Travel Pay for Low Pay – A Novel Idea to Improve the Labour Market

An environmentally positive change to the employment market that would operationally improve the labour force as well as having a beneficial levelling -up effect on incomes with no governmental cost….. too good to be true?

Here’s an idea.

All employees on minimum wage (or to a specific amount above this) should be payed “Travel Relief” by their employer reflecting the distance they have had to travel to get to work.

Such Travel Relief would be a targeted way to raise wage levels within society. It would benefit employees, employers, the environment and society as a whole. Some of the advantages are outlined below:

  • For the Employee:
    • It would improve worker’s pay as a cost that they previously had to meet now becomes paid for.
    • Given that employers will try to recruit more locally, this will improve the individual employee’s quality of life as, relatively, they will come to spend less time travelling and more time earning.
  • For the Employer:
    • It would improve the flexibility of the labour market – employees will be more prepared to work shorter shifts. For example, doing a two hour cleaning job or a four hour shift in a shop. Split shifts (doing two shifts at different times on the same day) would also become more appealing.
    • It would increase the size of the employable labour market as more people will think that working a few hours a week is now more worthwhile for them.
    • Although employers will be naturally incentivised to recruit locally, they will retain the ability to recruit from further afield – they will just have to pay more when doing so.
    • By having a more local work force, that work force will be more loyal and committed to the employer. This will improve staff retention and labour turnover.
  • For the Environment:
    • It would reduce traffic congestion as people will have to travel less to work and as other modes of transport become more feasible – walking and cycling.
    • Given that employers would be indirectly encouraged to recruit more locally, it would also reduce the environmental damage we do through commuting.
  • For Society:
    • It would attract more people into the labour market thereby reducing unemployment rates and the numbers of economically inactive people there are.
    • It would improve community relations and neighbourhood togetherness as people shift to living closer to their place of work.
    • It would give people a much greater stake in their local community.

Currently we have people criss-crossing cities in order to work in different areas to which they live. Workers are passing each other – as somebody travels East to do their job, somebody else will be travelling West to do the same job. That is neither efficient nor environmentally friendly.

Nobody benefits from such an arrangement.

Given that work is central to most people’s lives and to the function of society it must be right to look for ways that we can improve on how we do it.

Operationally, Travel Relief would work something like this. All employees would be given a banding based on their home address in relation to the mileage distance it is to their place of work. They would then be paid a travel expense based on that banding so that the farther away an employee is from their place of work then the more they would be paid.

Such a banding system would not be that difficult to create. In some respects, Travel Relief would be like a London weighting allowance – those within a certain geographical area receive an adjusted pay.

Ideally, the plan would be to introduce the scheme for those on minimum wage but to gradually extend it to cover others. Theoretically there should be no limit to its operational range, though it might be suggested that such a payment is already built into the salaries of many more well-paid people.

There would of course be some practical questions with introducing a Travel Relief scheme:

  • The amount that should be paid. How generous should it be? Is it taxable?
  • How such a scheme should be introduced. Should it be phased in? How does it apply to those employees who would already be eligible for such a payment?
  • What happens when employees move house. Perhaps the banding should be set when the employee starts with an employer. If the employee later chooses to move, then it is up to them – they either gain or lose from it, depending on whether they move closer to or farther from their work place.
  • How much of an administrative burden would it be for employers? How can this be minimised?

Of course, some will argue that payroll is already complicated enough, that it would just be easier to increase the rate of pay employees receive – raise the minimum wage. This Travel Relief measure, however, has added benefits in that it would not only increase productivity but it would have a much wider social and environmental impact. It would manoeuvre society in the direction that we want and need it to go.

And for the government there is added appeal. Travel Relief would be a redistributive, levelling-up measure that has no great government cost in relation to its implementation, operation or management.

In fact, Travel Relief might be considered as the next step in the changing relationship between employers and employees. Over the years the relationship between the individual and their employer has slowly shifted. Society should be and is increasingly managed in terms of what is right for the individual rather than what works or is beneficial to the employer (holiday pay, maternity rights, unfair dismissal protections….).

Travel Relief is merely an extension of this gradual attainment of greater employment rights and benefits.

And finally, we should consider that Travel Relief is the fair and right thing to do. If you are unable to work from home then you have to go into a work place. Your employer requires it of you and therefore it’s an expense that they should have to pay. People should be paid for what they have to do. And going into work is something that many people have to do.

With Travel Relief, travel time becomes work time so, in a targeted effort, it would be travel pay for low pay.