The National Minimum Wage (NMW) that was introduced in April 1999 is sometimes paraded as evidence of the Blair government’s commitment to reversing the rise in inequality that was characteristic of the 1980s (mostly) and the 1990s (a little). But, how much of an effect has it really had? One would expect the impact to depend on:
- the level at which the NMW is set
- the level of compliance
- the extent of spill-overs on those initially paid more than the minimum
And, trivially, the measure of wage inequality that one is looking at. In other work (Dickens and Manning, 2002, 2003) we have used data from the Labour Force Survey to investigate some of these issues. The conclusion from that research was that the NMW had been set at a level much lower than originally envisaged (see Low Pay Commission, 1998; Metcalf, 1999), affecting no more than 6% of workers and quite possibly less. And, that there seemed to be little in the way of spill-overs further up the wage distribution.