Minimum Wage Rises in UK with Barely an Eyebrow Raised

Minimum Wage Rises in UK with Barely an Eyebrow Raised April 1, 2021

This is a tale of two countries. In the UK, even our conservative government realises what is good for both economic stimulation and addressing long-term economic issues. The iNews website reports:

Rishi Sunak used his Budget announcement to raise the national minimum wage to £8.91 an hour, confirming the change would come into effect from April.

Mr Sunak also announced a raft of additional support for people and businesses affected by the Covid-19 pandemic, including an extension to the furlough scheme, a continuation of the £20-a-week Universal Credit uplift and a fifth self-employment grant.

More controversial moves will see the Government introduce a freeze on income tax rates and raise corporation tax to 25 per cent, in a bid to claw back some money for the Treasury.

So we have the conservative governments passing this with consummate ease and no one really batting an eyelid. The US, on the other hand, is a whole different kettle of fish. This is perfectly encapsulated in the Guardian’s headline “Senate minimum wage battle could play out in midterm elections”, whereby the midterm elections are two years away. in the UK, it gets past overnight with pretty much universal agreement. In America, this is a political football to be kicked around for years on a very muddy pitch.

It’s been twelve years since the minimum wage has been changed in the US on a federal level (to the point that many states have taken on tinkering themselves).

The main point about minimum wages (and building economies from the bottom up rather than trickle down) is that the working class and lower SES level people spend their money quickly, and in the local community. They are a much better economic stimulation than tax cuts for the rich, with their stock buy-backs and rich people taking their money offshore.

There is zero evidence that raising minimum wage leads to job loss.

That Guardian article explains:

Sara Fearrington, a North Carolina waitress, joined the Fight for $15 campaign two years ago. A server at a Durham Waffle House, her take-home pay fluctuates between $350 and $450 a week, leaving her struggling to pay bills every month. She voted for Joe Biden, who had pledged to increase the federal minimum wage to $15 an hour. It was the first time Fearrington, who is 44, had ever voted in a presidential election.

“It would mean everything. It would create stability for my household,” she said of the impact that a higher wage could have on her and her family of five, which includes her husband, who suffers from a rare lung condition, and a granddaughter who has asthma.

The purple states of North Carolina, Pennsylvania and Wisconsin have rock-bottom minimum wages of just $7.25 per hour – the current federal minimum. Georgia, where the Democrat Raphael Warnock will fight to hold on to the Senate seat he wrested from the Republican senator Kelly Loeffler in November, abides by the federal minimum wage, even though the one it has on the books is $5.15. Recent polling suggests Republicans could gain a seat in New Hampshire, another low-minimum-wage state, where the Democratic senator Maggie Hassan is facing a potential challenge from the state’s Republican governor, Chris Sununu.

The federal minimum wage has not increased from $7.25 since 2009, and for 21 states in the country the minimum wage law that governs employers is no higher than the federal minimum. Fearrington earns an hourly wage of just $3.10 an hour as a tipped worker, making her income unpredictable.

That Guardian article details some of the alternatives proposed by Republicans and the difficulties of coming to any kind of agreement.

This video from a month ago explains the context and arguments over the $15 minimum wage:

The nature of hyper-partisan politics in the US – with players like Mitch McConnell at the helm of the bad ship SS Cooperation, stuck, unmoving, in the doldrums of US parliamentary action – means that changes are very hard to come by.

Chalk and cheese (and we have conservatives in charge…).

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