Living Wage campaigners have calculated that it now takes a wage of at least $20.20 an hour to support a decent quality of life in New Zealand.
The minimum wage is just $15.25, rising to $15.75 on April 1. For most people, that’s not enough to live on. It’s a common misconception that the only people earning minimum wage are teenagers working part-time jobs after school for extra pocket money. That’s just not true.
Approximately 120,000 people are paid the minimum wage. Forty percent of these people work full time. Many of them will be supporting or helping to support, their family. They are more likely to be women than men, and Māori and Pacifica people are overrepresented.
The excellent documentary Under the Bridge recently pointed out that many teenagers who earn the minimum wage working part time are using their pay to support their struggling families.
Low wages are compounded by the rising cost of living. The housing crisis and the shortage of decent homes mean rents are rising fast. The average rent for a home in Auckland is $520 and nationwide it’s $450. Someone working a 40 hour week for minimum wage only earns $610 a week, before tax.
The latest data from Statistics NZ breaks down how some of our most vulnerable people are being hit hard by the rising cost of living. For these people, especially in Auckland, decent wages are vital.
What kind of a signal does it send about an economy and the value of work if a hard day’s work doesn’t pay enough to live on? To me, that suggests the economy is broken and unbalanced.
The strangest response I’ve heard to the Living Wage was from Kim Campbell of the Employers and Manufacturers Association (EMA). Mr Campbell was quoted on Radio NZ suggesting the Living Wage would actually make some working people worse off because by earning higher wages, they’d lose access to some benefits.
I think what Mr Campbell means is that the more people earn, the more their benefits get cut. For example, single parents can earn up to $100 a week before tax, and for anything they earn over that, their benefit gets cut. For example, under the previous Living Wage of $19.80, a single parent could work 5 hours a week and earn $99. With a higher Living Wage of $20.20, the person would earn $101 for that same five hours work. The extra $1 would see a corresponding cut of 30 cents to the person’s benefit. Instead of being $2 better off, that person would just be $1.70 better off.
30 cents may seem like a trivial example, but similar benefit abatement rules apply for other amounts. They get very complicated depending on what income support a person is receiving so I won’t list them all here.
I think this argument misses the point of the Living Wage, which is that people who work should be paid enough to live comfortably. Decent pay for decent work. It’s a very simple principle and, if you’ll excuse the pun, it works.
In Government, we want to see all core public service employees paid the Living Wage, and we will also extend it to contractors as contracts come up for renewal.
There will be circumstances when government top-ups like Working for Families are appropriate. But fundamentally, a decent day’s work should provide decent pay that’s enough to live on. That’s what the Living Wage is all about, and that’s why the Green Party supports the Living Wage.