Living Wage Gap & Compliant Hours Costing

How to read this sheet

Three states are costed and only the third minus the second is the cost of a living wage: as worked today, at compliant hours with pay untouched, and at compliant hours with the gap closed. Measuring from the first instead lets the overtime saving pay for the wage rise, which is how a sheet ends up reporting that paying people more costs less. The second state is the one that gets skipped and it is the one that explains the argument: overtime at a premium is a large share of take-home, so hours brought within the code reduce earnings, and workers who cleared the benchmark on eighteen hours of overtime do not clear it on twelve. Nobody has cut a wage and more people are below the line. Every unit that reaches a payslip costs more than a unit because contributions, accruals and the overtime premium all ride on basic pay, and that ratio worsens as hours become more compliant, since there is less overtime for the basic increase to leverage. Take-home here is gross of the worker's own statutory deductions, which vary by scheme and are not modelled. Nor is any of this a productivity model: it assumes the same output from fewer hours, and if that output actually needs replacing, the cost of the labour to replace it belongs alongside these figures and is not in them. Benchmark living wage figures differ substantially between the bodies that publish them for the same district, so the benchmark is an input and choosing it is a decision this sheet does not make for you.