The minimum wage is going up. It'll rise by 17p, to £5.52 an hour, in October. Alistair Darling says:
More than a million workers, two thirds of them low paid women will benefit from this announcement.
He doesn't say how much they'll benefit. Let's do some sums.
Take a married couple with two children, with one person working 40 hours a week. Their wages will rise by £6.80 a week. How much of this will they keep?
Yes - less than a pint of milk.
Of this £6.80 rise, they'll pay £2.24 in income tax and national insurance. And they'll lose £2.52 in working tax credit and £1.73 in housing benefit and council tax benefit. That's a deduction rate of 95.5%. Details come from table 1.6d of this massive pdf.
For sure, I'm taking an extreme case - though isn't it scandalous that such ones exist at all? But a single childless person faces a deduction rate of 70%, and some lone parents one of 89.5%.
So, the benefits to many low-paid are tiny - smaller than the gains to the Treasury in many cases.
And for this, the low-paid face an increased risk of losing their jobs or getting their hours cut.