum effort" unfortunately.
Here's an article via the LSE on low wage and productivity.
Worth remembering that it wasn't always a free-for-all before minimum wage was introduced. I think there was a mechanism to set minimum wages by industry, which got dismantled by thatcher (not sure on specifics but pretty sure there was some mechanism to set minimum wages).
Bet the people on the "Think Tank" aren't on minimum wage. Fucking think tanks can fuck off.
This is the best summary I could come up with:
The minimum wage has driven up the pay of millions of Britain’s lowest earners by £6,000 a year, making it the single most successful economic policy in a generation, according to a leading thinktank.
Since its introduction in 1999 by Tony Blair’s first Labour administration the policy has secured cross-party agreement, and should be seen as the basis for further improvements in the welfare of low wage workers, the Resolution Foundation said.
Nye Cominetti, principal economist at the Resolution Foundation, said parliament should use a review of the commission’s remit “to discuss the future of the minimum wage and low pay more widely ahead of the election”.
She said: “Politicians should reflect on why the minimum wage has been so successful – such as the combination of long-term political direction and independent, expert-led oversight – and whether this approach could be broadened to tackle some of the UK’s other low pay challenges.”
The foundation said MPs should consider how the level of statutory sick pay had fallen in relation to average wages and could be brought under the umbrella of the commission.
Some critics of the minimum wage have argued it is too high while others believe it has not risen fast enough to reduce poverty in the UK.
The original article contains 493 words, the summary contains 209 words. Saved 58%. I'm a bot and I'm open source!
It has been more successful than it should have been because wage growth has been so dire. One major contributing factor appears to be our long term productivity growth, which has been terrible for decades. Public and private sector bosses seem happy to scrape by instead of investing in more efficient work flows so we've now got more people being added to the workplace while economic output is flatlining.
Between 2012 and 2017 we imported over £10M worth of fax machines to the UK. Was also horrified to hear that Downing Street were coordinating their covid response in 2019 based on faxes from various NHS trusts because the health service are stuck using outdated systems.
Is there really no way to fix the value of the currency? Have any countries tried something other than increasing minimum wage? Not sure about the UK but here each minimum wage boost, things just gradually become more expensive or you get less product for the same price.
Funnily enough every time this is studied the correlation is never really there. Minimum wages going up are typically a result of things getting more expensive not vice versa.
It's pretty easy to reason about too: the big organisations handling huge sums of money in a country have a much greater impact on an economy than the group of people (about 1%) making the bare minimum possible in order to to survive.
The only way it goes up explicitly because of minimum wage is if a business owner decides to maliciously meddle with supply and demand pricing to explicitly target people who might get a minimum wage increase—but no business owner intending to continue to do business would hand their competitor an advantage like that.
Minimum wage increases are generally proven to benefit pretty much everyone at all economic levels (yes, even business owners, because their customers are able to be more liberal with spending)
Minimum wage raises have almost no effect on inflation rates, or "shrinkflation" for that matter. The rises in minimum wage have been frequent over the last few years but it's almost entirely been cost push inflation that's caused the cost of living to be so much higher and so swiftly over the last few years. Longer term here's actually been huge wage stagnation for most. Which is its own issue. Off the back of the cost push causation, the UA invasion by Russia, covid etc profiteering by companies is definitely happening too.
New Labour had the longest period of sustained low inflation since the 1960s, despite overseeing a massive increase in wages for the lowest paid.
Increasing minimum wage doesn't really affect inflation.