The Economic Impact of a £1.50/hour increase in the National Minimum Wage
This report by Howard Reed for Unite the Union looks at the potential economic impact of an immediate increase in the National Minimum Wage (NMW) by £1.50 per hour in the UK – from its current rate of £6.31 per hour for workers aged 21 and over to £7.81 per hour, with an equivalent cash increase for younger workers.
The results show that a £1.50 per hour increase in the NMW would benefit around 4.6 million workers. Increasing the NMW by £1.50 per hour would also benefit the public finances through increased income tax and National Insurance Contributions receipts, increased receipts from expenditure tax (due to higher consumer spending by workers with higher net wages) and lower in-work benefit and tax credit spending. Overall, this report estimates that the public finances would improve by around £2.1 billion as a result of the minimum wage increase.
While increases in the minimum wage are often opposed on the grounds that they would lead to job losses, the analysis in Section 5 of this report shows that once the potential stimulus effects
of increasing the minimum wage are taken into account there is a potential for modest gains in employment – at least 30,000 jobs.
Overall, the analysis presented here makes a powerful economic case for an immediate increase in the National Minimum Wage of £1.50 per hour; it is distributionally progressive, would improve
the public finances, and has the potential to create jobs through stimulating the economy.
More information can be found here: http://www.unitetheunion.org/news/no-delay---minimum-wage-increase-now-to-create-jobs-and-boost-the-economy/