It continually amazes me what various campaigners consider "Minimum" as in 'minimum wage," and "minimum" benefit levels. While attempting to write something completely separate about the potential benefits to abolishing business rates I came across an article about how much benefits are worth, and how (to quote the website) little this actually is. After a cursory glance, and a second, slightly longer one, it seems I should be claiming I'm a member of the downtrodden poor living below the poverty line. This is something of news to me.
..
The offending statistic was this: "The Minimum Income Standard of living in the UK is estimated to be around £161 per week, excluding rent and council tax, for a single person." A little digging suggests that the Minimum Income Standard is the level required for an 'acceptable' standard of living, as determined by a policy unit at York University (who in turn are funded by the Joseph Rowntree Foundation). Although I didn't do much investigation into the Foundation itself, it wasn't immediately obvious from the website whether they have a political bias.
So.. if we work backward we find that:
£161 a week net is £8,372 a year. Not much? Well yes and no...
Rent is usually the largest component of most people's expenditure, so simply excluding it gives a very biased statistic. Average rents in my region for a flat are £523. If we add this in we get:
£523 x 12 = £6,276 + £8,372 = £14,648
Now add in Council Tax (also not included above), assuming a rough average of Band B for my area;
£1,400 + £14,648 = £16,048.
£16,000 a year doesn't sound too extraordinary surely? Well again that isn't the whole story. If you want to earn a take home pay of £16,048 you need to account for income tax, national insurance, and for my demographic, student loans.
Add all this in and you get:
£16,048 + £2,097 income tax + £321 student loan + £1,461 NI = £19,927 Gross Salary
(This isn't accurate to the penny, but it is to pound).
A salary at this level would mean you were pretty much in the middle of the income bracket (i.e. on median salary). (Retrospectively I have a sneaking suspicion this is where the figure of 161 ultimately came from).
I accept that there is probably a standard below which we shouldn't let people fall, even if they make some seriously poor choices. I object to this being the same standard of living I manage to obtain by working a 35 hour week in a supposedly graduate level job, and while paying nearly £4,000 in tax!
Just to try and end on this on a slightly more macro-economic point. You can extend the logic of this type of statistic fairly easily. Let's say that the Rowntree Foundations own 'Minimum Income' level of £200/week is adopted as government policy. Widespread applause from lefties, the unemployable, and so on. That £200 a week (using the same figures as above) is about the same as a gross salary of £23,450. So, if you earn this amount or less (which is true for about 60% of the workforce), you might as well not work. What happens now? The cost of supporting the 20 million people no longer working is in the hundreds of billions; okay the tax take doesn't drop anything like as sharply as you'd expect because most of the tax comes from the top few %, but even so, no government could hope to borrow enough to cover the difference. Not to mention the number of industries and business which would just collapse because they had no workforce.
For anyone looking for a genuine minimum wage I suggest reading my previous article on this subject (working to live I believe),
Happy Trials,
/Z
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