Britain Announces Increase in Minimum Wage

[ckramer]

Britain's minimum wage for workers 22 and older will increase by 30 pence, or nearly 6 percent, to 5.35 pounds ($9.40) per hour in October, the government announced Monday.
The minimum for workers aged 18 to 21 will rise 20 pence to 4.45 pounds ($7.82), while 16- and 17-year-olds will get a 30 pence raise to 3.30 pounds ($5.80).

The increases, in line with recommendations of the Low Pay Commission, are likely to please trade unionists, an important force within the governing Labour Party. But they will dismay some corporate leaders who say rising wages are bad for business.

Treasury chief Gordon Brown is expected to announce his annual budget on Wednesday, and as Prime Minister Tony Blair's government faces allegations of sleaze connected to undeclared loans from rich supporters.



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[Untermonkey]

1. The numbers are deceptive.

The exchange rate makes the £5.35 rate look like Brits are making $9.40 but it's deceptive. Here in the UK prices are pretty close to those in the U.S. For instance, something that costs $5 in the U.S. costs £5 here. Someone making £5.35 per hour will have a standard of living roughly equal to someone in the U.S. making $5.35 an hour, with the caveat that the Brit will have health insurance. Some things are quite a bit more expensive though, like petrol (gasoline) for instance.

[baby_mouse]

4. What are you discussing?

The validity of the minimim wage increase or the image of the average American citizen's quality of life (in financial terms) in comparison with their Brit counterparts? It sounds like the latter.

[anotherdrew]

7. what are monthly housing costs like? n/t

[truebrit71]

8. Yeah, but you have much, MUCH better beer....

.. :-)

[muriel_volestrangler]

11. OECD purchasing power parity rate for pounds/dollars

£0.627 = $1 (http://www.oecd.org/dataoecd/61/56/1876133.xls - XLS file ; or http://www.oecd.org/dataoecd/61/54/18598754.pdf - 2 page PDF)

So the new UK minimum wage is equivalent to $8.53.

If you take health insurance into account, you also need to take tax rates into account. In general, US federal tax rates are lower than UK taxes, but state taxes, and who they fall on, make those kind of comparisons very difficult.

[lindisfarne]

12. Not having to pay for health insurance is a nice savings for families

though! The great public transit system means cars (and petrol) are much less necessary (I don't know any Americans under 70 without licenses, whereas I know quite a few Brits without them). Less to worry about in terms of saving for retirement, too - the pension situation is much better - as are the social services which help the aged remain at home for longer.

[muriel_volestrangler]

13. I'd dispute some of your adjectives

The health system is definitely a good thing; but it's a long time since any Briton described the public transport system as 'great'. And the pension situation is not any better than the USA - indeed, as Paul Krugman said, Bush's attempted reforms were rather like the system Thatcher introduced. It's still a mess, and no-one has a decent plan for it. I don't know about the relative social service provisions.

[lindisfarne]

14. Well, I won't debate that public transit in the UK could improve but it's

far better than what exists in the US!

[SoCalDem]

15. Gasoline has always been higher there, BUT

there is a vibrant public transportation system in place there, and like you said, they have no health care issues like we have here..That adds an additional amount to their "pay"..

Unless things have changed a lot , there is/was a "friendlier" approach to "redundancy" and to higher education too..

and there is the "holiday" issue too...

Overall, I think non-American countries tend to value the quality of life issues a lot more than we do./

[Untermonkey]

2. It might make more sense this way...

Would the $9.40 an hour minimum wage be much of a deal if, at the same time your pay went up, the prices of everything went up by 80% across the board?

[greenisin]

3. Why would prices go up?

You sound like a repuke aruging against fair wages! Prices and wages have nothing to do with each other. The amount of money in the economy is constant. Higher wages just take money that the gluttons have stolen from the working people and gives more of it back to the working people.

[phusion]

6. exactly

That's apparent right now...The federal minimum wage has remained constant for 10(?) years while the average cost of living has substantially increased.

Plotted out over 40 years, there is no obvious relationship between prices and wages.

[Terra Terra]

16. Have you ever taken Economics 101?

You said:

"Prices and wages have nothing to do with each other."

That is one of the most ludicrous statements I've ever heard. You are being naive if you think higher costs of production, i.e. wages, will not be passed through to the consumer. Business owners will not just say, "Well, our labor costs have doubled, but rather than raise prices to compensate for the increased costs I think we should just accept lower profits because it's the nice thing to do."

[KAZ]

17. Uh, yeah I have.

Higher costs of production are not always passed on to consumers, the last several years being a perfect example. Accepting lower profits has been axiomatic for most businesses during the last 5 years, as they lack pricing ability. I'm not saying there is no effect. I just think that "80% increase in minimum wage means 80% increase in prices" is silly. "Prices and wages have nothing to do with each other" can be just as silly. I suggest modifying "wages" to "moderate increases in minimum wages". Minimum wage, while not the most efficient at assisting the working poor, is the most politically palatable. And remember, the strongest growth in the American middle class occurred during periods of the strongest purchasing power of the minimum wage. IMHO, the minimum wage, along with unions, public funding of education, and the GI Bill, created the American middle class.


I'll give just one link that seems to pinpoint the the pricing issue.
http://www.ers.usda.gov/publications/tb1877/

[Terra Terra]

18. This is true

Certainly an increase in wages will most likely not result in a dollar-for-dollar increase in the cost of goods sold, but it will certainly put upward pressure on retail prices. That being said, I don't see an increase in mimimum wage as a bad thing. However, pegging minimum wage increases to the rate of inflation, as some states in the US have done, will create a positive feedback loop which will cause both prices and wages to rise, thereby encouraging higher rates of inflation.

[rman]

5. Oh boy, corps profit growth will slow

Disaster!

[Binka]

9. The Horror The MoFo Horror

If the corpos are sad I guess EVERYBODY gonna hafta cry. Boo Fucking Hoo. Anybody that opposes a "living" wage fuck the "minimum" has some issues that are easily remedied by visiting an unmentionable website. It is one of the top five giveaways for "hostile visitors" who don't share our progressive ideals for the working man/woman.

[Tiggeroshii]

10. It's interesting that they determine it by age

Typically a 16 and 17 year old would not have the same kinds of costs as an older person, but to an extent it's still not fair for those kids who are becoming forced to live on their own. I think, rather than determining the wage by age, they should do it by dependence and immancipation. Of course, they very well may have something like that. I don't know Britain.