The minimum wage vs. a living wage

By Tom Ladds

With the end of the Labour leadership contest in sight and the result too close to call between the Miliband brothers, the right-wing press are now formulating their response to something few pundits predicted even just a few weeks ago: a possible victory for Ed.

Many articles have erroneously tried to portray Ed as ‘lurching to left’, but few have been so scathing as a recent piece in the Wall Street Journal by Jamie Whyte. The theme of the article is that Ed Miliband’s Living Wage campaign is fundamentally wrong because all British workers receive a legal minimum wage which is enough to prevent them from starving. There are numerous falsities in the piece, but this article will focus on the more serious ones. Whyte’s arguments serve as a good example of the standard right-wing response to proposals for improving pay for low earners.

Mr Whyte calls the legal minimum wage sufficient because it ensures people do not starve. But in doing so he misconstrues the meaning of “living” in Living Wage. It is true that most workers no longer lack the basic income necessary to buy food. But has Mr Whyte considered the situation of a cleaner who works in central London and receives only the legal minimum wage? They are effectively on poverty pay, as the minimum wage cannot cover their outgoings. The Living Wage, calculated by the Joseph Rowntree Foundation, considered the cost of these outgoings and was set at a level that took into account the basics of life required by two adults supporting two children.

The idea that a minimum wage is already more than sufficient is the most serious statement Mr Whyte makes. He claims that the minimum wage is too generous because it has led to excess amongst the low paid, as a minimum wage earner is “more likely to die prematurely because he has over-consumed food, alcohol or cigarettes”. It is a statistical fact that low pay and lower life expectancy go hand in hand. Ed Miliband’s proposal would mean people could make healthier lifestyle choices. Beyond this purely economic argument, the point is that being paid a wage above the legally prescribed minimum is proven to improve a person’s sense of well-being. Employees feel more valued by their employer, and there is a proven increase in productivity as a result.

A final insight into Mr Whyte’s agenda can be seen in his statement that people on benefits “live off money confiscated from others”. This attack on benefit claimants has already been rolled out on many occasions by the Conservatives, both during the 2010 election and since. It is an argument that stirs up populist hatred directed towards benefit cheats, but ultimately acts as a disingenuous smokescreen. Those abusing the benefits system will be hit, but so will others who have done no wrong. An attack on the notion that anyone should receive public money while not working in full time employment is an easy way of justifying unwarranted spending cuts that will harm a wide array of the most vulnerable in our society, such as those needing housing support or disability allowance.

The Labour Party, and its new leader, must not be cowed by these assaults. By using its values and evidenced-based policies, important issues can be raised by Labour as alternatives to the coalition fixation on cuts. The Living Wage is a laudable campaign for aiming to help the lowest paid members of the nation’s workforce who are too often ignored. If the coalition is serious about making work pay then it needs to support the Living Wage, which would do exactly that.