Thursday, March 06, 2008

Minimum wage to rise in October

Good news to hear that the minimum wage is rising in October from £5.52 to £5.73/hour (£4.60 to £4.77 for 18-21 year olds, from £3.40 to £3.53 for 16-17 year olds).

It's not just that this will put more money in the pockets of nearly a million people on low incomes, and their families, good as that is. It's also a sign that the government is starting to recognise that employers need to do their bit to help reduce poverty. Over the past decade, the government has spent billions and billions on topping up people's wages through the tax credits system, and people living in poverty have found jobs, worked hard, learned new skills, and juggled work with caring responsibilities - and yet the number of people in work but also in poverty has rocketed.

Those who think that it is 'anti-business' to say that employers need to take their fair share of responsibility for tackling poverty amongst people who are working ought to listen to employers like KPMG and Barclays. They put their wages in London up to at least £7.20/hour (plus guaranteed sick pay) and found that productivity increased and staff turnover decreased - so everyone ended up better off.

3 Comments:

At 1:03 am , Blogger Jock Coats said...

So Dan, what do you make of the figures about the real effects of this rise calculated by Mark Wadsworth here?

When did the labour movement stop understanding that Free Trade rather than Protectionism was the way to increase the real returns to the worker? (I have a nice copy of Henry George's "Protection and Free Trade" for which Philip Snowden wrote the glowing foreword in 1929 - so sometime after that I suspect).

 
At 3:42 pm , Blogger donpaskini said...

I've seen quite a lot of Mark's stuff, and hence don't pay much attention to his calculations, since his alternative isn't very well worked out and is about making lone parents worse off because of his moral judgements. In my opinion. As for marginal tax rates, I'm for tweaks which reduce them, but as I put in my post, I think that policies which mean employers pay a bit more and the government pays a bit less are important in tackling poverty.

 
At 10:48 pm , Blogger Mark Wadsworth said...

Don, those are not 'my' calculations, they are the DWP's own (and they seem pretty accurate, subject to certain assumptions).

'My' alternative is the 'Citizen's Income' approach. e.g. in the CI Trust's workings. Or you can go with Neil Harding's figures (much higher CI, but higher income tax rate as well). Or my Bow Group suggestion that is no longer online that was somewhere between the two.

The inevitable result of all these is that two-parent families benefit relative to lone parents. Under the CI figures, lone parents would be a smidge worse off; under Neil's scheme lone parents would be about the same but two-adult unemployed households would be a lot better off.

This is not a moral judgment - it is a simple statement of fact that the current tax and welfare system vastly rewards lone parenthood relative to two parent families. I do not do morals or moralising, it is not a crime to tell the truth. And may the people at Con Home call me a socialist for explaining the virtues of Land Value Tax. I'm not a socialist, I am merely saying, in a non-moralising sort of way that Land Value Tax is the least-worst tax.

And so on.

So Don, are you with the Con Homers, ready to cast aspersion and close your mind to The Truth, or with sensible economics, as ably espoused by Jock, who AFAICS is totally non-judgmental and non-moralising?

 

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