Study: Work at minimum wage creates a distance from basic income support

Two household models compared

The calculations thus show that, in these circumstances, earnings from work not only secure subsistence. They also create additional financial leeway, with the amount in both case studies almost identical.

The Hans Böckler Foundation and the union Hans Böckler Foundation's economic policy institute, WSI, jointly published the results. The study considered household models in which working people live with children and are entitled to means-tested subsistence benefits.

The reform was above all a priority of the Union.

Political responsibility

The importance of the minimum wage is evident not only in individual households. For employees with children, higher pay directly affects the question of whether additional state benefits are needed. The larger gap figures make clear that, in these cases, the reform makes a perceptible difference compared with the initial situation.

The study therefore makes a contribution to the debate on fair pay and social security. It describes financial relationships between earned income and basic income support. The conclusions drawn from these relationships for individual households and further policy also depend on the assumptions made about employment and state benefits.

Implications for social security

The Munich ifo Institute and local data from the Munich district are incorporated into the analysis of the economic framework. Such regional reference data help assess how wages and living costs develop in different areas.

For the public debate, this means: The statutory minimum wage is often introduced with the aim of improving workers' incomes. The figures now presented quantify the gap from basic income support for two typical family situations and thus provide a measurable benchmark for further discussion.