If IDS succeeds, what then for the minimum wage?

That the minimum wage damages the work prospects of the least skilled is simple economics. Every person’s labour has value ~ a surgeon can command a higher wage than a warehouse picker, and so on. Clearly, setting a minimum wage that two parties can agree on for a job as ‘x’ instantly condemns those who’s market worth is less than ‘x’ to a life of benefits. External training may alleviate this, but most training and skill enhancement that is valued by employers is achieved on the job, as it were. Todays picker becomes tomorrows shift leader, next years supervisor, manager, etc. Pricing the least skilled out off a chance of the first foot on this ladder has is consequences.

These people are, to a large extent, invisible. The benefits system is so complex and clumber some, with such incredible marginal withdrawal rates that I suspect that many on long term benefits aren’t aware how unemployable the minimum wage has made them. Sure, they know that they can’t walk into a job that would make working worthwhile, but they probably don’t know that a minimum wage job is out of their reach ~ minimum wage jobs that give them an extra £5 a week for 40 hours work make no sense at all (your bus fare would wipe that out) so they seldom apply.

Now, let us assume that IDS actually manages to come up with a simplified benefits system that doesn’t punish people for working. Suddenly, it would be worth doing that part time cleaning job, a bit of casual sweeping in a builders yard, etc. Then, horror of horrors, some people are going to find that the minimum wage has priced them out of a job. They can’t say to the gaffer ‘give us a months trial on £3 an hour, and if you’re happy take me on at £5′, because that would be illegal.

Could we see the minimum wage issue being debated again? At the moment, to oppose it has one caricatured as some kind of Victorian Villain, sending children up chimneys and down pipes for a penny a day. However, if the people the minimum wage was designed to protect find it is preventing them entering the workplace, the debate may be very different indeed.

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