The story but not the whole story

RNZ asks is the minimum wage increase helpful or hopeless?

. . .  a cleaner who does night shifts at Auckland Council said the rise was still not enough to make it easier to support her family.

Before today, Lupe Funua’s wage was $15.10. That rate would be pushed up 15 cents to match the new minimum wage.

With a three-year-old son at home, a baby due in a few months, and a husband who was also a cleaner on minimum wage, she said every week she worried she was not earning enough. . . 

That’s the story but not the whole story which should include the family’s entitlement to Working for Families and they might also be eligible for housing assistance.

. . . Once the bills were paid, she said she had nothing to send home to her parents in Tonga, which devastated her. . . 

Wanting to help her parents is commendable but an employer can’t take that, or any other wishes however noble they might be, into consideration when determining what wage rates are affordable for the business.

Workplace Relations and Safety Minister Michael Woodhouse said the government first considered a 25-cent rise, but decided to be more generous.

He said lifting the rate any higher would mean some people losing their jobs.

That is a very important part of the story. Increasing the minimum wage can cost jobs and drives the move to more mechanisation. It also has a flow-on affect for people who are paid more the legal minimum.

Federated Farmers dairy chairman Andrew Hoggard said any rise would affect the struggling dairy industry.

“I think the concern for farm employers might be around farmers employed in the roles above those on the minimum wage – farm assistants – who would also get a boost,” he said.

“That’s going to be the discussion that farm employers will have with the employees and for many it’s not going to be an option.” . . 

I don’t know anyone who pays farm workers the minimum wage and most farm staff have non-cash rewards like a rent-free house which takes their annual effective pay well above the minimum.

 

 

 

20 Responses to The story but not the whole story

  1. Mr E says:

    “Finally, policy simulations using 1997-2008 data on the earnings and income of NZ households suggest that a 10% increases in minimum wages, without any offsetting reduction in earnings due to an associated loss in employment or hours of work, would lower the poverty rate (defined as living in a household below 50% of
    median equivalised household income) by less than one-tenth of a percentage point. This small impact is due to the facts that many low income households do not contain working members who could take advantage of higher minimum wages to boost household income, and many minimum wage workers do not live in poor households.

    Maloney, Pacheco 2010
    ISBN 978-0-478-35338-9

  2. Dave Kennedy says:

    “That’s the story but not the whole story which should include the family’s entitlement to Working for Families and they might also be eligible for housing assistance.”

    I still don’t understand why the state should be subsidising wages and landlord’s incomes. Why can’t living wages be a reality and the rental market be artificially supported by the state? Subsidising wages must now cost over $3 billion a year (It was $2.8 billion in 2011) and the Accommodation Supplement costs the country $2 billion a year. Around 15% of the Government’s tax income is now spent on subsidies for workers while our ability to fund healthcare gets continually squeezed.

    Mr E, you analysis doesn’t recognise that even 10% of a minimum income is still chicken feed. The Lupe Funua’s increase of just over a dollar a day is not going to do much to put extra food on the table. 10% of $25,000 (after tax) will provide around $6 extra a day.

  3. Paranormal says:

    Right DK. Maybe she should consider getting a job with a higher pay rate and holding off having more children for a while?

  4. Will says:

    You’re right of course Dave, but it’s the old story – once you start these welfare programs, it’s near impossible to get rid of them. They become’entitlements.’

    What I want to know is, where is my robot shearer? Eh, where is it!?

  5. Name Withheld says:

    Why can’t the rental market be artificially supported by the state?

    Well actually it can.
    You just have to live in North Korea to experience the benefits of it.

  6. Dave Kennedy says:

    NW it was a miss type. the rental market is supported by the state which means that the market rate is artificially high. It shouldn’t be. People should earn enough if they are working full-time to cover the costs of food and accommodation. The true market rental should be based on what working people can actually afford without support, that is how proper markets operate. It would actually be cheaper to put the $2 billion accommodation supplement into building more state houses and properly maintaining the existing ones (that would build around 7,000 houses).

    Will, I still support the concept of the Welfare State for those that need genuine support (disability, illness, life crisis etc) but the problem now is actually corporate welfare. Not only do we spend billions on wage subsidies but this Government also throws millions away in corporate bribes:

    $30 million to Tiwai to help the Meridian asset sale
    http://www.stuff.co.nz/business/industries/9016725/Govt-pays-30-million-to-Tiwai-Pt
    $12 million to a Saudi farmer as a bribe for a trade deal that never happened.
    http://www.radionz.co.nz/news/political/291259/nz-to-build-saudi-businessman-an-abattoir
    $45 million in tax breaks to oil companies wanting to explore for oil in our waters.
    http://www.wwf.org.nz/?10762/New-report-exposes-Government-hypocrisy-on-fossil-fuel-subsidies

    And then there’s Warner Bros, Sky City and $400 million for irrigation to support even greater dairy expansion…

  7. Dave Kennedy says:

    “Right DK. Maybe she should consider getting a job with a higher pay rate and holding off having more children for a while?”

    Paranormal, what makes this comment even sadder is that you are probably serious 😛

  8. Name Withheld says:

    The true market rental should be based on what working people can actually afford without support,
    Thus spake the landlord who rents a caravan in return for manual labour. No overheads, no tax, no GST.

    Paranormal, what makes this comment even sadder is that you are probably serious
    I sincerely hope he is.
    Most people would find that an eminently sensible approach to planning a family.

  9. Will says:

    Can’t you find better examples of corporate bribes? Like renewables subsidies worldwide. As I understand it, New Zealand is still better off with Tiwai open than otherwise. The electricity is still sold at a profit, and there’s all those jobs. Or don’t you care?

    Saudi Arabia is a corrupt country, you play by their rules if you want to go there. Easy for you to critisise, you don’t actually do anything do you?

    I’ve seen how Greens calculate so-called subsidies to industry, not interested in commenting further. Any money we make or keep is a subsidy in your world.

  10. Dave Kennedy says:

    Will, if part of a Government’s role is to ensure markets are operating properly and to work at future proofing our economy then we should be looking at building the capacity of our own industries than subsidising overseas comapnies, a good deal of the profits generated will only go off shore.

    When Warner bros were give $60 million of tax breaks and employment law was changed to allow overseas actors and film crew to work here in place of our own people it disadvantaged our local industry. The Auckland film industry was struggling while a highly profitable overseas company got support.

    I think there are advantages in being recognised as an honest player in the global economy and I would rather not do business with Saudi Arabia at all if it means using corrupt practices. Saudi Arabia is little better than ISIS.

    Tiwai has already gone beyond its projected life and we could be developing a silica smelter to replace it using a local resource. Where is the future planning?

  11. Will says:

    Maybe a ‘good deal of the profits go offshore’ but if you had your way, nothing would be done. That would seem a shame.

  12. Paranormal says:

    DK, maybe you should stop to consider reality before you comment on how markets ‘should’ operate.

    Rents are based on a return on investment. The reason rents are rising in Auckland is because of artificial restrictions in housing supply, imposed by those with likeminded ideas to you. At present rents are significantly below where they should be for adequate returns on investment. There will eventually be a significant correction upward if the council continue to restrict housing supply.

    Why would suggesting some personal responsibility be ‘sad’? Not all of us want to trap people in poverty like you clearly do.

  13. Dave Kennedy says:

    “if you had your way, nothing would be done.”
    Hardly, it is this government that sits back and does very little while hoping “the markets” will save the day. The only really succesful initiatives that have come out of this government have be the joint ones with the Greens.

    Paranormal, you believe the spin, the Auckland housing market crisis is caused by a multitude of factors and you have only identified one. Foreign buyers put up prices and 30,000 homes sit vacant because with current capital gains there is little need to have them occupied. The lack of any building of low cost and social housing for the past 10 years is also a huge contributing factor.

  14. Dave Kennedy says:

    “I think we have a government designed for the 20th century – the only problem being we are in the 21st century.”

    http://www.nzherald.co.nz/university-of-auckland/news/article.cfm?c_id=1503679&objectid=11615129

    So true, this Government is endlessly chasing ‘back to the future’ ideas with its investment and subsidising the coal and oil industries. Coal collapsed in a $600 million dollar heap of debt and most investors are divesting themselves of oil shares.

    National’s idea of doing something has been disastrous, most of the ideas the Greens have supported are now eventually happening (2nd cable, organic dairying, eco-tourism, investment in public transport) but if we had invested in these much earlier we would be in a far better place today.

  15. Paranormal says:

    Isn’t it wonderful DK that people can do so called green policy without the government having to do the whole legislated picking winners thing. Does that make you feel redundant? certainly the outcomes will be far better without government meddling.

    With your understanding of the Auckland housing market, and your superior knowledge of markets evidenced above (8.27 1 April), can you explain why land is way more expensive on one side of an arbitrary line drawn on a map (known as the urban limit) than exactly the same kind of land on the other side of the line?

    Have you seen the development occurring in Pokeno and can you tell us why it is happening there? As for so called ‘low cost housing’ again with your understanding of the market why has it failed where it’s been tried throughout Auckland? Why would government dictating the price of housing cause such a failure – who would have thought?

    As for your tyranny of low expectations, I see you have failed to answer yet again.

  16. Dave Kennedy says:

    Oh dear, Paranormal, it isn’t just my understanding of the housing market, it is the advice that this government has received through the Dept of Building and Housing five years ago and ignored:
    http://localbodies-bsprout.blogspot.co.nz/2012/10/englishs-housing-solutions-lack-logic.html

    National doesn’t want to reduce the capital gains being enjoyed by all their mates whose incomes are mainly derived from property investments. To take the heat out of the market and build too many social houses will reduce profits for many. I would love you to tell me me how many lower cost homes have been built under this Government over the past 7 years. 😉

  17. Name Withheld says:

    National doesn’t want to reduce the capital gains being enjoyed by all their mates

    The cost of rental housing summed up in one moronic sentence.

    Oh dear, Paranormal Mr Kennedy, just keep believing that please.
    This type of pathetically shallow, envious thinking will keep greens out of government for a long time to come thankfully.

  18. Will says:

    Dave nobody wants to live in state houses anymore, this isn’t 1950. Try to understand that markets are just tools for establishing price. Government needs to remove restrictions on land subdivision, take on the Carters/Fletchers cartel, and invest in urban infrastructure. Possibly pass laws to discourage land banking. Colin Craig’s idea to acquire land under the Public Works Act was howled down, but no-one seems to mind when they do it to farmers. It’s happened to me three times.

  19. Paranormal says:

    Sooo DK, you’re suggesting the Treasury opinion is: “The true market rental should be based on what working people can actually afford without support, that is how proper markets operate.”

    Only in a Green fantasyland. I bet you can’t find any proof of that – apart from linkwhoring to your own blog.

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