Study Reveals Minimum Wage Introduction in the UK Improved Perception of Higher Incomes Among Lowest-Paid Workers
Workers who benefitted from the Labour government’s minimum wage policy change became more tolerant of high incomes and more inclined to vote Conservative.
Academics at Cardiff University used data from the British Household Panel Survey (BHPS) to compare workers’ opinions and voting intentions before and after the introduction of the National Minimum Wage, which came into force in 1999.
The results, published in the journal European Economic Review, show that benefitting from the minimum wage raises the likelihood of tolerating high incomes by 11%.
The analysis also reveals that those benefitting from the national minimum wage have an increased probability of voting for the Conservative Party by 8.4%.
Dr Tommaso Reggiani, based at Cardiff Business School, said: “We wanted to find out if the minimum wage could be a policy that makes a world where many workers earn little and a few workers earn a lot more acceptable to people. Our study suggests that this is indeed the case.
“The results we find are certainly counterintuitive: despite the minimum wage being a policy aimed at reducing inequality, workers who benefit from the introduction of the minimum wage are still at the bottom of the wage distribution and could benefit from redistributive policies. Also, why change your voting preference to the Conservative Party that usually adopts more liberal policies?
“A first possible explanation for these results could be of a ‘technical’ nature. For example, the minimum wage may have decreased wage inequality and as a result minimum wage receptors have become more tolerant. In our analysis we try to understand if this is a possible explanation, but it is not. During the period of investigation, the introduction of the minimum wage in the UK has had quite little effect on wage inequality and even when we control for the latter factor our results continue to emerge.
“Overall, our study shows that decreasing workers’ vulnerability can change low-income workers’ perceptions of the workplace. Providing workers with a clear wage reference, which is considered ‘fair’, can alleviate concerns about possible inequalities generated by the free market.”
The introduction of the minimum wage was one of the key points of Tony Blair’s election programme for the 1997 general election. Two years after the election, won by Labour, in April 1999, the minimum wage came into force in the United Kingdom. The minimum hourly wage was set at £3.60 for workers over 22, and £3 for workers aged 18-22. Today, the UK minimum wage for workers aged 23 and over is £10.42, making it one of the most generous in the world.
The British Household Survey (BHPS) is a longitudinal survey based on a representative sample of the British population. It started in 1991 and, though initially designed as an indefinite life panel, ended in 2008, when a new survey replaced it. The BHPS interviews all of the permanent members of the household face-to-face. The questionnaire collects information on economic characteristics, such as employment status, salary, number of worked hours, and on personal attitudes and opinions.