Corbyn reckless in wage promise - Adam Smith Institute comment

In response to Corbyn's promise to raise the minimum wage to £10 by 2020 Executive Director of the Adam Smith Institute, Sam Bowman, commented:

"Labour’s commitment to raise the minimum wage to £10/hour is reckless and ignores the potential costs of such a move. We know that increases to the minimum wage have to come from one of three places – either through lower wages or employment for other workers, lowered company profits, or higher prices. The evidence is pretty strong that higher minimum wages kill jobs, whether through direct layoffs or by slowing down new job creation, and this effect seems to get stronger the higher the minimum wage level is.

"Higher prices may be even worse for the poor, because they are regressive – poor households disproportionately consume goods produced with minimum wage labour. 

"As well as being bad policy, this is also evidence that we were right when we warned that Osborne’s politicised “National Living Wage” would poison policymaking in this area. Instead of being set by the technocratic Low Pay Commission, with an explicit mandate not to risk unemployment, the National Living Wage is now subject to a political bidding war, with neither the Conservatives nor Labour having any real incentive to keep the level at a level that minimises harm to Britain’s poorer workers."

For further comment or to arrange an interview please get in touch flora@adamsmith.org.