Just boosting the Minimum Wage handicaps efforts to end poverty pay

Driving above 70 miles per hour.

Selling cigarettes, brought abroad in a lower sales-tax jurisdiction, to friends at cost price.

Smoking Marijuana.

Paying employees or contractors at below minimum wage.

These are all examples of actions that are against the law, but that happen all the time. This is partly because they are socially acceptable, and partly because they are hard to police.

The reason why I’ve come up with this list is not to argue that, because lots of people do  it, they should be legalised. Given the subjectivity of what counts as ‘lots of’, you could use that argument, logically, to legalise murder.

But it does show that committing something to law doesn’t make it so. Ultimately common sense tells us that the law is a lightly-policed collective bluff, and when the bluff is called, emboldened by social acceptability, it usually goes unanswered.

It is hard to know the extent of minimum wage non-compliance, because any illegal activity is hard to measure. However, not paying the minimum wage makes an employer part of an informal economy that could involve anything up to 2 million workers according to the TUC.

Which is why LabourList editor Mark Ferguson is wrong to say the answer to low pay is to raise the minimum wage to living wage rate.

Law enforcement has a role, but a voluntary living wage enables our society to have a conversation about low pay, in the way that the spectre of illegality scares off.

Anti-smoking campaigners have known this for decades. Action on Smoking and Health (ASH)  have campaigned for a long time to prohibit smoking in public places. But I also remember helping my dad man an ASH portakabin at fairs on bank holidays, where we’d give out leaflets and talk to people about quitting smoking.

There were various tricks of the trade. One was to challenge the older guys, often blokes who had spent their life working on the docks or in factories, to try to beat little-nine-year-old me in a breath-strength test. We also had some particularly gory tanks containing lungs of smokers – the 40-a-day one was particularly gruesome. The point is that we had conversations about why smoking was harmful to smokers and their families, and we managed to persuade some people to try to quit.

But those conversations were only possible – in public, at 2 o’clock in the afternoon, often in front of family members – because tobacco is legal. It would have been socially impossible to have the same conversation about an illegal recreational drug.

Research by Ipsos-Mori found that employers who do not pay minimum wage may not know what the level is. Others believe that by keeping employees ‘off the books’, workers will not have to pay tax or national insurance they would otherwise be liable for and so can afford a smaller wage.

We need to shift the culture around low pay, ensure that the level of the national minimum wage and living wage are well known and make sure there are financial and social penalties for non-compliance. But the conversations and campaigns necessary for that change can only occur while, to be frank, campaigners cannot rely on the law to solve problems, and companies who become champions of decent pay are willing to admit they were once poverty-payers.

Those conversations happen when, for example, London Citizens engages in a Living Wage campaign. The workforce is educated in its rights. The issue takes over the front pages of local newspapers. Anybody who can be of use in the campaign – customers, partners, shareholders, suppliers – is informed of the issue.

If it is just a job for law enforcement, you lose those conversations. And then maybe one of the stakeholders in that campaign has a friend who pays a cleaner or home carer a low wage, and they decide to talk to them about it. It helps create a cultural shift.

I would not argue for removing the statutory national minimum wage. But you need voluntary and legal action to change a society.

It is ironic that the government has decided to attack rights at work, when many of those rights were introduced by the Conservative Prime Minister Heath to reduce workers’ dependence on the voluntary campaigning known as trade unionism.

Lefties should accept Heath’s premise. Change is strongest when it involves voluntary and statutory efforts. That is the difference between rolling out the Living Wage campaign as it stands and merely boosting the national minimum wage.