Minimum Wage Contradiction

I was listening recently to a Reform politician explaining, with the usual air of weary authority, why raising the minimum wage would be a disaster. Jobs would vanish. Small businesses would collapse. The market would recoil. It was delivered as hard-headed realism, the sort of thing you are supposed to nod along to if you understand how the world really works.

What struck me was not the argument itself. We have heard it for decades. What struck me was what never followed.

Because keeping wages low does not make labour cheap. It merely hides the cost. When pay is insufficient to live on, the gap does not evaporate. It is filled by the state. Universal Credit, housing support and other in-work benefits step in to make low pay survivable.

This is not some edge case. A significant proportion of people on the minimum wage rely on in-work benefits to get by. Once you exclude those genuinely unable to work through sickness, disability or caring responsibilities, a large share of benefit claimants are either already in work or being pushed into it. Universal Credit is no longer a safety net at the bottom. It is a permanent wage subsidy built into the system.

And this is where the contradiction becomes unavoidable.

The same voices decrying any rise in the minimum wage are usually the loudest in their contempt for benefits. Welfare is dependency. Claimants lack responsibility. People should stand on their own two feet. Yet the low-wage economy they defend makes that impossible without state support. The only dependency here is the need for food and heating encouraging a dependency on welfare.

This is not an accident. It is the arrangement they prefer.

If a job only functions because the taxpayer quietly fills the gap left by inadequate pay, then the business is not efficient. It is being subsidised. The cost of labour has been shifted off the employer’s books and onto the public, while the profit remains private.

That is why the moral outrage is so carefully targeted. A worker claiming benefits is a scrounger. An employer relying on those same benefits to hold wages down is praised as disciplined and competitive. Same money. Same outcome. Entirely different judgement.

This is not really about jobs. It is about leverage. A workforce that cannot survive on wages alone is a workforce that cannot walk away. It is cheaper, quieter and easier to manage. Precarious enough to comply. Dependent enough to be grateful.

We used to have a word for an economy built on permanent dependence. Serfdom was not about chains or whips. It was about obligation without independence. You worked, but you never escaped.

Modern Britain has simply updated the paperwork. Payslips instead of tallies. Universal Credit instead of the lord’s granary.

They do not oppose higher minimum wages because they care about employment. They oppose them because higher wages break dependency.

And dependency, carefully managed and loudly moralised, is the point.