Missing link on Planet Labour

There’s at least a couple of missing links on Planet Labour – the one between action and reaction and the one between productivity and wages.

There’s no better example of this than in Dunedin MP David Clark’s ignorance about the impact on an increase of the minimum wage:

” . . . It will affect a couple of hundred thousand New Zealanders, . . . “

I presume he means there are a couple of hundred people on the minimum wage who would get a pay rise.

But what about the people who employ them and the people who might have got a job had the minimum wage not been increased?

What about the people who have to pay more for goods and services when businesses can’t absorb the extra cost of wages and put up their prices?

What about people who lose jobs because the business can’t afford the flow on increase to other wages.

Keeping Stock explains:

 . . . You see Dr Clark; it’s not just as simple as paying people $15/hour. If the minimum wage goes up, so will everyone else’s. Our wage bill is in the order of $1m per annum, so an arbitrary, across-the-board 15% wage increase would cost us an additional $150,000 per year. That would be totally unsustainable for us; our businesses run at break-even at best. There is little doubt for our businesses that we would have to reduce our staff numbers.

 

So who wins there Dr Clark? We certainly don’t; nor do the staff members whose jobs are lost, and their families. And far from the Wanganui economy receiving a shot in the arm, there are suddenly less people spending. . .

Pay rises as a result of productivity increases or a reduction in costs are sustainable.

Pay rises by decree are not and would affect a lot more than a couple of hundred thousand people.