In the UK, the Living Wage is set at £8.55 per hour in London and £7.45 elsewhere. The national minimum wage is £6.31 for people over 21 years of age, which compares with a suggested Federal minimum wage in America of £5.90-£6.00, allowing for exchange rate fluctuations. However, the UK is a dearer place to live for the working poor, who spend more of their money on essentials like groceries, utilities, and rent/mortgage. Grocery prices in the UK were 14.24% higher than in America in June 2014, utilities 53.37% higher, rental charges (outside of city centres) 27.17% higher, and apartment prices(outside of city centres) 216.78% higher per square meter. When added to the fact of a one-way ticket (local transport) being 75.82% higher, and petrol being 139.37% higher, it can be seen that the UK is a considerably more expensive place for the working poor to live in, and, even, allowing for government ‘working family’ assistance, the UK minimum wage should be at a higher comparative level than in America.
A major difference between the UK and America in terms of minimum wage legislation centres on the powers of local government – the UK is a centralised dictatorship, where national policy is forced on local communities, whereas in America, city councils have the power to enact their own fiscal policies. Seattle City Council has voted for a minimum wage of $15 (£9) within its jurisdiction by 2017, to be paid by larger employees, with smaller businesses having until 2021 to meet this requirement. This follows a national ‘fight for 15′ campaign – a wage enough to raise a family of five above the federal definition of poverty. According to a Pew Research survey (March, 2014) over 70% of Americans supported this level of increase.
Seattle is not alone in supporting this initiative. Chicago, San Fransisco, and Los Angeles are looking to follow suit, with smaller cities, such as Providence, R.I, also showing keen interest. The movement for a higher minimum wage in America is countrywide, with seven States, including Maryland, Michigan, and West Virginia legislating for increases in 2014.
The argument for such wage increases is the classic Keynsian one: low-wage earners have more money to spend and stimulate local economies, which supports local businesses. I do not intend to pursue the classic counter argument held by the political Establishment of the UK, those wedded to the free-market doctrines of Friedrich Hayek. What I do suggest is that if the Labour Party adopted the ‘Seattle doctrine’, and adopted a policy of allowing local councils to set a minimum wage of £10 per hour outside of London and £12.50 within (rates that reflect the higher cost of living in the UK compared to America), then one thing would certainly follow – a landslide victory in the 2015 General Election. The idea could be bolstered by claiming it recreates local democracy, and stops the government subsidising low pay out of tax payers’ money. Smaller businesses could be offered compensatory tax reductions.
I suggest that significantly more would vote for it on the prospect of being better off than would reject it on the prospect of losing their job, a fear that the Establishment media would play on, as they did in America, with the result that 70% of Americans reject their argument.
Will this tempt the Labour Party? It is so well camouflaged with such slight variations of Conservative Party doctrine that the majority of the electorate find it an almost identical twin. Trying to ‘outdo’ the Conservatives by ‘tweeking’ their policies will not win the 2015 election. There is a growing support for re-nationalisation of water, gas, electricity, and railways, and radical policies that promise to make the working poor much better off would sweep their proposer to power. Trying to win an election in 2015 on policies devised by Peter Mandelson in the 1980′s is myopic. If you sit on a fence long enough you will eventually be blown away.
Indices Difference:
- Consumer prices in the UK are 31.56% higher than in America.
- Consumer prices including rent in the UK are 27.44% higher than in America.
- Rent prices in the UK are 18.33% higher than in America.
- Restaurant prices in the UK are 50.10% higher than in America.
- Groceries prices in the UK are 14.24% higher than in America.
- Utility prices (electricity, gas, water) in the UK are 53.37% higher than in America.
- Price per square meter to buy an apartment in a city centre are 170.05% higher in the UK than in America.
- Price per square meter to buy an apartment outside of a centre are 216.78% higher in the UK than in America.
- Local purchasing power in the UK is 28.01% lower than in America.
- Average monthly disposable income (after tax) is 8.25% lower in the UK than in America.
Source (updated June, 2014) http://www.numbeo.com