That the Chancellor insisted that the national living wage came into being is true. That this is a rise in the minimum wage for those over 25 is also true. And that there will be some adaptation in the labour market to this is also blindingly obviously true. How could it be otherwise? It is thus with some astonishment that we see people who in general would support a higher minimum wage complaining about the effects of a higher minimum wage. For example, this letter from Liz Kendal MP:
The workers told me that the premium rates for night shifts, weekend and bank holiday working and overtime have been cut and in some cases would ultimately be phased out. Each and every one of the workers present was deeply concerned that they would end up worse off as a result of these changes, despite recent increases in the national minimum wage.
It's not despite such increases, it's because of such increases. The employers gain some amount of value from employing that labour. If they must pay more in direct cash wages for said value then they will attempt to cut back on less direct payments, those which go to make up total compensation even if not direct wages, to compensate. For the value of the labour to the employer has not changed: thus that same total compensation is still the amount they are willing to pay in total for that labour.
Surely there's nothing very difficult about this?
At the meeting Mr Davey and Mr Fletcher did not deny that the the changes to employee contracts were at least in part influenced by the impact of the higher minimum wage. They confirmed that around 15% of the 2000 people who work at you Bradgate Bakery will be worse off - that is 300 people in total.
Yes, who thought it would be different?
I want to emphasise how extremely concerned I am that at least 300 people who work for Samworth Brothers in my constituency will be worse off, when they should be getting a pay rise because of increases in the national minimum wage.
But there's the thing eh? They are getting a pay rise as a result of the national minimum wage. It's just that the combined effects of the pay rise and the reactions to it leave them worse off. Which is rather what we've been saying all along about minimum wages, is it not?
You'll not make everyone better off by forcing employers to raise wages.