Metiria Turei

Statistics, hyperbole, and hypocrisy on the minimum wage

by Metiria Turei

Prime Minister John Key claims the Greens’ policy, now also supported by Labour, of increasing the minimum wage to $15 an hour will “put 6000 people out of work.”

Key maintains Department of Labour advice supports his claim.  So I had a look at the advice, contained in the Department’s 2010 Minimum Wage Review (PDF, 2MB).

At page 15, I found that the Department of Labour calculated that increasing the minimum wage to $15 an hour could result in a “potential loss in job growth” of 4,280 – 5,710 jobs.  That’s very different from putting 6000 people out of work.  A potential loss in job growth can occur without a solitary person being put out of work. It all depends on the wider economic policy settings.

Furthermore, the Department fails to show the methodology it used to arrive at its figures, merely citing “Source – Department of Labour calculations”.  For all we know, and Key presumably knows, the Department could have used the same sort of maths as Harold Camping to arrive at its conclusions.

As the NZ Council of Trade Unions pointed out, citing supportive studies, in its submission (PDF, 58 kB) to the Minimum Wage Review:

…any analysis in a New Zealand context needs to draw on the more recent analysis of the behaviour of the labour market. What this has shown is that it is unlikely that an increase in the minimum wage would have an impact on employment.

And does anyone apart from me find Key’s faux concern for some low paid jobs that may potentially be created a wee bit hypocritical in the context of his government directly presiding over the loss of 2000 real jobs in the public sector over the past two years, with the promise of many more job losses from the latest round of Budget cuts?

Meyt says

Published in Economy, Work, & Welfare by Metiria Turei on Tue, May 24th, 2011   

Tags: , ,

More posts by | more about Metiria Turei