It was at the very end of the 19th century that one of Yorkshire’s greatest social reformers, Benjamin Seebohm Rowntree, carried out his survey, looking at the living conditions of 45,000 York residents. Results of the survey, designed to test household income against a poverty line, were published in his 1901 book, ‘Poverty, A Study of Town Life’, and showed that almost 10% of York’s population were living in primary poverty. The main cause of this poverty was that although people were in work, ‘wages (were) insufficient to maintain a moderate family in a state of physical efficiency’. Rowntree exposed the concept of the ‘idle poor’ to be a myth – the poor were working, but inadequate wages meant poverty.
So, what has the impact of the National Minimum Wage, introduced just over ten years ago, been? The evidence is pretty clear – for the best part of a decade the most vulnerable and low paid have seen their wages increased in a modest yet meaningful way when compared to increases in average earnings. Women, younger people, those with disabilities and those working part time benefitted most.
The number of jobs in the economy has increased following the introduction of the National Minimum Wage to the tune of over two million (a damning statistic for those economists who predicted mass job losses) with at least a quarter of these in those sectors containing workers who were previously the most likely affected by low pay. The current increases in unemployment do not reflect the wages of the lowest paid being too high but because of excessive risk-taking at the very top which is having such devastating effects on those at the bottom.
At least one Tory MP is calling for the minimum wage to be scrapped. Phil Davies MP for Shipley recently argued in the Yorkshire Post that “…if someone is happy to do a job for a certain wage I don’t believe that it should be any business of the Government to prevent them from so doing”. This fails to account for the bargaining positions of the employer and employee and the impact of the market in setting wage levels where no minimum is set – do we really want to see people working for as little as £1 per hour as was the case in the mid 1990s?
Davies goes on to argue that “before the NMW, although some people [were] paid extremely poor wages…people would be paid those low wages for a relatively short period…” But there is no evidence to back Davies’ contention. Rather, poverty pay is a trap. There was no incentive for employers to train or develop and no opportunity for the kind of advancement Davies refers to.
Dealing as he did with the plight of the most socially disadvantaged, Davies further argued that “…because an employer must legally pay the NMW, is it less likely that they would be prepared to take a chance on a former prisoner looking for a job, somebody with no qualifications at all, or somebody with mental health problems. I believe that it is now less likely and is leading to some of the most vulnerable people in our society finding it harder than ever to find a job…”. He seems to presuppose that those mentioned were previously exploited by being paid lower wages than others, perhaps doing the same job, but from a less unfortunate background. If this is the case, then surely these discriminatory ways are addressed directly and that they are ultimately best left as a relic of the past.
If the minimum wage was scrapped, reduced or left to whither on the vine by any future Conservative government, it would push the most vulnerable in society in to poverty. But, it would also reduce the revenue raised through tax and, given that it is the case that those earning lower incomes spend a higher proportion of their earnings, would take money out of the economy too. Unless the government of the day was prepared to see the one and a half million working people who benefit from the minimum wage have their pay substantially reduced, then this would also result in the need for additional government spending, topping up the reduced earnings with tax credits (if the Tories don’t scrap those too).
Of course it was Labour that introduced the minimum wage and the Tories who opposed it. It was Labour who said that jobs would not be lost as a consequence, and the Tories who pedalled fear. And it is Labour who is committed to protecting the most vulnerable and disadvantaged and the Tories who want to reverse that progress.
There was a time when political consensus existed, and I would ask Mr Davies to consider the contribution of one Winston Churchill to a parliamentary debate in April 1909, ‘…it is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions. It was formerly supposed that the workings of supply and demand would naturally regulate or eliminate that evil . . . but where you have . . . no organisation, no parity of bargaining, the good employer is undercut by the bad and the bad employer is undercut by the worst . . . where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.’
The independent Low Pay Commission has searched for evidence of any damage caused by the minimum wage to the economy or to jobs. In their most recent report, they confirm that they have found no such evidence, no significant negative effects at all. There have clearly been many benefits, lifting thousands out of poverty.
One of our greatest achievements for working people is at risk if the Tories return to power.
Jamie Hanley is a trade union lawyer and Yorkshire & The Humber CLPs rep on the Labour Party’s National Policy Forum