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People who think minimum wage is just an inevitably controversial topic in politics & economics should spend some time studying the U.K.
Tl;dr. UK used to be like the US back in mid 90s. But since then, it's become much less controversial in both politics and economics.
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Tl;dr. UK used to be like the US back in mid 90s. But since then, it's become much less controversial in both politics and economics.
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UK didn't have a national minimum wage until 1999. There were industry specific minimums, but these were gotten rid of under Thatcher and Major admin. The 1999 NMW was controversial and opposed by Conservatives and business interests. Not unlike in the US today.
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But there was a key difference. The UK established a @lpcminimumwage - with representation from business, labor, and experts. LPC and allied academics commissioned research, but also spent time talking to stakeholders and listening to them, while choosing min wage raises.
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For around 15 years, the LPC maintained the value of the NMW roughly around half of the median wage, with some slight uptick. Meanwhile, the NMW became popular across party lines and stopped being opposed by businesses.
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And then in 2016, something remarkable happened. The Conservative chancellor, George Osborne, proposed a surprise hike in the new "National Living Wage" up to 60% of the median wage. This caught most observers by surprise, and changed the politics of UK minimum wage forever.
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Then, in 2019, Conservative chancellor Phillip Hammond raised the possibility of raising the minimum (now called the "National Living Wage") to 2/3 of the minimum wage. I was asked to work with the LPC, academics in UK, and review the evidence internationally .
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One of the most fulfilling part of my professional life was to work with @hmtreasury @lpcminimumwage @beisgovuk and academics to convent meetings and gather evidence about the UK experience (and bring in evidence from other places).
My report is here: https://twitter.com/arindube/status/1191319006088769536
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My report is here: https://twitter.com/arindube/status/1191319006088769536
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What I want to stress this this. There is plenty of uncertainty about exactly how hight the UK NLW should go to and this comes out in conversations. As it should! But most UK labor economists, and key constituents agree that to date the impact on jobs has been modest.
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The the idea of having relatively high minimum wage is not something which drives most UK business leaders or academics crazy. There are questions of scientific type. Not of just straight ideological type that triggers people.
This is a remarkable difference with the US today.
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This is a remarkable difference with the US today.
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My main take away comes back to the @lpcminimumwage. I think there is much to be gained from having the type of tripartite, multi-stakeholder, institution that can help people feel more comfortable.
Seems to have worked in UK. Maybe can in US too!
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Seems to have worked in UK. Maybe can in US too!
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