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When you think of people who are less than the minimum wage, do you think of them? Does anyone wash their cars under the arches of a railway? Is someone sewing clothes in a small factory and getting cash? How about someone tapping in the office for sal?
In the UK, the rapidly rising minimum wage is catching up to the bottom of white-collar jobs. Certainly, there is an increasing number of workers outside the traditional low-wage sector, so it appears that they are not even getting a legal minimum wage.
How did you get here? In 2016, UK conservative governments began to push the minimum wage sharply higher than median workers. In a stagnant era when median wages were almost essentially rising, consecutive governments continued to increase wage beds to ensure that at least the lowest workers received at least the pay rise. As a result, the UK minimum wage is currently about two-thirds of the median wage. With this measure, the UK government says the country has the second highest minimum wage rate in the G7.
At £12.21 per hour, the UK adult rate is equivalent to an annual salary of around £22,000 to £25,500 per year, depending on the number of hours you expect to work. The data actually provided to FT suggests it is a Job Advert website, which is approaching the bottom pay that is advertised in many white-collar sectors, including marketing, IT, and legal employment.
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Does that mean that universities are no longer “worthy”? For most young people, earning their degrees means that, at least for now, they still rest on a better lifelong ladder. The Institute of Finance estimates that around 80% of students are likely to make financial profits through working life after attending university. That said, the minimum wage entry level salary outlook will certainly add to recent graduate complaints, where artificial intelligence is also facing the possibility of destabilizing traditional professional career ladders.
When it comes to white-collar employers, many of them need to know the minimum wage law. The latest report on minimum wage violations from the Low Wage Commission, an independent body overseeing the policy, estimated that the number of low-wage workers in the low-wage sector has risen by nearly 40% since 2019.
The LPC said “the quick (minimum wage) may have caught some employers of payroll workers who don’t know the yearly salary altogether necessary to comply.”
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It is also a difficult time to measure in white-collar work. It is not uncommon for payroll workers to exceed contract hours. However, as many of these entry-level jobs appear in the sight of HMRCs that enforce minimum wages, a casual approach to documenting working hours will become a problem, especially with the significant complexity of regulations in this sector. For employees close to wage beds, there is also the risk of using the sacrifice of salary for pensions and falling below the minimum wage in the eyes of the law.
Josiah Greenall, a national minimum wage expert at KPMG, told me that some clients who were convinced that the minimum wage was not an issue a couple of years ago were keen to understand the risks. “We have a lot of conversations with our employers about our working hours record,” he said.
Outside of the world outside of the white-collar world, the rapidly rising minimum wage also contributes to the sense that it is undervalued among skilled workers, such as truckers. Truck drivers and others have seen the minimum wage central wage salary premium from 62% in 2011 to 38% to 38% in 2024. It discouraged people from taking on promotions.
When I was writing about the outlook for the UK minimum wage experiment ten years ago, the big concern was that it could destroy jobs. “Just as paracetamol is safe at low doses, but dangerous at the highest wages, so is the minimum wage,” economic writer Chris Dirow said at the time. The massive unemployment did not come to fruition. Certainly, this experiment has proven to be extremely successful in raising the pay of the lowest people. However, while the dose of paracetamol has not killed the patient, some of the side effects are now causing headaches for yourself.
sarah.oconnor@ft.com
