The minimum wage has had a big impact on low earners The impact of the minimum wage is clear to see in the changing shape of wage growth over the past several decades. [...] From 1980 to 1998 – when the UK had no minimum wage – hourly pay growth was twice as fast at the top of the distribution (3.1 per cent per year at the 90th percentile of the hourly pay distribution, in real terms) than at the bottom (1.4 per cent per year at the 10th percentile). [...] Faster pay growth at the bottom is what has led to rapid reduction in the rate of ‘low pay’ in the UK, as measured by the proportion of workers earning less than two-thirds of the median in hourly terms. [...] Perhaps most concretely, the impact of the minimum wage is seen in the substantial improvement in the pay of the UK’s lowest-paid jobs. [...] But it’s worth underlining: over the course of 25 years in the UK, we have raised the relative cost (compared to middle-earners) of low-paid labour by 41 per cent (as measured by the increase in the ‘bite’ of the minimum wage) without materially affecting the job prospects of low earners.
- Pages
- 11
- Published in
- United Kingdom
