Saturday, October 26, 2013

Another Failed Reform

Nearly a quarter of those on the national minimum wage have been stuck on the rate for at least five years, suggesting the minimum wage is danger of becoming a permanent rate for some, rather than a floor as first envisaged by its founders.

The Resolution Foundation think-tank found that people – mainly women (73% of all those who have only held minimum wage jobs in the past five years are women)  – who are finding the minimum wage turns into a job for life rather than the first rung on the career ladder.

There are also signs that more people are being clustered close to the minimum wage. A new briefing paper by the think-tank says that 1.9 million people (7.6% of all employees) earned within 25p of the minimum wage in 2012, twice the proportion in 2002.

The Resolution Foundation suggests that 320,000 people have been in the UK's minimum wage labour market for at least five years, only ever having held minimum wage jobs in that period. This is equivalent to 17% of all employees who are paid at the minimum rate. Viewed over a longer time period, 140,000 people or 7% of all current minimum wage earners have been in the labour market for at least 10 years. About 90,000 people have been earning close to the legal minimum since the policy was introduced in 2002. This means that 5% of minimum wage earners have been unable to move above the first rung of the earnings ladder in the preceding 13 years.

This is apparent support for the admission by the Social Mobility and Child Poverty Commission that working parents aren't earning enough to escape poverty. 

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