by frog
The Employers and Manufacturers Association rather unsurprisingly came out criticising the Greens campaign for a $15 an hour minimum wage. The part of their argument that I found the most incongruent was their claim on National Radio this morning that “employees should be paid according to their productivity”.
I would have thought that in your average business those on that factory floor, the production line or holding one end of a mop could easily show that productivity was more than commensurate with their wages. Where that test might be a bit harder to meet is a bit further up the food chain. The National Equal Opportunities Network noted last year
There is evidence that wage inequality is growing: In 2000, a CEO could expect to earn eight times as much as the pay of the average worker. By 2006, the average CEO pay-packet was 19 times the average wage, according to a Sunday Star Times survey.
I would be surprised if the average CEO has increased her, or more likely his personal productivity nineteen-fold in 6 years. So are the Employers and Manufacturers really advocating that people be paid according to their levels of productivity. They might find they don’t get the result they want. It would be interesting to see how much productivity your average business could maintain if you removed all its workers versus if you removed all the CEOs.
Published in Economy, Work, & Welfare by frog on Mon, October 20th, 2008
Tags: , Employers and Manufacturers Association, Minimum wage, wealth inequality
on the trolls and those who are unable to keep on topic
Lets not bother about the business’s ability to pay $15 per hour, lets not bother with the fact that most people earning the minimum wage are unskilled and many will be illiterate.
Lets just keep producing an endless line of unskilled kids (remember, only one per family) from our schools, as long as they understand the treaty, socialism, and the feminist struggle then that is all that matters really, the ability to read, write and count is secondary.
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“unskilled kids (remember, only one per family)”
Lol wut?
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$15?
Why not make it $50?
Let’s make it $100.
No, $300.
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thanks for regurgitating your usual dull arguments BB. how about engaging with the points raised in the post.
do you think a business would do better without its frontline floor workers or its management? have CEOs increased their productivity by a factor of 19 in the last 6 years?
maybe if those pay rates hadn’t gone up so much there’d be room to pay the struggling hard workers on the bottom tier.
“Lets just keep producing an endless line of unskilled kids “
no let’s help them to take a productive role in society by rewarding them for working hard. even low-skilled labour deserves fair compensation.
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So if the criteria is NOT productivity, what is it then frog? I’m guessing a sort of minimum standard of living…$15/hour x 40 hours = $600/week = $30,000/year (pre tax).
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“I would be surprised if the average CEO has increased her, or more likely his personal productivity nineteen-fold in 6 years. ”
It’s two-fold, not 19-fold. 8 times average wage to 19 times average wage.
(not that it alters your point)
Productivity is notoriously hard to measure. But CEOs haven’t magically become twice as good in 6 years.
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why should a worker be paid more than their productivity? if they are paid more than their productivity the company is making a net loss on that employee and has no reason to keep them on, that is apart from employment law.
If a employee is not paid lower than their productivity then no profit is made by the business, one can summarise the cost of paying and maintaining an employee as the marginal cost of that additional employee and their productivity as the marginal benefit. No person in their right mind invests in something they expect to make a loss on, its just not good management.
I agree that CEO’s should not be paid so much but they are alot more proutive than flaw staff even if they do minimal work; you could have hundreds of floor staff, almost all of them can be replaced at any poin of time in the flick of a finger, its rare for a company to have more than one CEO and that CEO is hard to replace and in their hands is the profitablility of the company, if you have a bad CEO you have bad decisions and the copany gos kaput.
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big bro,
If you’re after unskilled kids then you’ll be voting for National and their education cuts then?
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Yes, thanks icehawk for clearing up my (poor) maths – Now you point out my error I note that both numbers are variables so going from 8 times as big as number A to 19 times as big as number B means we can’t really deduce 2fold either. The answer is likely to be somewhere in the middle I guess (closer to 2 than 19).
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icehawk
Education cuts???
Is that new Greenspeak for wanting them to be able to read, write and count?.
If you are talking about cutting PC, treaty rubbish, feminist propaganda and the like then I am all for these cuts.
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nommo
“do you think a business would do better without its frontline floor workers or its management?”
Stupid question, one cannot survive without the other.
“have CEOs increased their productivity by a factor of 19 in the last 6 years?”
I doubt it, productivity under this govt has fallen dramatically right across the board.
“maybe if those pay rates hadn’t gone up so much there’d be room to pay the struggling hard workers on the bottom tier.”
I doubt it.
“no let’s help them to take a productive role in society by rewarding them for working hard”
Lets teach them the right skills in the first place, when we do that we will dramatically reduce the number of low skilled workers in our economy.
“even low-skilled Labour deserves fair compensation”
$12 an hour is more than adequate for unskilled Labour.
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Business A has a requirement for job x.
Business A can afford to pay $10 p/h. At $15 p/h, job is simply uneconomic, so it doesn’t get done.
So, there is a job at $10 p/h but no job at $15 p/h
A person is happy to work at $10 p/h. Employer is happy to pay $10 p/h. Everyone wins. Worker turns out to be a good worker, and employer promotes worker to a different job. Employee now on $20 p/h. Business expands. Everyone wins.
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The minimum wage was $7/hour in 1999 when the National Party was last in office. Now it is $12 and, as far as I recall, the National Party attacked every increase along the way – certainly the last increase on 1 April 2008. During this time the unemployment rate fell and fell defying all economists’ predictions.
Where would the National Party and their supporters like to see the minimum wage now?
While I’m on the topic, the same argument applies to many of the more left-wing initiatives of the Labour-led government – National did not support them at the time and is now planning to keep them all, Kiwibank, (part of) Kiwisaver, free or subsidized doctor visits, 4 weeks annual leave, paid parental leave, even the biggest-ticket item of the lot, Working for Families. Any true centre-rightists among their supporters must be furious. The dividing line on policy between Labour and National looks wafer-thin to me. I can’t understand why this hasn’t been a bigger issue during the campaign. Any thoughts?
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National will do anything for power, so they aren’t rocking the boat, just mainly differentiating themselves on…tax, really. Like Brash, I suspect Key is quite a bit more right wing than it seems – if he does an allright job 2008-2011, the electorate might trust him a bit when he starts rolling out ‘real’ right wing policy in 2011.
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>>During this time the unemployment rate fell and fell
Booming economy based on credit.
Now, the next ten years will be rather interesting….
Unemployment will rise and businesses will close.
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BP,
and how would you recommend rectifying that? keynesian economics? lol.
the political compass seems to think there is a fair difference between the two parties but then again it refers to the Maori party as “pacific”, lol.
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Robert McLachlan
“Where would the National Party and their supporters like to see the minimum wage now?”
I cannot speak for the Nat’s but personally I would like to see the minimum wage abolished.
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“I cannot speak for the Nat’s but personally I would like to see the minimum wage abolished.”
that’d be great. along with your determination to remove unemployment benefits we’d be well on our way to being the go-to country for low-paid low-skill labour. hey, we could set up a special economic zone where sneaker companies can employ children.
I’d vote for that
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big bro – please, please, please can I come and work for you, you seem such an enlightened employer! I’m guessing you have a rapid staff turnover so there’ll be a vacancy for me before too long
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Actually I think a skilled or even semi-skilled worker is harder to replace than a CEO. We have found it hard to get skilled teachers where I work, but whenever we advertise for a management position all kinds of applicants come out of the woodwork. And it is not the workers who take more than they are entitled to, it is the CEOs. All of the teaching staff do a great deal of work to gain students and research funds, only to see much of it disappear in executives’ salaries. We had a period of about 15 months with no boss, and there was no drop in productivity; quite the contrary, we could actually get some work done, without having to go through endless management-ego-stroking meetings.
It was exactly the same in government, and here I have some sympathy with National wanting to cut dead wood. I am sure that they could get rid of one or two management levels in every government department and the whole place would run more efficiently. Unfortunately I don’t think that is the kind of pruning they have in mind.
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Kiore1
“We have found it hard to get skilled teachers where I work”
That’s because all the good ones have left the profession, I bet you have no end of applicants who are rubbish.
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There are good ones, but there are also crap schools which cause good ones to prefer temp work instead…
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greenfly
“big bro – please, please, please can I come and work for you, you seem such an enlightened employer!”
No you can’t, I only take the best and I happen to pay well above the award rate, the perks are also fantastic.
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We certainly have no end of rubbish applicants for executive positions. If we got rid of a management layer we could find the funds to attract better teachers. We coud do what they do in Japan and everyone take turns to be head of department (actually not a popular job because it is mostly admin.).
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but I’ll wear my undies out, Superbigbro! Will we be bustin’ nasty commies and evil socialists, Superbigbro, will we, will we ???
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greenfly
I do not hire pinko’s.
I do not hire commies.
I do not hire climate change nutters.
I do not hire unionists.
I do not hire softball or league fans.
I do not hire people who wear their undies on the outside of their pants.
I do not hire people who own diesel cars or hybrids.
I do not hire people who use public transport.
I do not hire illegal drug users.
I do not hire fat Sheila’s.
I do not hire people who think that Pol Pot was a decent chap.
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that’s very interesting big bro – have you apologised to Valis yet?
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What for?
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ah! feigned ignorance! who’d have thought you’d play that card? You are the master, oh master!
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greenfly
Best you lay off the dope, it was a simple question and I would have thought you would be capable of answering it.
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oh, there is no problem finding people willing to be CEO’s, even qualified ones coming out of our business schools in vast numbers; the point is that it is hard to find half decent CEO’s.
there are no bad schools as such, mearly bad principles/CEO’s which make bad management decisions, employ bad teachers and drive away the good teachers and students.
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big bro – some insider information – any green knows that when the accusation of criminality (ie. you’re a dope smoker!) comes, it signals that the accusor has lost the argument. In a way I’m sad that you’ve conceded, but there will be other fights! Have you been good to your word and apologised to Valis? Do you have the mettle?
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The problem is that the thing that makes a good CEO isn’t the quality of the decisions that come from the office. It is the quality of the connections the CEO has in his personal network.
That’s painfully obvious when you look at the hiring of such people in the States. I have no reason to believe the process is different here.
That this relates to the successful running of the company in “normal” times isn’t clear. In times when governments are pumping credit and growing economies the way most of the OECD has been doing, competing for the biggest GDP, it’s the “players” who prosper and the quality of their decisions is almost irrelevant. In a downturn the quality of decisions is paramount and the quality of the “network” is becoming quickly and vastly less relevant. Which has IMAO some relationship to the nature of the troubles suffered by so many businesses in the past couple of months.
We are paying them for the quality of their decisions? I think not.
BJ
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BB, you do not hire fat sheilas? If I knew who you were (and could turn myself into a fat sheila) I would be very interested in applying to you for a job….
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Question
Has the minimum wage kept pace with the average wage over the past nine years?
We can be assured that BB has rewarded himself at a rate GREATER than he rewards his workers. But that is only fair. After all his needs are greater than theirs.
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Like I said….
http://www.bloomberg.com/apps/news?pid=20601087&sid=aVUE96d.HKyw
I should add
Wow!
respectfully
BJ
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Maybe the average CEOs remunerationhas grwon twice as quickly as the workers simply because of mergers and aquisitions. When a smaller company is swallowed by a larger company the smaller CEOs sallary disappears and the bigger CEOs salary stays or may even get bigger because the comapny has got bigger.
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Kevyn
I’ve had a peek… by reason of just being old enough to have heard them do it… (the invisible engineer) it is who they know, who is on their board of directors and how much they think they can get away with. With the stockholders meetings being a charade of FPP voting and financial shenanigans to buy power the whole setup is corrupt as hell.
These guys do NOT “earn” money. They steal it pretty effectively but and occasionally they make it by making a deal, but value for money? Not if they worked 10 times as hard. It’s hard to build a good business (other than a farm) on a foundation of fertilizer.
respectfully
BJ
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This policy is a prime example of Green policies which damage the environmental cause.
Sure you can increase the minimum wage. You’ll put a lot of small businesses out of business, prices witll rise, after a short time inflation will increase to the point where the new minimum wage has the same purchasing power as the old one did.
Most of our problems are caused by low productivity. In part because of inefficient work practices and because we don’t have enough high earning sectors.
Luxembourgers have nearly 3 times our income. Ask yourselves why.
I’m an environmentalist but I will not vote Green until you stick to the knitting. Do you guys want to save the planet or not? Social engineering is not going to stem climate change.
How many more non-socialists are turned off by your fruitcake economics?
You want to know why we have a low wage economy? Ask Dr Paul Callaghan or look here:
http://www.mistywindow.co.nz/economy/gdp-&-productivity.htm
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