Increasing Minimum Wage Would Not Reduce Available Work

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March 29th 2020
Tax Week 52
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Increasing Minimum Wage Would Not Reduce Available Work

Raising the minimum wage increases pay for low-income workers without negative effects on employment levels and work hours.

A report on the impacts of the minimum wage published by the University of Massachusetts Amherst states raising the minimum wage has little effect on employment stats, whilst increasing pay for low income employees. The report goes on to state that evidence shows the NLW, currently £8.21 per hour, could be increased to 60-67 percent of current median UK pay (median pay is ~ £26,000, so up to ~ £17,500).

The current UK NLW for people aged 25 and over of £8.21 p/hr is equivalent to 59% of median UK pay. The government has outlined plans to increase this to 60%, or £8.34 next year, but 67%, up to £9.32 an hour, is feasible.

A person earning the median UK wage takes home around £1,770 per month, whilst someone working full-time on the minimum wage takes home around £1,170 per month.

Interestingly, the UK 'Living Wage' is currently £9.30 - but this is just a recommended minimum set by the Living Wage Foundation, part of Citizens UK. 6,000 employers have implemented this standard for employee wages.

Last year seven percent of those in employment were paid at NLW level, with women and part-time workers more likely to be paid the basic amount. Wholesale/retail, accommodation and food sectors account for the majority of lower paid employment. Increasing the minimum wage would not only benefit low-paid workers through extra pay, but reduce the use of state benefits such as tax credits as well as increase morale at work.

Overall, research in the US mirrors the findings for the UK although a minor reduction in hours was noted.

Below are the current (2019) 'minimum' wage levels set for the UK, across ages.

National Living WageNational Minimum WageLiving WageLondon Living Wage
Age25+21-2418-20Under 18Apprentice18 and over18 and over
£ per hour£8.21£7.70£6.15£4.35£3.90£9.30£10.75
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