The impact of workplace locations versus home locations on minimum wage coverage
06 May 2020
The Low Pay Commission (LPC) has published a blog which explores minimum wage coverage in respect of workplace locations, and how that compares to minimum wage coverage on the basis of where people live.
The LPC typically considers geography in terms of workplace location - the region, local authority, or constituency in which individuals work. This is the variable that they use for local measures of pay and in order to determine the number of individuals who are paid at the minimum wage. This is because workplace locations make a better proxy for local labour markets, and it makes the LPC’s visits programme run more smoothly and effectively, as they can target areas in which there are high numbers of low-paying employers.
In considering the locations of visits, however, the LPC does also seek to find areas in which a substantial number of people paid at the minimum wage live. The LPC has published a document which shows minimum wage coverage by the home locations of individuals, in response to a request it received.
The relationship between measures based on workplace and home is that the coverage in both is very similar. For many local authorities, the percentage of workers who are paid at the National Living Wage (NLW) is comparable when measured on the basis of where individuals work and where they live. This is a general overview and there are a few local authorities which show variations between coverage at home when compared to a work location.
Hertsmere, East Renfrewshire, South Derbyshire and Ryedale all show higher coverage when viewed on the basis of workplace rather than residence location. They are suburban areas in which a large portion of residents commute into neighbouring local authorities for work, where they are normally higher-paid.
Coverage is higher on a residence location basis, however, in places such as Manchester, Nottingham, Slough and Westminster. These are locations in which there are a high number of workers who commute in but in which jobs held by locals are commonly less well-paid.
The LPC will maintain the workplace definition as its main measure of geographic variation but will continue to investigate and pay particular attention to areas where there are differences between the two measures, particularly when deciding which places to visit. LPC will begin to publish data that includes both work and home locations as standard when releasing any area-based information.
CIPP comment
The CIPP’s Policy and Research team are currently running a survey to inform a written response to the LPC’s consultation on National Minimum Wage rates for April 2021.
The survey can be accessed here and is open until Friday 22 May 2020, so don’t miss out on the opportunity to have your say!
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