Making work pay…by freezing the minimum wage

The chancellor George Osborne will make a speech today in which he will say the government is “making work pay” through tax and benefit changes. Making work pay is an admirable goal and something that everyone on the left supports. The problem, however, is that the government’s idea of making work pay is radically different to that of most progressives, as a quick glance at today’s Daily Telegraph makes clear.

The chancellor George Osborne will make a speech today in which he will say the government is “making work pay” through tax and benefit changes.

By giving examples of how the government is supporting those who “get up in the morning and work hard”, Osborne will aim to put substance on government claims to be supporting “strivers” and encouraging aspiration.

Making work pay is an admirable goal and something that everyone on the left supports. The problem, however, is that the government’s idea of making work pay is radically different to that of most progressives, as a quick glance at today’s Daily Telegraph makes clear.

On page four the Telegraph reports that the minimum wage could be frozen “if the economic downturn continues”.

“The low pay commission, which sets the wage level, has been told that it must consider the impact on employment and the economy before agreeing future increases,” the paper says.

Like so much of what the government is now doing this stands counter to what the Conservative Party said when it was opposition. “Modern Conservatives acknowledge the fairness of a minimum wage,” said George Osborne in 2008.

Also, not only is there very little evidence to suggest that reducing or getting rid of the minimum wage would create jobs (a 1994 study found the opposite; and the introduction of the minimum wage in the UK was not accompanied by rising unemployment) the underlying problem of a flat lining economy will not be resolved by taking money out of the pockets of those most likely to spend it – teenagers and young people.

As Tim Harford has put it in the FT (£), “if a young adult cannot produce enough of value to justify being paid a living wage, nothing we do to the minimum wage will help. He, the institutions which trained him and the society in which he lives, have far bigger problems”.

So much for “making work pay”.

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32 Responses to “Making work pay…by freezing the minimum wage”

  1. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  2. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  3. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  4. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  5. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  6. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  7. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  8. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  9. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  10. LB

    And your idea is let’s tax them so we can have our money.

    Taxing the poor makes them rich.

    Taxing g jobs creat jobs.

    Just as taxing smoking makes people smoke.

    Taxing drink makes people drink

  11. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  12. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  13. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  14. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  15. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  16. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  17. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  18. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  19. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  20. Mr Free Tory

    I say that we should round them up and put them in camps, take their children away and give them to some strivers.

  21. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  22. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  23. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  24. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  25. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  26. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  27. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  28. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  29. Lipotidae

    Obviously been on the Crack again Georgie boy. Behave you are a Public Servant now…..

  30. Anthony Masters

    The author cites the 1994 Card-Kruger paper in support of the contention that “there is very little evidence to suggest that reducing or getting rid of the minimum wage would create jobs”. Given the deviation this statement makes from traditional economic thinking, their data and results were investigated by later research. A 2000 paper, by David Neumark and William Wascher, use administrative payroll records in fast-food restaurants in the two states (the focus of the original Card-Kruger paper) to compare against that paper. They found that:
    “In contrast, a simple replication of CK’s differences-in-differences estimation using the payroll data indicates that the New Jersey minimum-wage increases led to a 3.9-percent to 4.0-percent decrease in fast-food employment in New Jersey relative to the Pennsylvania control group, with elasticities in the range of -0.21 to -0.22.”
    http://www.davidson.edu/academic/economics/foley/eco324_s06/Neumark_Wascher%20AER%20(2000).pdf

  31. orkers

    In the hopes of maybe supplanting the ConDems at the next GE you will continue to sell Scotland short.

    Grow a set and support Independence.

  32. silverfawkes

    London’s unemployment rate is higher than that in Wales or Scotland and similar to the North West and North East of England. Yet London is the main destination for people from East and Central Europe looking for and finding work. When employers have to pay the minimum wage they will employ people whose productivity justifies it and many of the unemployed in London have been made unemployable by a wage higher than their productivity

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