Wednesday, 4 November 2015

The Telegraph: Tax credits are far, far better than a living wage

The Telegraph: Tax credits are far, far better than a living wage


Article by Kate Andrews


'In conjunction with the announcement of this year's (voluntary) living wage increases, the Living Wage Foundation has marked out this entire week to raise awareness about the UK’s in-work poverty crisis and to encourage employers to adopt higher wages for their employees. In theory, this campaign could gain the support of socialist and free-marketers alike; higher salaries can create loyalty and satisfaction amongst employees, and there are PR benefits to be incurred when a business implements a living wage.

But naturally, these kinds of campaigns aren’t just preaching to JP Morgan and the like. They put pressure on all businesses, large and very small, to adopt a living wage for their employees.

When they don’t – often because they can’t afford to pay a worker above her productivity level without damaging their business – pressure is then put on politicians to make higher wages mandatory. And this creates terrible consequences for the very people living wage campaigners want to protect.
The Chancellor’s watered-down version of a National Living Wage has been estimated by the Office of Budget Responsibility to put 60,000 people out of work. Over in the United States, we’ve seen Seattle’s living wage experiment go awry, making the job loss for restaurant employees between January and June this year the largest since the Great Recession. The workers losing their jobs are mostly low-skilled, low-educated people, including minorities, who are in most need of a break on the career ladder.'

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