Mr. Neil McDonnell:

Can I extend that point further and explain the difficulty? I am trying to be helpful in terms of the position the Senator represents to his membership, and I know he has a difficult furrow to plough from time to time. Very good research was done this summer in University of Washington, Washington state, where there was a substantial increase in the minimum wage from $9.50 to around $11. When they analysed the effect of what actually happened - this is what is called cost transmission - the ability of certain businesses to recover that hourly increase did not exist. While the hourly rate increased, the total amount those workers got fell. What the Senator would call P60 earnings dropped because those businesses had to maintain the total cost of manpower. That is what happened. Unfortunately, that is what happens in the real world. I regret to say we will see more of that, especially if the United Kingdom, about which we are very concerned, gets hyper-competitive in that area. That is a real concern. We are afraid that what is happening on the minimum wage and the so-called living wage front will put more people on social supports rather than in employment.