Statutory Minimum Wage

Paper Summary:

This paper explains that an increase in the statutory minimum wage in the U.K. will not affect significantly the rate of employment or inflation but rather might help reduce the extent of low rates of pay; however, a raise would do little to provide living wages for U.K. workers. The author points out that the factors which will determine the effects of an increase in statutory pay on the economy are (1) the number of people or workers entitled to a pay increase, (2) the types of pay that might be included in the statutory regulations, (3) the hours of work the national minimum wage will assess, (4) the record requirements employers need to keep and (5) the extent to which the statutory minimum wage is enforced. The paper states that the theory that a statutory minimum wage would increase unemployment has not been grounded in much empirical evidence.

Table of Contents:
Introduction
Expected Effects and Theory
Conclusions

From the Paper:

"Other theories including those of social economists suggest that wage setting should be based on "workers needs or socially defined levels of subsistence" (Figart, 2004, p. 3). This suggests that wage levels should be set at a point that allows consumers and employees access to the services and supplies they need to support their families and themselves. Along this line of thinking, the national statutory minimum wage should impose a positive effect, provided it climbs to the point where workers are receiving a sustainable living wage."

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