Should London have its own, higher legal minimum wage?
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Version 0 of 1. Casual complaints about “rich London” ignore the hard time many Londoners have making ends meet. In her latest piece of research into the capital’s cost of living, Labour London Assembly member Fiona Twycross pulls together hefty facts about the high cost of housing, food and fuel and some telling ones about pay. She’s summed these up at Left Foot Forward: When inflation is taken into account, London’s average real terms pay dropped from £700 a week in 2010 to just £646 in 2014. This amounts to a real terms cut of £2,802 a year as a result of wages rising far slower than inflation. That’s a very different story about Britain’s economy from the one George Osborne told last week, Twycross remarks. The report itself tells a tale of falling buying power as prices soar and job security erodes. Quoting figures from the Labour Force Survey, Twycross says an estimated 77,000 Londoners are now on zero-hours contracts. Using stats provided by Boris Johnson she shows increases in the estimated amount of London jobs paying less than the voluntary London Living Wage (LLW) since 2008. Back then, it was 569,000 or 13.2%. In 2014, the percentage was 19.4% and the number a whopping 916,844. The mayor highlights that fact that the number of jobs paying the LLW has also gone up, but that reflects an increase in the number of jobs in London altogether. It isn’t much consolation to the close on one million who aren’t being paid it. The mayor’s aspiration for the LLW to become “the norm” by 2020 is looking ever harder to achieve. Twycross recommends that if the voluntary approach fails to produce the rate of uptake Johnson requires, his successor should argue for “a phased increase in the [statutory] National Minimum Wage in London so that it arrives at the level of the London Living Wage”. If implemented now, that would mean starting a journey from £6.50 an hour towards £9.15 an hour. This raises questions about the implications of having a higher compulsory minimum wage in London - or any other city - than in the rest of the country. Earlier this month, the Resolution Foundation think tank hosted a talk by Arindrajit Dube from the University of Massachusetts on how city minimum wages work in the United States, where Albuquerque, Chicago, San Francisco, San Jose, Santa Fe, Seattle, and Washington DC already have what he calls “city-level wage floors” with Los Angeles likely to follow, and what London can learn from this. He’s now produced an essay on the subject. Dube records, among much else, that recent evidence suggests only modest negative employment effects but sizeable reductions in labour turnover and substantially increased beneficial consumption among the lowest paid. He also points out important parallels with London: The economic engine of London is similar to cities like San Francisco, Chicago, and Washington DC: international in nature, with relatively high pay and including a large and increasingly global professional class whose demand for services has fuelled a growth in low-wage jobs. Dube cautions that more evidence from US cities is needed before firm judgments can be made, but notes that the case for a London minimum wage has already been made by Kitty Ussher for the Trust for London. A contributor to the Resolution Foundation event was the prolific Andrew Adonis, a supporter of Tessa Jowell’s London mayoral bid. Jowell is campaigning for a London minimum wage £1 higher than the national one and for the power to enforce it devolved to a future mayor. She will not, I’m assured, be the only mayoral hopeful from her party taking up this cause. Definitely a London policy idea that’s on the rise. |