Now for the 'living wage'?

Britain has had a minimum wage for more than a decade now. Since 1999, the minimum wage has increased from less than £4 to now more than £6. Although there was fierce resistance from the business community in 1999, the minimum wage has attracted little criticism since. 

However campaigners have now identified another target: the living wage. They argue that what everyone needs is a wage that covers all necessary expenses somebody may incur, including housing, heating, food etc. This represents a considerable shift in setting the wage from what is an appropriate pay for somebody’s labour to what is a minimum income to meet somebody’s needs. As opponents of the living wage argue, the problem is that the living wage takes its cue from the definition of individual needs. In other words, it severs the link between what somebody provides in terms of labour and what he or she is awarded as a payment for their work. 

Consider this: somebody working in a factory full time has a monthly take home pay of £1100. Legally, everyone else who does a similar work should be paid the same amount. Now let us assume the first person is a single mother with two children while the second person is a single male without dependents. For the campaigners in favour of a living wage, the single mother with children should be paid more than the single male simply because her needs are higher. 

What is wrong with this? Opponents of the living wage argue that the concept of paying somebody with respect to needs disrupts the link between work and reward. But there is another aspect to it that seems to undermine its presumed fairness. Paying somebody regardless of his or her efforts, calls into question the principle of individual merit. Paradoxically, meritocratic principles are often at the heart of those campaigning for more equality in society. As they point out, the pay of bankers and some company directors does not reflect their work. Anyone detected the inconsistency here? How can a living wage be squared with the clamour for a stronger meritocratic impetus in society? The answer is it cant. 

This is not only stumbling bloc for the living wage. The last decade has seen a significant shift from sharing the burden of education and public services across society to an increased privatisation of the costs for individuals. Students for example are supposed to invest in their education, hence pay more towards the gains they may reap in their future work life. Introducing a living wage does not just disrupt the link between effort and reward, it also runs counter to the way in which more and more people are asked to contribute to their personal development through financing education and training. 

Who would like to pay student fees, i.e. invest in their future, and then discover that others, who may not have made similar efforts, overtake them on the pay and reward scale? The living wage does not just undermine the link between pay and reward, it  is also patently unfair to those who behave responsibly in their lives.