Why stop at $15?

Labour Minister Simon Bridges announced the minimum wage will increase from $13.75 an hour to $14.25.

 . . The Starting-Out and training minimum wages will increase from $11 an hour to $11.40 an hour, which is 80 per cent of the adult minimum wage.

“Setting these wage rates represents a careful balance between protecting low paid workers and ensuring jobs are not lost,” says Mr Bridges.

“The increase announced today balances the needs of both businesses and workers and will have minimal impact on the wider labour market and inflationary pressures.

“This increase will keep the minimum wage at around 50 per cent of the average hourly rate, which is the highest rate in the OECD.

“The Government is firmly focussed on growing the economy and boosting incomes. Through our Business Growth Agenda we are creating opportunities to help grow more jobs in New Zealand, for New Zealanders.” . . .

That nearly half those surveyed think that’s not enough goes to show most people don’t understand the issues.

The only sustainable way to increase wages is by economic growth.

Without an increase in productivity and profit, an increase in wage rates will result in a decrease in job numbers.

The Green Party doesn’t understand that.

The Greens would have immediately raised the minimum wage to $15 an hour, Green Party Co-leader Metiria Turei said today. . .

Why stop there?

“Around 125,000 kids live in families where the adults earn less than the living wage. It is in the government’s hands to end poverty for working families and improve the lives of those kids. . .

Those families get Welfare for Families through which those with two children pay no net tax until they earn $50,000. Any increase in their pay will reduce their welfare. That’s less money from public coffers but they’ll be no better off and could be worse off if jobs are lost.

That living wage is an arbitrary figure and last week’s increase in it was based on different methodology from the original figure:

The ‘new’ living wage has shifted the goalposts and appears to be more about politics than public policy, says BusinessNZ.

Last year the living wage campaign said $18.40 should be the living wage, calculated on the basis of the living costs of a family of four.

The promoters now say the living wage for this year should be updated to the higher rate of $18.80.

“But the report shifts the goalposts,” BusinessNZ Chief Executive Phil O’Reilly said.

“The increase from $18.40 to $18.80 is not based on the same methodology as last year.

“Using the same methodology, for the same family of four, would show the new living wage should really be $22.89.

“If last year’s formula said $18.40 was needed for a living wage, and the same calculations now show $22.89 is required, why isn’t the campaign seeking $22.89 an hour?” Mr O’Reilly asked.

“Either the original calculations were flawed, or the campaign is just picking numbers out of thin air.”

Mr O’Reilly said decision makers could not have confidence that the living wage figures were soundly based.

“This switch in the figures used is important for taxpayers and ratepayers who are being asked to pay for the campaign. Wellington ratepayers are now funding the living wage policy for council employees and taxpayers would be funding it for all government employees under Labour Party policy.

“There can be no confidence in a living wage proposal set on an arbitrarily changing basis.”

The whole concept of a living wage which decrees everyone should be paid enough to support a family of four, regardless of what the work they do is worth, is flawed.

For the record, all our staff are paid more than the minimum wage.

That’s a decision we make in negotiation with them taking into account their skills and experience, what they’re required to do, the value of all of that and what the business can afford.

11 Responses to Why stop at $15?

  1. TraceyS says:

    Do you mean *living wage* in the second to last paragraph?


  2. Psycho Milt says:

    Why stop at $15?

    Gee, I dunno – perhaps because reductio ad absurdum arguments are stupid?

    Without an increase in productivity and profit, an increase in wage rates will result in a decrease in job numbers.

    So goes the pious cant. However, workers in this country have for several decades now seen productivity not reflected in increased wages, to the point where the government has to top up wages with social welfare benefits. At the same time, they’ve seen the proportion of economic output going to profits rather than wages increase significantly. Don’t expect the pious cant about productivity and profit to persuade anyone who earns a wage, they’ll laugh in your face.


  3. Andrei says:

    Naked election year cargo cult politics – designed to give a soundbite that will undermine Labour’s electioneering.

    And you wonder why I don’t hold the National party in high esteem but see it composed of self serving politicians?

    God help us all


  4. homepaddock says:

    Tracey – now you mention it, they are paid more than the living wage too.


  5. Paranormal says:

    It is a valid question Milt that the left are very poor at addressing. The left know the answer undermines what they are promoting.

    So why stop at $15? $18.40 is promoted as some utopian level. Why not $25 or $50? Answer that honestly and it shows why the minimum wage is a fallacy.

    For example it was the minimum wage along with labour laws that penalised employers taking a chance on someone that, amongst other things, drove the high levels of youth unemployment we’ve experienced recently.


  6. jabba says:

    I don’t want to make light of the plight of our low paid people BUT I get annoyed hearing people say that they can’t survive on the minimum wage because they all seem to be alive. I assume they mean it is very difficult which I would agree with because I was in that position when married on one income and 3 kids under 5 and no WFF and sod all other assistance as is available these days.
    We also didn’t have mobiles, colour TV, the internet or access to cheap imported cars or credit cards


  7. TraceyS says:

    Probably no 20 hours free ECE either jabba…


  8. TraceyS says:

    The average increase to the adult minimum wage under the last Labour government was 55c. So 50c is a decent increase – above National’s average increase of 38c achieved during more difficult economic times.


  9. jabba says:

    in MY DAY, we had the family benefit for a year or so then that stopped and that was it .. lived off 1 wage until the wife worked at Cobb & Co, then cleaning Motel rooms and then at an old folks home and them in a Lab .. all night shifts with low wages. I guess worked meant more back then regarless what it was.


  10. TraceyS says:

    My Mum worked nights too, cleaning. Late 70s early 80s.


  11. JC says:

    Milt, those are the choices we made decades ago.

    At the first sign of structural unemployment in the 1960s we used the State to make work, the Forest Service expanded its planting programmes from a few thousand to over 40,000 ha per annum to preserve “the workers’ Paradise”.

    Natually enough such an unfocussed approach blew productivity because we didn’t adapt and wouldn’t fully even today.

    Unemployment and low wages are indications of imbalances in the economy and by and large we’ve taken the wrong approach to them.. preferring the politically expedient route of make work and subsidies.

    I well remember the town hall meetings of the 70s where the community would turn out to discuss such issues. People would advance sensible ideas till some git would stand up and start raving about looking after the poor and the lower “socioeconomic” groups and demand some “integrated” scheme to look after them. Whereupon the room would erupt in applause because those farmers were too guilty about their good fortune to stand up and cry “Bullshit!”

    Then as now NZ suffered from a chronic lack of foreign investment and right now NZ is one of the most repressive FI places in the world.. up there with North Korea, Saudi Arabia and China. We aren’t going to get productivity and long term growth without a mighty change in attitude towards foreign direct investment.



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