I have been really impressed by the coverage that Living Wage Week has received and by some of the commitments and comments that have been made by some politicians. The Living Wage Foundation noted that at a No 10 lobby briefing on the 5th November, it was reported that a spokesman for the Prime Minister said ‘We back the idea of a Living Wage and we encourage businesses to take it up’ and Boris Johnson and the Miliband brothers, amongst others, have also spoken powerfully during the last seven days.
However, not everyone thinks it’s such a great idea. A piece in the Daily Mail called it ‘economic illiteracy’ and a very strange piece on the Spectator website claimed that a living wage was the ‘latest fad in this area of simplistic marketing slogans’ and ‘misses the point of poverty’. I wasn’t aware that poverty had a point, but I suppose, from a certain perspective, there are benefits to some people from others living in poverty.
Both articles were interesting in relation to how they framed the potential role of governments. The Spectator article, written by Ruth Porter from the IEA, suggested that the government should look at ways to reduce the cost of living in different areas of the UK and the Mail article suggested that the Minimum Wage was legislation enough and that:
The idea that somehow the minimum wage in Britain falls short and needs to be replaced with something better is a piece of nonsensical sophistry.
Aside from the totally false premise of its name, which suggests the existing minimum wage does not provide a living income, (the Living Wage) is a direct assault on the concept of free wage bargaining in a competitive economy.
Interestingly, the Adam Smith Institute proposed raising the tax free allowance to provide a Living Wage for all, shifting the responsibility for increasing the take home pay of employees from the employer to the state, noting that the lowest paid often pay proportionately more tax than those wealthier than them.
There are, of course, lots of very good business and economic reasons why employers should pay a Living Wage, not least the reputational benefits they might enjoy but surely we shouldn’t aspire to be a society that knows the price of everything and the value of nothing, one that is guilty of ‘tearing up the flowers to get at the worms’ in the words of Robert Tressell. Adam Smith himself, considered by some as the founder of free market economics, put it very well in The Wealth of Nations, when he wrote:
“Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be ﬂourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.”
The Wealth of Nations was published in 1776. Thirty years later, Robert Owen said that:
“What ideas individuals may attach to the term “Millennium” I know not; but I know that society may be formed so as to exist without crime, without poverty, with health greatly improved, with little, if any misery, and with intelligence and happiness increased a hundredfold; and no obstacle whatsoever intervenes at this moment except ignorance to prevent such a state of society from becoming universal.”
Now, nearly 200 years on from this comment, it could be argued that there hasn’t been much progress in some of the areas highlighted by Owen, at least for some people. When there are five million workers paid less than a Living Wage, millions more unemployed and yet more castigated as scroungers for being unable to work or unwilling to do because they prioritise caring for others, large inequalities in health and eduational attainment and poverty looking likely to increase, can we call ourselves a happy and flourishing society?