There is also evidence to suggest that higher minimum wages slow down the creation of new jobs, particularly in sectors that employ large numbers of low-skilled workers.
Well, lo and behold, this week the Guardian reports:
the national living wage, which pays £7.20 an hour to 25-year-olds and over, has prompted retailers to register the biggest fall in optimism about their hiring intentions since 2011. …
About a third of employers in the retail sector intend to restrict the number of new jobs as higher pay packets for the lowest-paid staff eat into profit levels and cut dividend payouts.
We also warned that:
Firms may also respond to this by cutting back on non-monetary worker compensation like break times and sick leave, to offset their increased labour costs.
And what do you know? Yesterday the Guardian reported that left-wing pressure groups Citizens UK and ShareAction are protesting B&Q’s planned cut-backs in employee breaks and overtime pay:
B&Q announced in February it would be cutting Sunday pay and reducing bank holiday pay and bonuses for some staff. The DIY retailer raised basic pay to a minimum rate of £7.66 an hour from 1 April – 46p more than the new national living wage. Some staff had been on the previous statutory minimum wage of £6.70.
Today at PMQs Siobhan McDonagh questioned the Prime Minister about Marks and Spencer, which has:
announced changes to so-called premium payments for Sundays and unsociable hours, which will see it axe extra pay for Sunday shifts and introduce a flat rate for bank holidays.
It is of course far too early to tell what the full effects of the National Living Wage will be, and many other factors may be at play even if retailers blame the NLW. It may be quietly forgotten by whoever succeeds George Osborne as Chancellor later this month. But the early signs don't look good.