Today is the first day of 'Living Wage week'. This is a promotional week run by the Living Wage Foundation to promote its campaign to get firms to pay their workers no less than £7.20 per hour (£8.30 in London) – what it says is the lowest wage needed to live decently in Britain*.
Especially at times like this, low pay is an important issue: people at the bottom of the earnings ladder are most vulnerable to rises in the cost of living, and the amount of money earned compared with the benefits rate plays a role in determining how likely people on long-term benefits are to look for work.
To coincide with this, we at the Adam Smith Institute have released a new paper (PDF) that reviews some of the Living Wage debate and proposes a way to leave more money in the hands of low- and middle-income earners. We applaud the motivations and methods of the Living Wage Foundation: instead of lobbying the government for a hike in the National Minimum Wage (NMW) rate, the Foundation has worked directly with private firms to persuade them to pay their workers more. The power of good PR can be an enormously effective tool in effecting social change. Unfortunately, some people will inevitably think that the NWM needs to be raised to reach the Living Wage rate. This is the policy that our paper aims to argue against.