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Wednesday, 4 March 2009

Minimum Wage

As part of my job I've been doing some work on minimum wage. I've noted a very worrying trend amongst certain parties who are pushing for a freeze, cut in or removal of the minimum wage. I think it's really important that Labour is able to stand up and defend the minimum wage and those (like me) who earn it. While I certainly see the dangers of setting the NMW too high, there is a real danger that those who earn this pretty pitiful sum are cast aside as mere employment costs.
Aside from the usual social justice arguement, the dangers of deflation and impoverishment are clear. Those earning little spend much more of their income, and have very little wealth. Their marginal propensity to consume is high because they can't afford to save. Any cut in our income means we can't just dip into savings, but rather are living pretty tight to the line as it is.
Restraint in the future, yes. But nothing less than restraint

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