From the TUC

Lord Freud gets it wrong on the employment of disabled people

15 Oct 2014, by in Labour market

It’s been a fun afternoon. Lord Freud was outed at Prime Minister’s Questions for having suggested that some disabled people are “not worth the full [minimum] wage” and that it might be a good idea to “let” them work for “£2 an hour” instead. The days when disabled people would let that sort of comment go unchallenged are long past and within minutes the errant minister had issued an apology:

I would like to offer a full and unreserved apology. I was foolish to accept the premise of the question. To be clear, all disabled people should be paid at least the minimum wage, without exception, and I accept that it is offensive to suggest anything else.

Most commentators think it’s only the speed of the apology that’s saved him from resignation. (Though the night is young, let’s see how he fares over the whole news cycle.) But there’s going to be some people who think this is all political correctness – I’m waiting for one of the more predictable columnists (Rod Liddle and James Delingpole, I’m looking at you) to pen the inevitable article about how shameful it is that David Freud had to resign when everyone knows he was right.

So let’s scotch that argument before it gets established, because it’s factually wrong.

If disabled people don’t deserve the minimum wage and employers won’t take them on unless they’re paid substantially less, then we’d expect disabled people employment chances to have got worse after the introduction of the minimum wage and their risk of unemployment to have risen. As it happens, the Office for National Statistics publishes statistics that allow us to check this, a series called Labour market status of disabled people that gives us unemployment and employment rates for disabled and non-disabled people.

Now, disabled people are substantially less likely to be in employment than non-disabled people, and were so before the introduction of the minimum wage so the absolute levels aren’t the key thing here. And it would be a bit unfair to just go by what happened to disabled people’s employment and unemployment rates immediately after the minimum wage was introduced in April 1999 (they improved) because we entered a period of sustained employment growth, and everyone’s chances of getting a job got better.

No, the key to the argument is that disabled people are said to be less productive than non-disabled people and the only reason an employer might take them on is if s/he can pay them less. To the extent that employers’ ability to do this is constrained, the relative prospects of disabled people should deteriorate. We have a technique for investigating this, which is to look at “gaps” – the difference between the employment and unemployment rates of disabled and non-disabled people.

At this point things become a little complicated, but not enough to stop our investigation. Firstly, there have been a couple of changes in the definitions of disability used for these data, which means that the most useful table stops at 2009 – but the period we’re interested in is what happened after April 1999, so we have more than enough time to see whether the minimum wage made the gaps bigger. Secondly, the ONS provides data using three different definitions of disability – which is usually useful for studies of disabled people and the labour market, but here does make the picture more complicated. Fortunately, the story is the same whichever definition you use, so there’s nothing to stop us going ahead.

First let’s look at the gap in employment rates. If the minimum wage was leading to a relative disadvantage for disabled people we’d expect to see the lines on this chart heading up from 1999; instead we see the opposite for all definitions of disability:

Gaps 1

Now let’s look at the unemployment rate gaps. Again, if disabled people were harmed by the minimum wage the lines should go up in 1999.

Gaps 2

The picture here is more complicated. Disabled people’s relative position worsened in 2004 -6 – but not, crucially, in the first five years after the introduction of the minimum wage.

Lord Freud’s comments about disabled people not being “worth” the minimum wage and “allowing” them to work for less were offensive. But, just as importantly, they were wrong: if you care about the employment of disabled people there is no need to accept that we should be paid less.

2 Responses to Lord Freud gets it wrong on the employment of disabled people

  1. John
    Oct 16th 2014, 3:55 am

    Thankyou for this detailed article about ‘the’ comment from Mr David Freud. When I first read about this I can quite understand why so many disabled & non disabled people were very angry. The mind set of these so called senior people even thinking anything like that defies belief, but he will now have to live with this for his remaining time in public office.

  2. Les Mondry-Flesch
    Oct 16th 2014, 9:08 am

    I don’t know why anyone’s surprised that this man says stuff like this.

    Isn’t he the one who, not so long ago, said something along the lines of ‘the only reason people go to food banks is because they’re there and it saves them having to pay for food’?

    Another demonstration of how these people just have no inkling of what real life is like.