What would a higher minimum wage do to Britain’s cities?

Labour leader Jeremy Corbyn and his shadow foreign secretary Emily Thornberry campaigning last week. Image: Getty.

The national minimum wage has become increasingly popular with politicians in recent years and remains so in this election campaign. And it isn’t surprising. Pledges to increase the minimum wage offer a pay rise to lots of workers at a time when the UK is experiencing an unprecedented fall in real wages – OBR forecasts suggest that earnings will still be lower than their 2007-08 level in 2021-22.

The concern though is that any significant increase could impact on employment, particularly in low wage sectors and places. Just as the benefits to workers in low wage cities may be larger, the costs may be larger too, if employers struggle with rising wage bills.

Jeremy Corbyn launched his election campaign with a pledge to increase the minimum wage to £10 per hour, tying the minimum wage to the Living Wage rather than median pay. The Conservatives have since reiterated their commitment to increase the National Living Wage (NLW) to 60 per cent of the median by 2020.

From left or right, a single legal wage floor is always going to be a blunt tool – in part because of the significant differences between cities across the country.

The most recent increase in the NLW, which tracks towards the Conservatives’ 2020 goal, is likely to have had a much greater impact outside London and the South East where a higher proportion of people tend to work in low pay sectors. One in seven employees in Wigan, Doncaster and Hull are likely to have seen an increase in their wages as a direct result of the 2017 NLW. This contrasts with just 1 in 40 in Oxford.

Coverage of the April 2017 NLW at city level: click to expand. Source: Low Pay Commission and Annual Survey of Hours and Earnings, 2017. For further information on the LPC’s methodology see here. Local authority level data has been weighted using jobs data from ASHE.

 

Corbyn’s pledge to increase the national minimum wage to take account of costs of living would have a much larger impact everywhere, for two reasons. Firstly, the level would be higher; and secondly, it would be extended to include 18 to 24 year olds.

The proportion of workers earning the minimum wage in Oxford would rise from one in 40 to one in eight. But again the impacts are likely to be much more significant in some areas compared to others. In Doncaster, where one in seven workers currently earn the NLW, coverage would rise to over a third under Labour’s plans – virtually turning it into a one wage city.

Potential coverage of Labour’s 2020 minimum wage pledge: click to expand. Source: Annual Survey of Hours and Earnings, 2017 and OBR March 2017 forecasts. Note: coverage will be slightly over-estimated as figures include 16 and 17 year olds.

In some cities, the cost of these increases may be too large for employers to bear and low wage workers could face a reduction in their hours or redundancy as a result. Cities like Oxford where those on the minimum wage make up a lower proportion, can much more easily bear the cost than cities like Hull.

Increasing wages in a sustainable way in low pay cities means accompanying the minimum wage with policies that support businesses to pay higher wages.  This means investing in education, training and infrastructure in these places in ways that improve businesses’ access to markets, suppliers and the skills they need – and that ultimately creates an environment for businesses to thrive.


At the other end of the spectrum, even with Labour’s proposed increases to the minimum wage, rising costs in our most expensive cities mean that its impact on low earners will be limited. Over the last five years, average house prices in London have increased from 12 times average wages in 2011 to 16 times in 2016.

So a single level wage floor would on the one hand make the standard of living high in Doncaster, where the cost of housing in particular is much lower – but it would not support higher standards of living in those cities where housing costs are far past the wages of many people, and not just those earning minimum incomes.

This is not necessarily an argument for introducing regional minimum wages. But, as we’ve argued before, the Low Pay Commission could play a role in assessing where the floor could be set in high wage cities, like London, without impacting on employment, as a way of encouraging higher wages where employers can afford it. More generally, it reinforces the need to introduce other measures designed to reduce the cost of living, whether it be increasing housing supply or reducing the cost of transport and childcare.

Wage stagnation is undoubtedly one of the biggest challenges facing the next government. Without recognition of the different challenges facing different cities and an approach to policy delivery that reflects this, the risk is that the most expensive places will become increasingly unaffordable for low paid workers, while in others their employment opportunities may be reduced.

Naomi Clayton is a senior analyst at the Centre for Cities. This article was originally posted on the think tank’s website

 
 
 
 

America's cities can't police their way out of this crisis

Police deployed tear gas during anti-racism demonstrations in Los Angeles over the weekend. (Mario Tama/Getty Images)

As protesters took to the streets across the United States over the weekend to express their anger at police killings of unarmed black Americans, it was hard to miss the hypocrisy coming from local authorities – including the otherwise progressive, left-leaning officials who are in power in most major American cities. 

Many US mayors and their police chiefs had issued public statements over the past week that seemed – only briefly, as it turned out – to signal a meaningful shift in the extent to which the Black Lives Matters movement is being taken seriously by those who are in a position to enact reforms. 

The sheer depravity of the most recent high-profile killing had left little room for equivocation. George Floyd, 46, died last Monday under the knee of white Minneapolis police officer Derek Chauvin, while three additional officers helped to hold Floyd down, doing nothing to aid him as he begged for them to stop and eventually lost consciousness. The officers had been attempting to arrest Floyd on suspicion of having used a counterfeit $20 bill at a deli. All four have since been fired, and Chauvin was arrested Friday on charges of third-degree murder and second-degree manslaughter. 

“The lack of compassion, use of excessive force, or going beyond the scope of the law, doesn’t just tarnish our badge—it tears at the very fabric of race relations in this country,” Los Angeles Police Chief Michel Moore told the Washington Post in response to the Floyd case. Meanwhile Moore’s boss, Los Angeles Mayor Eric Garcetti, on Friday claimed that he understood why his city, which is no stranger to police brutality, was protesting. “We absolutely need as a nation, certainly as a city, to voice our outrage, it’s our patriotic duty to not only stand up for George Floyd but for everybody who has been killed unnecessarily, who’s been murdered for the structural racism that we have in our country,” Garcetti said. 

Normally, US police chiefs and mayors tend to ask citizens to withhold judgment on these types of cases until full investigations can be completed. But a 10-minute video recording of Floyd’s killing had made what happened plain. Police chiefs across the country – and even the nation’s largest police union, which is notorious for defending officer abuses – similarly condemned the actions of the Minneapolis officers, in a rare show of moral clarity that, combined with the arrest of Chauvin, offered at least a glimmer of hope that this time things might be different. 

As the events of the weekend have since shown, that glimmer was all too fleeting. 

In city after city over the past three days, US mayors and their police chiefs made a series of the same decisions – starting with the deployment of large, heavily armed riot units – that ultimately escalated violent confrontations between officers and protesters. Images widely shared on social media Saturday and Sunday nights made it clear that members of law enforcement were often initiating the worst of the violence, and appeared to treat protesters as enemy combatants, rather than citizens they were sworn to protect. 


In New York City, two police SUVs were seen plowing into a crowd of protesters, while elsewhere an officer was recorded pulling down a young protester’s coronavirus mask in order to pepper spray his face

In Louisville, the city where Breonna Taylor, a 26-year-old black woman was fatally shot by police on 13 March, state police in riot gear were captured confiscating and destroying protesters’ supplies

In Minneapolis, forces opened fire with nonlethal rounds on residential streets, much to the shock of homeowners standing on their own front porches. 

Images of police pushing or shoving peaceful protesters were almost too numerous to count, including, in Salt Lake City, an elderly man with a cane

In many places, police also targeted journalists who were covering the protests, firing at clearly identifiable media crews with rubber bullets, injuring and even arresting reporters

Some protesters did commit acts of vandalism and looting, and the leaders of cities where that happened generally responded in the same ways. 

First, they blamed “outside agitators” for the worst protester behaviour, a claim that harkens all the way back to the civil rights era and for which the evidence is murky at best

Next, they enacted sudden curfews with little to no warning, which gave law enforcement an excuse to make mass arrests, in some cases violently. 

In a pair of widely criticized moves, Garcetti of Los Angeles closed the city’s Covid-19 testing centers and suspended the entire mass transit system Saturday evening, stranding essential workers on their way home from daytime shifts. Late Sunday night in Chicago, the city’s public school system halted its free meal distribution service for low-income children, citing “the evolving nature of activity across the city”.  

Governors in at least 12 US states, in coordination with city leaders, have since called in National Guard troops to “help”. 

At this point it’s clear that the leaders of America’s cities are in desperate need of a radically different playbook to respond to these protests. A heavily armed, militarised response to long-simmering anger toward the heavily armed, militarised approach to American policing is more than ironic – it’s ineffective. Granting police officers wider latitude to make arrests via curfews also seems destined to increase the chances of precisely the tragic, racially biased outcomes to which the protesters are reacting. 

There are other options. In places such as Flint, Michigan, and Camden, New Jersey – both poor cities home to large black populations – local law enforcement officials chose to put down their weapons and march alongside protesters, rather than face off against them. In the case of Camden, that the city was able to avoid violent clashes is in no small part related to the fact that it took the drastic step of disbanding its former police department altogether several years ago, replacing it with an entirely new structure. 

America’s cities are in crisis, in more ways than one. It’s not a coincidence that the country has tipped into chaos following months of emotionally draining stay-at-home orders and job losses that now top 40 million. Low-income Americans of colour have borne a disproportionate share of the pandemic’s ravages, and public health officials are already worried about the potential for protests to become Covid-19 super-spreading events.

All of this has of course been spurred on by the US president, who in addition to calling Sunday for mayors and governors to “get tough” on protesters, has made emboldening white nationalists his signature. Notably, Trump didn’t call on officials to get tough on the heavily armed white protesters who stormed the Michigan Capitol building over coronavirus stay-at-home orders just a few weeks ago. 

US mayors and their police chiefs have publicly claimed that they do understand – agree with, even – the anger currently spilling out onto their streets. But as long as they continue to respond to that anger by deploying large numbers of armed and armored law enforcement personnel who do not actually live in the cities they serve, who appear to be more outraged by property damage and verbal insults than by the killings of black Americans at the hands of their peers, and who are enmeshed in a dangerously violent and racist policing culture that perceives itself to be the real victim, it is hard to see how this crisis will improve anytime soon. 

Sommer Mathis is the editor of CityMetric.