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Raising the Minimum Wage for Working Men and Women in California and the Rest of America

Why We Need A Minimum Wage

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There is constant grumbling from free market aficionados that a minimum wage destroys jobs, particularly for the young. Obama’s proposal to raise the minimum wage is running into opposition in Congress despite evidence that it would have little effect on job supply. In the UK, the Chancellor of the Exchequer has recently ruled out any real increase in the minimum wage. And in Germany, debate continues over whether to introduce a minimum wage at all.

Arguments in favour of a minimum wage mostly hang on the idea that firms have a responsibility to ensure that their workers earn enough to live on. If a firm can’t pay its workers enough to live on, then it isn’t a viable business, because it is dependent on wage subsidies. Of course “enough to live on” depends where you live: the cost of living in London is considerably higher than it is in, say, Newcastle, so a minimum wage that would give a reasonable standard of living in Newcastle is starvation level in London. The campaign for a voluntary Living Wage tries to persuade firms to pay above the current UK minimum wage, which is perceived as being below the real cost of living.

But whether a minimum wage reduces jobs or improves welfare is entirely beside the point. I find it astonishing that many of the same people who oppose minimum wage legislation are in favour of in-work benefits and measures to force the unemployed to work. They haven’t thought it through

The real reason why we need a minimum wage has nothing to do with the welfare of workers or the availability of jobs. Welfare is adequately ensured by in-work benefits, and the State is perfectly happy to create the illusion of employment in order to please voters. No, the minimum wage is necessary to protect taxpayers from the rational desire of firms to get something for nothing.

• Category: National • Tags: Frances Coppola