Ever since I covered the end of the Bush-Gore presidential election in 2000, I have been wary of drawing lessons from US elections about UK politics: America is much less like Britain than too many British journalists tend to assume. But there’s one bit of the US voting last week that intrigues me in the context of British politics and policy, and which might just be a signpost to one of the big issues here in the next couple of years: the politics of the minimum wage.
Florida last week voted for Trump: he got 51 per cent. It also voted, 60:40, for a proposal to increase the state’s minimum wage to $15 (£11.35) an hour. By some accounts, some of the strongest supporters for the wage increase were Hispanic voters around the Miami conurbation whose support secured the state for Trump.
During the state’s election campaigning, Florida Republicans had argued strongly against the wage increase, agreeing with business groups that it could cost jobs. Voters evidently ignored those warnings, even as they gave the state to Trump.
What does this tell us about politics, and about British politics in particular? One obvious observation is that many of the ideas that underpin a lot of political commentary are wrong, or at least irrelevant to many voters. If you try to explain politics using a simple left-right scale, you struggle to explain how a state could support a ‘right-wing’ presidential candidate and a ‘left-wing’ economic policy on the minimum wage.
Of course, voters look at economic and cultural/values issues when deciding how to vote, as a lot of newish Conservative MPs in old ‘Red Wall’ Labour seats can confirm. Arguably the electoral success of Boris Johnson’s Conservatives is based on understanding that a fair chunk of voters want cultural conservatism and a more generous, interventionist economic policy.
There is no Johnsonian theory of economics – he’s just not very interested in economics – but the political imperative to serve those voters are straining even the very elastic boundaries of Conservative philosophy these days. Every time Chancellor Rishi Sunak has tried to take a step back towards ‘sound money’ and apply a bit of restraint to public spending this year (reform the Triple Lock, scale back furlough, resist Marcus Rashford), it has been economic cakeism from No. 10 that wins out in the end.
The short-term politics of that are obvious and often positive: not many people complain about the State giving more stuff away. And some of it makes for sensible policy. But it’s postponing a fierce political puzzle for the Conservatives in future: once you’ve started giving people stuff, how do you stop? And then how do you start doing the things that will be necessary to pay for that stuff?
Here’s a way that will, sooner or later, come to the top of the political agenda in the UK: get someone else to give them more stuff. More precisely, get employers to give workers more money, much as Florida’s voters have demanded.
Even before Johnson got near No. 10, Conservatives were getting keen on the national minimum wage. In 2015, George Osborne talked about a national living wage, then his successors Philip Hammond and Sajid Javid went further, promising the NMW would reach two thirds of the median wage.
In a way, that’s a big shift by the Conservatives, who strongly opposed the NMW when the Blair government introduced it in 1998. But it’s also been a relatively easy move to make. Backing a higher NMW was easy in a tight labour market, when employers were keen to hire and retain, in some cases voluntarily paying more than the legal minimum to get and keep the right people.
As Gavin Kelly of the Living Wage Foundation warns, the real challenges are still to come:
‘…the success of recent years has been achieved against the backdrop of a steadily tightening jobs market which has resulted in some big employers, like Amazon and Aldi, opting to pay Living Wage rates even though they’ve never opted to make the commitment to formally accredit. In the years ahead, by contrast, gains will have to be made in the face of a slack labour market with many employers in low-paying sector facing profound challenges to their current business models.’
The pandemic has already hammered the employment and finances of many people on low incomes. While there’s a remarkable level of optimism being unleashed by moves towards a Covid vaccine, the outlook for UK employment and employers remains pretty tough over the next year or two, and especially the sort of company that employs a lot of people on low wages (retailers and hospitality businesses.)
As the economy puts downward pressure on wages, the political forces created by the pandemic are likely to create pressure on politicians to find ways to increase workers’ pay. Florida is a reminder that voters can simultaneously endorse right-of-centre values while demanding more economic generosity.
That is likely to create an opportunity for Keir Starmer, should he choose to urge ministers to keep raising the NMW even as unemployment rises. The Johnson Government has repeatedly shown its willingness to answer Labour’s demands by adopting them: extending furlough, locking down, feeding children… When the minimum wage comes to the fore next year, who’d bet against the PM again choosing generosity over restraint? On recent showing, he’d have solid Conservative support too.
But that choice would seriously antagonise the employers who would have to pay those higher wages. The relationship between the Conservative party and British business is today the worst I’ve seen since coming to Westminster in the 1990s: Brexit and Covid restrictions have driven some corporate leaders to angry despair.
The politics of a breach between the Conservatives and British business are not yet clear, not least because that breach may well be closed in due course, especially if Covid-19 becomes manageable and some sort of Brexit deal is finally struck. But those results in Florida suggest that sooner or later, questions about the minimum wage will put the Conservative relationship with business under even greater strain.
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