I don’t accept your premise that having a low minimum wage creates more jobs. What jobs would be created by a low minimum wage. I can identify whole groups of people who would be harmed by a lower wage than they receive now.

The low minimum wage doesn’t work alone. In this economy it CANNOT work. The problems we face are not “all one thing” but trying to solve the problems by addressing just one mole at a time simply leads to the hammer flying out of our hands.

The deal with the ECONOMY is that we have embraced globalization with both hands, abandoned skilled trades and industry with… well… abandon, and created a property market with a productive economy as an afterthought. None of those mistakes have anything to do with the minimum wage.

All have to be corrected for there to be a investment in productive enterprise, and a range of skills and employment in this country.

respectfully
BJ

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I think we can ALL agree that the situation with the partner is broken and in need of repair in that case. One more aspect of my observation that a monetary value set by legislation that is not adjusted for inflation, is an indication of incompetence on the part of the lawmakers.

respectfully
BJ

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(on productivity – ours was low in that period because so many more were employed, extra units of employment are not usually as skilled or productive, especially coming off a period of higher unemployment as we had in the 90’s).

Whereas the USA which did not incease its minimum wage till after the 2006 election and which had higher growth than us during the 1999-2006 period had higher unemployment … . Despite it still having a low minimum wage its unemployment is 10%.

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The dole increased from 7 to $12 an hour over 9 years and unemployment fell until Bollard’s OCR policy and the global recession kicked in.

Yeah sure, a “Green economy” approach to exchanging value – unemployed labour providing things/services to those without and unable to pay for them” is an option.

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Yes the costs of higher prices from minimum wage rises are born by others in society – it’s those on the minimum wage who are and remain better off.

But since the minimum wage rises increase inflation, a rise of a dollar may only give them a raise of 20 cents or so, if that, in real terms if small unemployment takes place. In reality it would be more like 80 cents but that is because massive unemployment would result. The increased taxes and decreased circulation hurting more than that 80 cents is worth.

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Realistically, those whom find work quickly are the same ones who would not need the adverse incentives provided by the work scheme, this is accounted for by the two periods of no need to work and of little need to work. The working only really comes into play for those whom are almost certainly not looking for work, and if they were, then they stand to benefit more through working than they would under the present scheme because of the possibility of working a lot of hours.

Maybe we could put them to work making cheap clothes and furnature to be provided free to other beneficiaries. It would displace a small amount of demand on presently economic production (in relation to the furnature) but it would cut government costs by more than it would the tax take and excess could be sold cheaply, displacing production from china not here as we produce higher price, higher quality, clothing.

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Yes the costs of higher prices from minimum wage rises are born by others in society – it’s those on the minimum wage who are and remain better off.

I won’t agree that “people” are stupid, but individually and collectively we get it wrong sometimes and sometimes inertia in the organisational process (or just human nature/politics) gets in the way of focus on the right issues in the right way.

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There are always ideas to reform of the unemployment benefit receiving and maitenance of eligibility process.

All have advantages and flaws.

We tried work for the dole and found people got comfortable on it and those not on it got work more quickly.

We have programmes for volunteer work for the unemployed – the problem with paying extra for those doing it is the cost. You suggest cutting the dole to finance paying them for some work. This means finding enough work for those whose dole is cut, or otherwise it’s real poverty with no way out. If the work is found, is it replacing work that could have been used for paid jobs. And see above, people get comfortable on it and don’t return to paid work.

What I like, and this works with Nationals decision to keep their promise of increasing of the other income earnt before benefit abatement comes, is the government receiving offers of work from the private sector/public sector for the unemployed – and allocating out this paid work as it comes available on a shared basis (rather than 100 jobs for 100 people – say 500 get a days work etc). This allows the employer to trial more employees before hiring some.

PS The unemployed would have to receive the minimum wage rate at least for the hours they workerd – ILO pointed this out in the 1990’s prodded by Unite.

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National increased the minimum wage because we live in a democracy and it would have been political suicide not to. People are stupid and the government is ultimately bound by that stupidity. Social credit multple times got a very large portion of the vote; enough said. They may have some good policies now, but their understanding of the nature of money is so flawed as to be from a mentally retarded individual.

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I don’t see supermarkets, or fast food outlets, being in trouble if the minimum wage rises, or small to medium sized businesses threatened if their cleaners get a wage increase. The state would have some liability in the area of hospital services – rest home care is a mixed funding system. The income from increased taxes (and reduced WFF liability) from the other minimum wage pay increases might cover the government minimum wage increase liability.

I guess the government increased the minimum wage to $12.50 having done the numbers.

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I should clarify. As the benefit system is at the moment I support a bare bones UB because not only can we not afford to support individuals on the UB at a higher rate, but we can not afford to not motivate them to find employment.
I would much rather reform the system such that an individual in the first trimester of unemployment gets a benefit able to support a decent standard of living and cover mortgage payments, etc. so that they do not slip back from what they have worked for. An individual in the second and third trimesters would receive a smaller benefit consisting of two parts. The first part being granted regardless of work and the second part being granted based on the willingness of the individual to work a small number of hours during the week, varing based on the hours worked. The two components adding up such that, depending on the amount of work, the individual would receive between bare bones and potentially the amount of the first trimester. After the end of the first trimester the first component would reduce substantially and the individuals would need to work about a 15-hour week to keep the total at bare bones level, with the option of working up to perhaps 25 hours if they would rather a more comfortable standard.
This would act to deter bludgers and the work could create some small return able to offset the cost by puting those in this stage to work in government run areas which the minimum wage would otherwise render uneconomic. Those genuinely desiring work would not be hurt by this, only the bludgers and because of the work component the employer perception ‘they just sit on their arse’ barrier to finding employment would be minimised.

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I don’t accept your premise that having a low minimum wage creates more jobs. What jobs would be created by a low minimum wage. I can identify whole groups of people who would be harmed by a lower wage than they receive now.

The service sector provides services, it employs enough people to supply these services. Exactly what other jobs are created by a lower minimum wage – and do not forget the effect of cutting tens of thousands of workers wages on the rest of the economy.

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One reason why we disagree on the minimum wage (back about 1999 I was concerned that too much increase in the level might create job barriers, prevent more jobs etc but I was proven wrong by what happened between 1999 and 2008, so I had to understand why) is we have a different profile of the minimum wage job and worker.

These are unskilled jobs largely in the service sector and someone needs to do them. Much of the work is done by young people (often while in school and training) and by older women (second jobs while raising families or before they retire). The cost of the higher wage is not reflected in less employment, but in higher cost for these services – the cost of the higher minimum wage for others is met by the rest of us in higher costs (supermarkets/cleaning/fast food/labour in hospitals and rest homes).

I think its good that students get more money from the hours they work while studying (thus they can get greater rewards from their study) and that families get help from a second income.

Some businesses paying between $12.50 and $20 may be worried that their semi-skilled workers want a premium on the minimum wage and this premium will reduce if the minimum wage keeps rising and they feel the need to hold down wage costs during a recession diminishing their incomeing revenue, but note even National allowed an increase from $12 to $12.50 per hour this year. Why was that, if there really was a threat to jobs?

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The problem with cutting back a bare bones benefit level even lower after some time is that the UB is set to be sufficient for a short term only, it is not even the bare boens over a longer term. Cutting it back further will place pressure on charity support – food banks and the like. It will also result in people moving onto SB because of health issues.

PS The reason the SB (slightly) and IB (significantly) are higher is because it is not presumed (especially for IB) that the benefit will be only for a short term period and thus needs to be at a higher bare bones level to cope with peoples needs over a longer time frame (replace things, in the house and also clothing etc).

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I know you may not see it, but I am very much concerned about the well-being of society. It is, in fact, one of the motivating factors behind my study of psychology, sociology, and economics. That I seem, or rather am, hostile towards the unemployed or those on the minimum wage in discussions like this reflects my belief that their unwillingness to up-skill, whilst they maintain a belief of entitlement to more without any extra input, is strongly detrimental to society. I am just as hostile toward corporates and businessmen whom would cause detriment to society or the environment on which society relies.
I am just doing my best to try and work out how to improve society for those yet to be born and to those whom are alive presently. My conclusions differ from yours not because of a difference of goal so much as a difference of perception of the worlds workings; my conclusions were similar to yours when I started my journey on this blog almost three years ago now, but the arguement and the learning has shown me things that would of not come to mind otherwise. I enjoy arguing with you, even if you do not accept my points your challenge does make me think, even if the conclusions are little altered.

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Our economy lacks a strong record of saving (except for a house but now speculation in landlordship is taking this out of the reach of too many), so Kiwi Saver is important in that it allows the use of stored saving as a deposit on a house and also provides local finance for mortgages. While those saving won’t be able to get a mortgage while still on a minimum wage, the savings built up across the years assist them in obtaining their deposit. The lower the workers income of course the more likely the banks will require a 10-20% deposit.

It is people without a home who will be a larger cost on the state when they retire. The more unable to save to have homes now, the more cost that those retired will be later.

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The current income level for excluding someone from claiming the dole, while they have a working partner, is close to the minimum wage level. This has occured because the minimum wage has increased while the income level determined for their partner has not. This means that current policy determines that the minimum wage is supposed to support someone and their partner. But note the amount is little more than the dole *2.

This was the point Goff was trying to make some time back but did not get this point across (he chose a poor example).

And for once I agree with sapient – access to the dole should be for each individual available to work.

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