Minimum wage could be frozen or cut if it starts to cost jobs or damage economy, Government suggests
The minimum wage for millions of people could have to be capped or frozen in future if it risks damaging jobs or the economy, the Government has said.
What they\’re really saying is that the Low Pay Commission must check the impact on unemployment of any rises in the minimum wage. And take them into account when setting it. Which could lead to freezes….even, theoretically, falls…in the rate they set.
Now Polly won\’t of course, come out and say she supports this. However, I do recall one of her Guardian columns saying that the minimum wage should continue to rise: until we see problems with it. At which point we can freeze it or lower it. If anyone\’s bored enough they can check back through her archive to try and find it.
Thus Polly should support a distinct instruction to look for possible employment damage done by the minimum wage so that this can be done if necessary.
As to the main feast here, yes, of course some damage is done by the minimum wage. For the current adult minimum wage it\’s not much. But for the current youth minimum wages it\’s quite a lot.
The general rule of thumb is that a min wage over 45% or so of the average wage causes significant damage. One under 40% doesn\’t (for the blindingly obvious reason that very few people ever get paid below 40% of average wages). Current adult minimum wage is in the 40-45% gap. Current youth minimum wages are in the 60-70% ranges of youth average wages.
This is one (but by no means the only) reason for significantly higher youth unemployment than adult.
I\’m unconvinced that anyone will ever try to cut the youth minimum wage, however beneficial it would be. But they might freeze it.