A 'living wage" must be earned, not imposed Since unveiling his vision of a "One Nation" Britain at Labour's party conference, Ed Miliband has been under pressure to pin down exactly what the phrase means. Now, he has delivered a partial answer - and it turns out to be a shift in focus from the squeezed middle to what might be called the squeezed bottom. The Labour leader's new campaign - launched at the weekend with the assistance of his brother David, and Dave Prentis, general secretary of the Unison union - is for a higher "living wage" gradually to replace the minimum wage. There is nothing new in the measure itself: Boris Johnson has already been promoting the living wage in London, and will do so again today, to mark the issuing of the latest updated figure. But by putting it at the forefront of Labour thinking - and flirting with the element of compulsion - Mr Miliband hopes to steal a march on the Conservatives. It cannot be denied that there is a problem with living standards - or that Mr Miliband is astute to highlight it. KMPG recently calculated that almost five million people, or one in five workers, receive wages that are too low for comfort. In many cases, meagre salaries are supplemented by benefits, increasing the cost to the state. And while this problem has been exacerbated by the recession, it is not of recent origin: partly as a result of globalisation, and partly because of the persistent skills shortages caused by an inadequate education system, wages (especially for the low-paid) have long been relatively stagnant. Sadly, while Mr Miliband has the problem right, he has also repeated his usual trick of offering a solution which sounds eminently reasonable, but turns out to be muddle-headed. Economically speaking, there is no such thing as a free lunch - no magic way to raise millions of salaries without paying a wider price. The living wage works in London because it is voluntary, and because the capital's economy is relatively robust. But it is a big step from urging companies to pay their workers a little bit more to the version of the idea endorsed by Labour and the unions, in which moral, legal and financial incentives are combined to make the living wage the nationwide norm. It is not just the level of state intervention envisaged that should make voters uneasy. Higher wage costs could make companies reluctant to invest in Britain, or lead them to shed staff rather than raise salaries. Bringing in a living wage for government workers would make things even harder for firms in deprived areas, where the state often dominates the economy excessively already. Of course, everyone should be paid a comfortable wage. But the only way to achieve that is to ensure that workers have the skills, and the economy has the flexibility, to deliver growth.