State intervention in low-wage work: Politics, social actors, and increased governmental control in the setting of the minimum wage

With the decline of unionization and collective bargaining coverage rates across advanced economies, governments increasingly make use of statutory minimum wages to ensure adequate compensation for low-wage workers. This state intervention reflects the liberalization of labour markets and the rise of an ‘employment rights’ regime, where state regulation in the low-wage sector plays a growingly important role as the influence of social partners diminishes. This article investigates the factors that drive increased governmental involvement in minimum wage-setting mechanisms (MWSMs). Through a combination of historical large-N statistical analysis and an in-depth review of ruling parties’ justifications to changes in MWSM, we find that economic and industrial relations variables – such as lower economic growth, higher inflation, and declines in unionization and collective bargaining coverage – primarily explain the shift towards greater governmental discretion. Partisanship and electoral cycles appear less significant. A media analysis of policymakers and social partners’ statements in Germany, the United Kingdom, Ireland, and Spain reveals that governments justify intervention by emphasizing their responsiveness to changing economic circumstances. These findings have implications for the study of partisan politics and low-wage regulation, highlighting the growing role of governments in wage-setting practices.