By Andrew Brady Those of us campaigning for a raise in minimum wages whether in the States or in the UK who use social media streams such as Reddit’s ‘Economics’ section will no doubt have been bombarded with comments along the lines of: ‘a raise will …
By Andrew Brady
Those of us campaigning for a raise in minimum wages whether in the States or in the UK who use social media streams such as Reddit’s ‘Economics’ section will no doubt have been bombarded with comments along the lines of: ‘a raise will cost jobs’, ‘the economy will be hurt’, ‘labor doesn’t understand economics’ and so on.
It reminds those of us based in the UK of the doomsday scenarios painted by the Conservatives as an incoming Labour Government in 1997 promised to introduce a minimum wage. Let’s remind ourselves of some of the drivel:
- Then deputy prime minister Michael Heseltine mocked the idea back in 1996, saying: “Any fool knows that a minimum wage costs jobs.”
- Iain Duncan Smith, speaking in 1997, the Tory MP said it “will negatively affect, not hundreds of thousands but millions of people” depending on how high the minimum wage was set.
- William Hague, speaking as leader of the Opposition, ridiculed the minimum wage, saying in 1997 it “would be either so low as to be utterly irrelevant or so high that it would price people out of work.”
The list goes on for brevity I’ve selected a few comments at the time. To the contrary, after the implementation of the National Minimum Wage there was a net jobs and pay increase which benefited over a million workers. The UK Low Pay Commission confirms that: “there were 2.8 million more workforce jobs in the UK in September 2012 than before the minimum wage was introduced. There were also 2.0 million more people in work, an increase of 9.4 per cent.” So much for a million jobs down the toilet due to its introduction.
But, let’s not let facts get in the way of Right-Wing politics. Now those on both sides of the Atlantic switch to Plan B: if you raise it any higher then jobs will be lost. The same old drivel. In an article written with such hysteria akin to the previous Tory politicians Luke Johnson – I know who’s he – in the Financial Times contested that to raise the minimum wage would – wait for it – be ‘populist politics and bad economics’. You just couldn’t make it up!
In a powerful Editorial by the New York Times, who in contrast to most mainstream media stick to the facts, it points out that the recent Congressional Budget Office report actually said that the benefits of a raise to $10.10 by 2016 were ‘almost entirely positive‘. 16 million plus low-wage workers making $7.25 an hour would directly benefit from the increase while up to 8 million earning slightly more than the minimum would also probably get a raise due to the “ripple effect” in total adding $31 billion to the wages of families. So much for disaster once again.
The Right-Wing have instead sought to focus on a scenario – I stress that word – which said up to 500,000 could be lost as a result. Now anyone who has done economics knows that variables are weighted and various scenarios are modulated. The report actually stated that there is a two-thirds chance that a $10.10 wage would produce job losses in a range from just above zero to one million. Yes – starting at zero job losses in conjunction with lifting millions out of poverty and putting extra money into the pockets of tens of millions.
In a excellent report commissioned by the UK public sector union Unison in support of the UK trade union movement’s campaign for a Living Wage. It stated that there can also be an aggregate jobs impact from raising the minimum wage.
“Using recent estimates from the IMF of the effectiveness of fiscal stimulus in the recent economic depression and combining them with the UK Office for Budget Responsibility’s own multiplier estimates, this report has shown that once the potential macroeconomic stimulus effects of extending the living wage to all employees are taken into account, it is more likely than not that a statutory living wage would result in a modest boost to aggregate employment.”
So much for the labour movement not understanding economics eh!
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