The current political consensus about the minimum wage in Britain is a cause of great puzzlement and concern. We have already seen minimum-wage levels increased, to much fanfare this past fall, by an above-inflation 3%. As the May 7 election approaches, there have been promises of even bigger increases still to come.

Chancellor George Osborne has suggested he wants the minimum wage increased in October to £7 ($10.80) from £6.50. Ed Miliband, leader of the opposition Labour Party, responded with a pledge to push it above £8 by 2020. With living standards at the centre of the election battleground, we can expect minimum-wage rates to be a hot topic.