Research and analysis

National Minimum Wage: a focus on Universal Credit. Brewer, De Agostini

An examination of the likely impact of Universal Credit on the incomes and work incentives of families with National Minimum Wage workers.

Detail

This paper examines the likely impact of Universal Credit (UC) on the incomes and work incentives of families containing NMW workers.

The study, by the Institute of Social and Economic Research, considers tax and benefit data on the basis that families don’t alter their employment (or other) decisions in response to Universal Credit (UC), and it assumes full take-up of all benefits and tax credits.

It concludes that both families for whom National Minimum Wage (NMW) jobs are the main source of earnings and families for whom NMW jobs are a secondary source of earnings are forecast to lose (very) slightly from UC.

But families for whom NMW jobs are a secondary source of earnings are forecast to lose more, consistent with the redistributive nature of the pattern of winners and losers. There is a great deal of variation within these small, ‘on average’, changes, some of which is related to family type.

The analysis reflects announcements in the December 2012 autumn statement, but was completed before the Spring 2013 Budget, so doesn’t reflect any changes to personal taxes and benefits for 2014 to 2015 that were announced then.