A stingy and evidence-averse decision on the minimum wage

As I predicted in my blog post last week, John Key’s Government has announced today what amounts to a nil increase in the minimum wage – a paltry increase of 50c an hour. The nominal increase is 3.8% – but at the same time the Consumer Price Index increased 4.6% in the year to September 2011 and 1.8% in the year to December 2011.  So it is not “boosting incomes” at all, as Minister of Labour Kate Wilkinson claims, it is just keeping pace with inflation.

50c an hour is not going to help the people that need it most – people like the Bradley family who were profiled in the Herald this week, where dad is having to work three jobs just to feed the family. And even so, the parents are having to go without food some days just to feed the kids.

What we need in this country is a living wage – one which pays enough for families to be able to feed and clothe their children, pay the rent or mortgage, pay the power, phone and doctor’s bills, and not slide into debt when something unexpected happens.

The Government will tell you that increasing the minimum wage to a decent level will cost jobs. Indeed, last year John Key claimed that increasing it to $15 an hour would cost 6000 jobs. This has not been shown to be true – in fact the NZ Council of Trade Unions has done an extensive literature review which indicates there is no clear evidence, either internationally or in New Zealand, of a causal relationship between moderate increases in the minimum wage and employment or unemployment levels. But, despite the evidence not supporting John Key’s claim, Minister Wilkinson is still banging on about the fictional 6000 job losses.

What we do know is that hundreds of thousands of New Zealanders are experiencing poverty and hardship on a daily basis – and on this basis 50c simply doesn’t cut it.

The Green Party wants to see an increase in the minimum wage, first to $15 an hour and eventually to two thirds of the average wage. This will help both reduce inequality and poverty and reduce the reliance of many low-income New Zealanders on taxpayer-funded financial support.

We need to lift wages across the board. We need a Government that will actually care about families struggling to get by in New Zealand.

15 thoughts on “A stingy and evidence-averse decision on the minimum wage

  1. Good on you, Denise. The Nats don’t have any genuine concern about jobs. They are just running that line to excuse their currying favour (and donations) from employers who want to maximise their profits by refusing to pay their employees a living wage.

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  2. What we need in this country is a living wage

    Actually, it’s not. What we need is a living income whether you work or not. Yes, we can afford it – we just won’t have rich people afterwards.

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  3. Wow an extra 50c..
    while some kiwis are being ‘offered’ 68k extra.. just to help THEM, ‘keep pace with inflation’ GO FIGURE !!
    Many don’t even come close to earning that much.. never mind as a pay increase.
    What next another.. 2.5% increase in GST to ‘help us all keep pace with inflation’
    Too Cynical ??

    Kia-ora

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  4. @Draco T Bastard 6:49 PM

    The Greens have policy to address that issue too. In the short term, to extend the so-called In Work Tax Credit to beneficiaries. That would put $60 at minimum more in the hand of every family reliant on a benefit.

    Longer term, the Greens want to increase the level of main benefits and provide a universal child benefit that can be capitalised to assist low income families to purchase a family home – something that is beyond many families’ dreams at the moment.

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  5. This is the same Bradley family who run two cars on one income, have a laptop, and choose to continue having kids they cant afford, and wnat me to pay for?!?!?!

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  6. @Misanthropic Curmudgeon 8:57 PM

    From what I gather, Craig Bradley earns $900 a week working 3 jobs. Given his work hours to do that, his wife would need a car too, as there would be no time for the car he needs for work to be available for her to do shopping or take their kids out.

    And FFS, do you begrudge them a laptop. That is like saying 30 years ago that people should not have a phone if they can’t afford it. Even the old Department of Social Welfare accepted that as a necessity, and internet access today is analogous.

    FFS, if you don’t have a job and can’t access the internet you have stuff all chance of getting one.

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  7. If the recipient of that minimum wage spent it all (difficult to save anything at that level) then the government would be getting back over $2 per hour in GST alone. How much income tax would that person be paying?

    Trevor.

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  8. Further to tradeable versus non tradeable sector wages.

    The hike comes a day after government figures showed average hourly earnings rose 2.8 percent to $26.59 an hour in the 2011 calendar year. That was made up of a 2.8 percent rise in private sector wages to $24.58 and a 3.2 percent increase in public servant pay to $33.86 an hour.

    http://www.scoop.co.nz/stories/BU1202/S00226/govt-lifts-minimum-wage-50-cts-to-1350-an-hour.htm

    So tax paying workers are around 40% worse off then the tax recipient state (including local council) sector workers.

    And one wonders why we have a taxation problem!!!

    Time the state cut its wages bill to realistic levels and reduce the tax burden on the Bradley Familys’ of this world.

    Put the minimum wage up to $20 per hour, cut state servant wages to the same level as private sector workers, reduce the tax burden on private enterprise so that the higher wages can be paid.

    Simple, solved, next problem please Denise.

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  9. Toad defends multiple car ownership for this couple, while ignoring The Greens position on priavte motor vehcile uauage and roads (and also ignoring the Green push of public transport). Or is multiple car ownershipo ownly for beneficiaries and net-tax-receivers like the Bradleys, and not for those of us who actual are net-tax-payers?

    Toad then suggests that I am “begrudg[ing] them a laptop” while they cry poverty. Poverty is not two cars, laptops, broadband, consumer electronics, but woer-no-holiday (that Toad also expects other to subsidise?)

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  10. @Misanthropic Curmudgeon 12:06 PM

    If it were practical to downsize to one car of course I would be among the first to encourage them to do that. My own family made a deliberate choice to do this, not for reason of cost but for reason of ecological sustainability, a few years ago, but were able to do so only because we live somewhere with good public transport.

    The Bradleys live in Red Hill, where the public transport service is among the worst in Auckland. I suspect cutting back to one car is simply not practical for them.

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  11. Curmudgeon, im not sure if you have pointed out to the blind that the Bradleys pay $160 per week on 2 cars, which would mean in total the cars were bought for a total of around $20,000 on a 3 year repayment plan – much higher on longer plans.

    This family could buy 2 sufficient quality cars for less than $10,000 and have $80 plus dollars back in their pocket for food etc.

    They have made a choice to have 2 more flasher, luxurious cars. That is consumerism for ya.

    Dont plead poverty when you have made choices as a consumer as to where you spend your money – particularly on luxuries such as $20,000 of motirsed gas guzzlers. There are other alternatives.

    Toad, they could move from Redhill, to be closer to work, and public transport.

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  12. @K1W1 6:12 PM

    If they were to move from Red Hill they would almost certainly pay more for accommodation costs (unless they moved to somewhere like Clendon, which is even worse), which would negate any savings in transport costs. And there is simply not enough accommodation available in Auckland suburbs that have good public transport for everyone who needs to cut their transport costs to move to them.

    And how do you know whether their cars are gas guzzlers? Nothing I’ve seen would suggest that – you are just making it up.

    Oh, and trading down to a clapped out old car is not a good option either – consider the extent of the frequent repair bills (what does it cost to replace a gearbox these days?)

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