Citizen's Income and the Minimum Wage - 4 comments

A number of challenging posts have come from Stumbling and Mumbling recently, and the latest one lays into that Labour Party stalwart, the Minimum Wage, in stark opposition to the blogger's favourite, Polly Toynbee, who urges its extension in the Guardian today:

[...]
Is there a limit to how high it can rise before jobs really are lost? All economists agree there is, but none can say when: just suck it and see. Keep pushing upwards until it begins to do more harm than good. But that level would be quite different in each sector and each region - and it hasn't happened yet.
[...]
There is a climate of opinion ripe for change, but with no one to lead it. Why not start that debate?

Well, according to S&M, the emphasis on the minimum wage and its role in poverty alleviation: ignores the high marginal tax rates that the poor encounter, has been judged based upon employment figures that actually reflect all sorts of other economic changes, is blind to the fact that more people can be employed for shorter hours than before, and may be responsible for unintended changes in the composition and skill structure of the workforce.

I quote the final paragraph:

The real way to help the poor is not to raise the minimum wage but to introduce an unconditional basic income. This would give people the choice of whether to accept low-paid jobs or not, and so genuinely empower them. But then, New Labour's mission is to harrass and manage the poor, not to liberate them, isn't it?

... and ask whether "a climate of opinion ripe for change" would be better considering a radical policy like this, rather than unquestioningly adhering to the existing policy, but bumping the limits up a bit, under the tutelage of Ken Livingstone's economic team.

Now, there has been some discussion on a Citizen's Income within the Labour blogosphere, but not an awful lot. Neil has been assiduously making the case here and here, though the point raised in the final paragraph is concerning:

Now I'm not saying any of this will be politically easy, there are lots of self interested parties to overcome, particularly the massive redundancies needed in the civil service and such a massive change could not be done overnight, it would take political consensus over 2 or 3 parliaments as it is gradually introduced, but without ID cards making ID fraud much more difficult, it would be virtually impossible to properly introduce a CI.

As far as I'm concerned, whatever our attachment to the minimum wage and the political capital we have earned, if it is really the case that it costs tens of thousands of jobs - without improving incentives into work - and that these losses have merely been concealed by job creation elsewhere, and if it is really the case that the impact on poverty is negligible, then people who claim to be both radicals and concerned with the elimination of poverty should debate the Citizen's Income more widely, encourage its adoption as a matter of principle, and kick the minimum wage (possibly with Polly in tow) into the long grass.