Breaking character, Ed Miliband has committed to some kind of political stance and has pledged to increase minimum wage to £8/hour by 2020.
Upon closer inspection this is less interesting than it initially seems and Ed has preserved his reputation of doing absolutely nothing useful: At 4% inflation, minimum wage should grow to £6.50 * 1.046 = £8.22 in 2020. Yep, Ed has committed to doing absolutely nothing differently. I am still finding it difficult to work out if Ed has some kind of election campaigned lined up and just feels it’s too early to unleash it, or whether he genuinely has no interest in being elected. I suppose we’ll find out soon.
The greens previously came out and said they’d raise it to £10 in the same time frame. I say the greens have the right idea but they are still too conservative and should have given a bigger number. At the moment, low paid employees are subsidised by all sorts of state benefits and this is necessary because it is simply not possible to live on minimum wage alone. This is an example of socialism gone wrong where we use the state to subsidise corporations. In simple terms, a company is asking the taxpayer “I’d like to make this person generate some profit for me, but I don’t want to pay them for it, will you pay them for me and I’ll keep the profit?”. This is ludicrous. The minimum wage should be set high enough that somebody working full time can be expected to support themselves with no intervention from the state. The expectation by employers of free labour in this country is as baffling as it is damaging.
As well as directly benefiting extremely low paid workers, this has the benefit of kicking off some competition in the employment market from the bottom upwards. If minimum wage were raised today to £10 (let’s assume this is roughly the figure that someone on minimum wage currently makes once benefits are factored in), suddenly high stress/high responsibility jobs at £11/hour and £12/hour wouldn’t look so appealing so the numbers would have to rise and average worker salaries would gradually start eating more into companies’ earnings, making an overall more equal distribution of income. At the moment it is difficult to have a true insight into what your wages are worth at the lower end of the scale (which, due to the unbalanced distribution of earnings, includes most people), because you compare them with a number that is artificially low and doesn’t really mean anything.