September 19, 2014

Business leaders call for higher UK minimum wage

A group of business leaders has called for an increase in the UK’s minimum wage, following the country’s return to economic growth.

In an open letter, influential business figures including the chief executives of Nomura Holdings and Kingfisher plc state that the value of the minimum wage has fallen in recent years.

The letter goes on to argue that: “A stronger minimum wage will benefit businesses, improve public finances, and help tackle low pay […] We must ensure that all employees are benefiting from the recovery.”

The economic impact of minimum wage legislation is controversial, with mixed evidence of its risks and benefits. In his analysis, our author David Neumark argues that introducing and raising minimum wages reduce the number of jobs available to lower-skilled workers. He further argues that minimum wages do not necessarily benefit the poorest households.

Similarly, our author Daniel S. Hamermesh argues that minimum wages have small negative effects on employment, albeit while raising earnings for those low-wage workers who remain employed.

The minimum wage was first introduced in the UK in 1999 and is currently £6.31 an hour for workers over 21.

Read more here.

Related articles:
Employment effects of minimum wages, by David Neumark
Do labor costs affect companies' demand for labor? by Daniel S. Hamermesh