How the £22k minimum wage caught up with graduate jobs ...Middle East

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Ask Siri to show you a picture of a person working in a minimum wage job. You might expect to see someone working in a factory, processing ready meals on a conveyor belt.

The person who cleans your office under the cover of darkness long after you’ve gone home to your family. Or, perhaps, the delivery driver who facilitates the arrival of your latest Vinted or Asos purchase.

You probably don’t expect to see someone sitting in an ergonomic office chair working away in their secure salaried job.

But, increasingly, in Britain, our rising minimum wage is closing in on the salaries of the lowest-paid white collar graduate jobs.

So what’s coming up in today’s newsletter?

Now, let’s be clear: it’s no bad thing that Britain’s minimum wage has gone up relative to the median earnings of other workers.

Indeed, we need people working in hospitality, production and delivery services to be able to afford housing and food. Not just because they need it to survive, but because if they cannot pay for the things they need to live, they must draw down on their stake in our creaking welfare state.

As I report almost weekly at this point, a growing number of people who are in work are asking their local councils for homelessness support because their wages do not cover private rents. This is thought to be one reason why the number of families with children living in the temporary accommodation, which now costs the state more than £17bn a year, has risen.

Britain’s minimum wage began to go up under the Tories in 2016, even though graduate salaries remained relatively stalled and stagnant in the years after the 2008 global financial crisis.

Today, a minimum wage adult worker in the UK will be paid £12.21 per hour. That is equivalent to an annual full-time salary of somewhere between £22,000 and £25,000, depending on the hours they work.

According to the government, this means that Britain now has the second-highest minimum wage of all the G7 advanced economies. And, added to that, the latest increase means that the Chancellor has facilitated the minimum wage edging ever closer to the earnings of a median worker in this country. The minimum wage is now almost two thirds of what an average worker on an average salary of £39,000 brings home.

Lots to celebrate if you’re a low-paid key worker. But, at the same time, this wage compression between what we might once have defined as the working and middle classes forces us to ask some questions which are rather existential for our higher education sector. Not least, is paying more than £9,000 a year plus interest for a university degree even worth it these days?

How graduate salaries compare

For a young and ambitious history of art graduate vying for a gold dust job in the competitive gallery and museums sector, the answer may well be no. The typical starting salary for a curatorial role, even though it requires at least one degree, is usually somewhere between £18,000 and £25,000. Later on, a curator may progress to earn more, but it’s a slow-burning career.

Similarly, graduates starting out in HR can expect a salary of around £23,000, while charity sector jobs start anywhere between £18,000 and £26,000. Recently qualified teachers may also start questioning their life choices. This group can expect to earn somewhere between £31,650 and £49,084 depending on their experience when working outside of London.

After housing and other living costs, none of these wages leave much money to have fun or save for the future at all.

Indeed, a salary of just under £40,000 won’t help many graduates buy a home. The average house price in England is £296,000, but much higher in cities. And, generally speaking, banks will let you borrow 5 or 5.5 times your income. Rachel Reeves is clearly worried about this because she’s been trying to convince the major banks to give first-time buyers bigger loans in relation to their incomes.

All told, while some graduates will see their earnings increase as they get older, the closing gap between the financial remuneration for white collar and what is considered low-paid work still has serious political implications.

Over the last three decades, generations of young adults have been encouraged to go to university and get into debt to gain degrees, which, they were promised, would aid their social and economic advancement.

Increasingly, those young people are finding that higher education was not a gilded doorway to a lucrative career but, instead, a financial burden which they will carry around through their twenties, thirties and, perhaps, into their forties while they pay off a student loan.

Housing costs have created a new ‘squeezed middle’

The living standards of supposedly middle-class graduates are not necessarily improving as politicians may have expected them to. Data is patchy, but various statistics suggest that after housing costs (which have risen dramatically in recent years), those on median incomes are worse off than they used to be and struggling.

This enormous shift in the fortunes of what Ed Miliband was once ridiculed for labelling the “squeezed middle” has not been properly addressed. Wages may have risen recently, but not enough to catch up with house price, rent or mortgage interest inflation. I’d argue that the middle classes are changing, and Professor Mike Savage, who oversees The Great British Class Survey at the London School of Economics, would agree. Savage recently told me that these changes have fundamentally redrawn class lines and will reshape our society in the years to come.

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The minimum wage was once a contentious political intervention in the jobs market. However, it has turned out to be one of the most successful policies of all time. That is, if success is measured by delivering exactly what it set out to do: making low-paid work better paid. By another metric, it has caused another problem: making expensive degrees and “sensible” graduate jobs look like an increasingly unstable path for a young person to take.

Britain is used to the well-organised strikes of junior doctors, but in the future, we might find that other graduates rebel too.

What do you think? Let me know [email protected]

Housing crisis watch

The Housing Secretary, Steve Reed, has announced that planning rules will be changed so that homes to be built near train stations will get an almost automatic approval.

Under Reed’s new proposals, he will also have greater powers to “call in” planning applications where councils are dragging their feet on developments of more than 150 homes for various reasons, including local objections. He, as Secretary of State, will then have final say on whether the development goes ahead.

When Reed took over from former deputy prime minister Angela Rayner at the Ministry of Housing, Communities and Local Government he vowed to “build, baby, build”. True to his word, he’s pulling every lever to make sure that’s possible.

However, some local people may wonder whether all of this is riding roughshod over local democracy.

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