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Comrade David signals radical rewrite of Act’s living wage policy

Written By: - Date published: 7:36 am, November 25th, 2020 - 75 comments
Categories: act, david seymour, economy, Economy, Living Wage, minimum wage, uncategorized - Tags:

It seems Act’s influx of new MPs has caused it to radically reassess its policy on minimum wage.

From yesterday’s press release:

“If minimum wages don’t reduce the number of jobs available, and we can legislate our way to greater prosperity, left-wing groups should be advocating for a much higher minimum wage than $22.10 an hour,” says ACT Leader David Seymour.

“Labour and the Helen Clark Foundation claim there’s no cost to raising the minimum wage and that we can boost productivity and grow the economy by passing new laws.

“If that’s the case, why not advocate for a minimum wage of $50 an hour?

Imagine living in a country where the minimum wage put everyone on an income in the vicinity of $100,000 a year if they worked full time.  Child poverty would be annihilated, the effects as people spent more would flow through the economy and put it on steroids.

But I wonder how David’s funders would feel?  Because it would take one huge tax increase to pay for it.  And industries based on minimum wage employment would find things very hard.

Of course there was a catch.  Seymour claimed that MBIE’s advice to the Government is that a living wage would reduce the number of available jobs by 30,000.  This is as fantastical as his advocating for a $50 an hour minimum wage.  It is very clear that our economic woes are not caused by working people getting paid too much but by them not being paid enough.

And Seymour’s argument is a logical fallacy, arguing that a reasonable increase is bad because we cannot afford a dramatic increase.

But if Seymour is saying that if we can persuade ACT that trickle down economics is not working they will change their view on the living wage I for one am up to that challenge.

75 comments on “Comrade David signals radical rewrite of Act’s living wage policy ”

  1. Tiger Mountain 1

    Moving to higher wages is an economic argument that needs to be had–illiteracy levels on wages/prices are certainly high on social media!

    Also it is a queasy feeling indeed, for someone on MP (party leader) wages and perks to be lecturing the low paid on how they should live.

  2. Nic the NZer 2

    David claims that empirical evidence suggests increases in the minimum wage restrict employment. This is completely untrue it often suggests quite the contrary.

    https://larspsyll.wordpress.com/2020/10/28/is-economics-value-free

    • RedLogix 2.1

      I accept the argument you are making, but clearly while a zero minimum wage is not desirable, and a very high one (as Seymour was effectively saying) is impractical, there must be some optimum in between.

      Do we know what that optimum minimum wage might be? Has anyone done any good work on this?

      • Ad 2.1.1

        I present to you: the MONIAC and the Philipps curve for wages

        https://blog.elearneconomics.com/tag/phillips-curve/

        Unfortunately that one analysed data for money wages agaiist he rate of unemployment over the period 1862-1958.

        https://www.rbnz.govt.nz/research-and-publications/fact-sheets-and-guides/factsheet-bill-phillips-and-the-moniac

        Making the money flow … as a form on fluid mechanics, from our own Reserve Bank (back in the day)…

        If anyone has a model for our recent era I would be all ears.

        For example New Zealand's own relationship between government wage subsidies and our current and forecast levels of unemployment. Maybe the Au RB is doing something on this relationship for them that might be applicable here?

        https://www.rbnz.govt.nz/research-and-publications/videos/making-money-flow-the-moniac

        • RedLogix 2.1.1.1

          Yup the MONIAC is a greatly underrated bit of kiwi history; well known in some geeky circles but hardly at all outside of it. It was remarkable for at least two reasons; the most important being that for the first time ever it treated the flow of money in an economy using dynamic methods, or more specifically it was necessary to solve differential equations in order to solve the models. The second because such equations were usually impossible to solve in a practical fashion before digital computers were invented, Phillips devised this amazing analog computer for the purpose. From the fact sheet linked above:

          – MONIAC has some claim to being the world’s first econometric computer. It could carry out calculations unable to be performed by any other computer at the time, and while other machines of its era used cogs, gears and sometimes Meccano parts, the MONIAC used water to model flows of money in a macro-economy. The linkages were based on Keynesian and classical economic principles, with various tanks representing households, business, government, exporting and importing sectors of the economy. Water pumped around the system could be measured as income, spending and GDP. The system was programmable, and experiments with fiscal policy, monetary policy and exchange rates could be carried out

          Now I'm thinking about it, the next economist to really put dynamics at the heart of his work is Steven Keen. In recent years he's been plugging away at developing an economic simulation called MINSKY that's based on similar ideas to Phillip's machine. But is of course far more flexible.

          As to whether he's done any work explicitly with minimum wages is something I don't know at this moment, but I'll do some homework.

          The interesting thought that arises here is that maybe determining an optimum minimum wage is not purely solvable in economic terms only. Maybe there will always be a social/political dimension to it.

      • Nic the NZer 2.1.2

        I think there is simply no one right answer. If there is an optimum then it differs between countries and over time. Ultimately it looks like a political issue.

        I am pretty confident that society can determine that only a higher minimum wage is socially acceptable and that putting this into practice makes it so.

        I would say MBIE should consider what is happening to see if minimum wage increases are having a down side in practice. But David Seymore is saying we can determine this premaface and thats untrue. Its largely untrue in pure theory terms in fact.

        • RedLogix 2.1.2.1

          In an ideal labour market there would be no requirement for a minimum wage if labour supply and demand were both elastic and efficient, but in reality it is neither.

          But economic theory alone may not be all that helpful here, for the simple reason that the models may simply not care if the minimum wage was zero. Now of course that's undesirable socially, but the current theory may simply not be sensitive to this concern.

          There would however be a much stronger economic case if we could argue for a minimum wage that was sufficiently high to mitigate the non-ideal character of the labour market. How to go about this is … well beyond my pay grade 🙂

          On the other hand if we set the minimum wage to some arbitrarily high value, this would be highly inflationary. Which indirectly is what Seymour is getting at.

          So we can set some boundaries, high enough to overcome the social consequences on the bottom end of an inefficient and inelastic labour market, and low enough to avoid excessive inflation that impacts everyone. Assuming these two numbers are sufficiently far apart, say $10ph at the low end and $25 ph at the high end (just to put some numbers on this), then it really falls into the political domain to put determine the value everyone can live with.

          But I’m open to suggestion here; what’s the obvious next question?

          • Gyrogearloose 2.1.2.1.1

            By coincidence last night I was watching speeches by Milton Friedman. ( won a Nobel prize for economics)

            His take on inflation is that it is the result of increasing the money supply faster than the growth in goods, and nothing else.

            He addressed the claim that strong unions pushing up wages was the cause of inflation ( a claim that was aparently made by anti union people)

            Showed data from around the world to show it is not linked to strong unions pushing up the wages.

            • Nic the NZer 2.1.2.1.1.1

              You should note that Milton Friedmans theory that inflation is a purely a monetary phenomena was widely tested during the late 1970s and early 1980s. The idea was to control (target) the amount of money to control inflation rates. At this point it completely fell appart when it turned out that the central banks involved could not actually influence the amount of broad money in circulation.

              You can look up Monetarism to review the history of this. Even govts like the Thatcher one which called themselves Monetarist before trying it didn't want to be associated with it after trying. In the case of the UK it became toxic when the policy was understood to have chewed up their manufacturing and export sectors.

              I believe every one of Milton Friedmans theories has been discredited by now.

              • Gyrogearloose

                Had a look and did not find much to support your claim.

                What I suppose his big win was

                Investopedia article in 2019

                "To the extent that Keynes was seen as an enemy of laissez faire, Freidman was the new face of free markets. Freidman won a major intellectual victory after 3 decades of keyensian policies ended in stagflation in the late 1970's, something establishment Kenesians generally thought was impossible "

                But that was some time ago…

                The Economic Times nov13 2017 article "View:Inflation is not always a monetry phenomenon "

                Starts of saying he was wron on this because of post 2008 events as govts printed like crazy and got no inflatoon, but then wandered of going on about relationship beteen inflation and unemployment and the deflationary effects of tech and uber etc.

                On why govts printing money during the GFC , i recall two camps in the sites I followed, one high inflation , the other saying no inflation because of the way the FED was printing and stuffing the money. That one turned out to be right….

                Another page says 'shown not to be true during recessions'

                Another on the link but only showed dat to 2013, and noted 'big increase in m1 an so with the 18moth lag we can expect either inflation or an asset bubble'…… I think off hand we got an asset bubble…

                While looking on you claim, I saw an interesting thought of his

                "The valuable political power of government force creates an incentive for the wealthy and devious to misuse it"

                If you look at the huge lobby industry, thousands of lobiests in DC all earning fat salaries working to get govt to write laws that profit the people paying the lobbyists.

                Freidman was absolutely bang on there!

                It seems the left hate him as he is a free market guy.

                But they need to look deeper….. like his thoughs on govt above.

                He is against big govt, and look at what big govt got us.

                Wall street owns the govt.

                Bail outs and bonuses for them. Debts for the people. ( and both dems and reps act the same )

                • Gyrogearloose

                  Aditional thought on the article with data to 2013 that ended up saying "expect either inflation or an asset bubble"

                  Inflation excludes house prices and othet assests…….

                  So if you expand the money supply and it goes into an asset bubble, it is logical you do not see inflation as you don't measure it!

                  • Phil

                    Inflation excludes house prices and other assets

                    Not true. CPI includes cost of new builds, the cost of rental, plus all of the associated costs of property purchase (legal fees, RE agents etc). Also includes other assets like durable consumer goods, motor vehicles etc.

                    It doesn't include the price of a pre-existing dwelling being sold between two individuals. Why? Because that's a transaction between two households and doesn't directly impact how consumers transact with other sectors of the economy in aggregate.

                • Nic the NZer

                  Here is a discussion of this period with further links

                  https://www.nakedcapitalism.com/2012/07/philip-pilkington-the-new-monetarism-part-i-the-british-experience.html

                  Monetarism was roundly rejected when Central Banks reverted to interest rate targeting. Thats a rejection of quantity targets as the central bank stands ready to sell whatever quantity is purchased at their policy rate.

                  • Gyrogearloose

                    Interesting how differently the author of you link (Philip) describes the Thatcher years vs Wiki page

                    Wiki " by the time of the May 1979 general election, stood at 15.4%.[citation needed] Thatcher implemented monetarism as the weapon in her battle against inflation, and succeeded at reducing it to 4.6% by 1983 "

                    vs

                    Philip " Nevertheless, despite the fact that the experiment was a complete failure, the Thatcher government… "

                    but there seems to be some problems in Philips article I have yet to resolve.

                    Philip " Traditionally central banks use interest rate policy to regulate the level of demand and hence inflation in the economy. ………..The monetarists claimed that the British government need no longer use straightforward interest rate targeting to get inflation under control. Instead they would simply target the supply of money and let interest rates fall where they may. "

                    So up until some time unstated in the article, they were using interest rate policy, with several years of severe inflation which was rarely below the 10% by the time Thatcher won.

                    As I piece it together, interest rate policy was used until Thatcher came in, and then switched to following Friedman's theory. When she took over inflation was 15.4%. and by 1983 it was 4.3.

                    Philips " through the massive recession that the monetarist policies had induced" blames the policy for the recession, without showing how it was not caused by the price of crude going up five fold.

                    Imagine if petrol jumped to $10 per liter, instant recession…

                    wiki and Philips, two quite contrasting takes on the Thatcher era.

                    More digging required….

                    • Nic the NZer

                      If you watch the linked video you will see plenty of people who were responsible being interviewed. But the main point is they were trying to use quantity of money targets at the central bank and that failed to limit broad money growth which kills off Friedmans central monetarist thesis.

                    • Gyrogearloose

                      For some reason your post below ending " which kills off Friedmans central monetarist thesis. " has no reply button…

                      Mulled over and looked at more pages.

                      Couple of thoughts, apparently there had been several years of the conventional controls not working, with inflation climbing to 15.4% by the Thatcher got in and tried monetarist method. Given the sever oil shocks, saying either system was wrong by looking at that period is not a call I am comfortable with.

                      If monetarist policies failed it did so after interest rate method had failed too.

                      But to Judge either through the sever oil price shocks is a risky call to make.

                      In looking at other sites on this subject leaning both ways, a very dry subject mostly, the Philips article you linked to came across as having an idealogical axe to grind.

                      From what I can see, with some dry analysis pages concluding "

                      we now see why Milton Friedman was correct when he said that "Inflation is always and everywhere a monetary phenomenon."

                      and other sites equally dry analysis finding the opposite.

                      However the Austrians' also see inflation as result of an increase of money supply and credit, but disagree with Friedman in this article about what to do about it and its effects.

                      " However, it is overlooked by the distinguished professor that fixing the money supply's rate of growth does not alter the fact that money supply continues to expand. This, in turn, means that it will continue the diversion of resources from wealth producers to non-wealth producers even if prices of goods will stay stable. In short, the policy of stabilizing prices is likely to generate more instability. "

                      The first video on your Philips article, near the end they decided to cut Govt spending, funny that is what happened in the 'forgotten ' depression of 1920, where GNP declined 17 percent. 3 quotes from that page.

                      " Instead of "fiscal stimulus," Harding cut the government's budget nearly in half between 1920 and 1922. The rest of Harding's approach was equally laissez-faire. Tax rates were slashed for all income groups. The national debt was reduced by one-third. "

                      " By the late summer of 1921, signs of recovery were already visible. The following year, unemployment was back down to 6.7 percent and it was only 2.4 percent by 1923 "

                      "Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that "government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed.""

                    • Nic the NZer []

                      Regardless of the debates about the best policy to address various recessions, these are beside the point.

                      The point is Friedman made a (supposedly scientific) causal argument that inflation is a purely monetary phenomenon with inflation reflecting changes in that quantity. But this was not true of the institutions in practice (and if you know how bank credit expansion works its obvious).

                      In fact if you have followed this episode in the UK you will find that James Calahan (Labour) introduced it with a claim that the inflation came from UK govt spending and not from a political protest by OPEC to hike oil prices. But as you said OPECs protest was a cause and had nothing to do with UK monetary (or fiscal) policy.

              • Tricledrown

                Nice the NZer what hard evidence do you have to back your claims.

                Keynsian economic policy works well in times of recession's as everyone is scared to invest or spend.

                When economies are growing rapidly it can add to inflation.

                Austerity the opposite of Keysian policy has not worked in any economy.

                • Nic the NZer

                  First, please restate what you think I am claiming, because I am doubting that I have claimed these things to be fact.

            • Phillip ure 2.1.2.1.1.2

              Yeah..and obama got a nobel peace prize..then engaged in regime change..etc etc..friedman's nobel is up there with obamas'..a sick joke..

              • Tricledrown

                Philip Freidman was part of a huge propaganda machine pushing business knows best it was an anti communist/socialist set up during the cold war ,fake news Chicago school of economics right wing spin machine.

          • Nic the NZer 2.1.2.1.2

            I don't think economic theory has anything to say here.

            An efficient market is one where all buyers and sellers get what they want. Its an outcome not a policy regime. In the case of the jobs market all sellers getting what they want means full employment. Since this is not an outcome generated by operating a jobs market it should not dictate the laws and regulations by which employment works. There is also the obvious issue that this outcome is supposedly being generated by flexible wage rates but employment contracts are in no way similar to flexible price markets.

            No, in practice its about the institutions and practices around employment and on that basis its quite reasonable for the govt to say you can't employ anybody for less than an acceptable wage.

            • Gyrogearloose 2.1.2.1.2.1

              A friend has 2 autistic children. Unemployable in the conventional sense.

              Tried to get them work but paid on a piece rate so the employer not disadvantaged.

              He wanted to do this to improve their mental heath by getting them doing something productive.

              But employer can't because of min wage law.

              Odd case, but an unintended consequence of govt policy.

              Unless anyone knows a legal workaround…

              • Descendant Of Smith

                Minimum wage exemption

                https://www.employment.govt.nz/hours-and-wages/pay/minimum-wage/minimum-wage-exemptions/#:~:text=Labour%20Inspectors%20will%20issue%20a,the%20rate%20of%20pay%20offered.

                Difficulty I have with this is that I've seen it abused too often e.g. receptionist for IHC carrying out full reception role from greeting people, directing them, answering phone freeing up full-paid staff to do other work. She should have been paid the same, wife once worked for a firm and part of her job was to assess the productivity of the staff. She fairly assessed some as having better productivity than their pay rates. This wasn't acceptable to management so they destroyed they, got an unskilled person to do the assessment where no-one changed from the low amounts they were on and had it signed off by a local labour inspector who was an ex-employee of the organisation.

                Now we know that wage rates are not really linked anymore to productivity – certainly since the mid-80's so I'm not sure why we would pretend otherwise for those with disabilities.

                I can't see why they simply can't be linked to dignity and see no reason why disabled people, including those with significant disabilities, can't simply be paid the same rate as anyone else in any work place.

                Sheltered type workplaces are really just institutionalisation.

                • Gyrogearloose

                  My friend says thanks for the link.

                • greywarshark

                  If there is a sort of co-operative then all would believe it fair and work to be a good little co-op, taking prid, and it would be aimed at selling at reasonable prices, and covering reasonable costs. The wages for some disabled might accept they would be low producers but pay their basic costs plus some spending money. They would have accommodation, a job with others where they were happy most of the time, and some spending money. What would be wrong with that for very disabled? Or there could be bonuses for output set at a personal level of achievement, where there was repetition or measurable out comes etc. That would be on top of a rate that was sufficient for needs + discretionary spending.

    • Phil 2.2

      David claims that empirical evidence suggests increases in the minimum wage restrict employment. This is completely untrue it often suggests quite the contrary.

      David is wrong, but for broadly correct reasons. The link you post to is right, but for the wrong reasons (the back-ward sloping supply curve comment is just nonsensical).

      Setting a minimum price achieves its outcome only if the price is set above the supply-demand equilibrium. All the evidence we have from around the world is that minimum wage levels are often set well below the equilibrium level, so they are not especially effective and nor do they have noticeable impacts on unemployment.

      • Nic the NZer 2.2.1

        A backward sloping supply curve makes perfect sense. Its just another way of saying if you pay your workforce well then they can recycle their income back to your business (Henry Ford said it better than I have).

        And if you want to argue that supply and demand equilibrium analysis is relevant, how do you account for most firms being quantity (not price) flexible. If they prefer to cut hours or lay people off in response to demand shortfall (rather than cutting wages) then any adjustment to wage rates is not drawing the wage market towards equilibrium anyway.

        • Phil 2.2.1.1

          A backward sloping supply curve makes perfect sense.

          A backward sloping supply curve means "As the price of X goes up, I choose to supply less of X to the market". There are an limited number of empirical examples of markets with backward sloping supply curves that have been identified and they're all things like high-fashion handbags or extremely highly paid consultants. I can assure you there is nothing about the minimum wage labour market for which a backward sloping supply curve is relevant or sensible.

          …another way of saying if you pay your workforce well then they can recycle their income back to your business (Henry Ford said it better than I have).

          That's not a description of supply. That's a description of demand.

          how do you account for most firms being quantity (not price) flexible. If they prefer to cut hours or lay people off in response to demand shortfall (rather than cutting wages)

          Two words: sticky wages. If demand falls in an environment where you can't cut the price of your inputs, the rational response is to reduce supply. Demand and supply curves both move left, price stays roughly the same but output falls. An entirely conventional and well-understood Labour market dynamic.

          • Nic the NZer 2.2.1.1.1

            However, we are discussing an aggregate market. In this case one participants income is anothers cost. The macro economic impact of this is, even if all individual participants have downward sloping supply curves in aggregate the market supply curve can be any shape at all.

            I missed out this because you seemed more or less aware of the underlying theory.

            Of course the point about if firms are price or quantity adjusters is that equilibrium is only a relevant concept if they are price adjusters. To me the relevant facts seem to be, if minimum wages were lower many employees would earn less and this would be unfair in many of those cases.

            • Phil 2.2.1.1.1.1

              The macro economic impact of this is, even if all individual participants have downward sloping supply curves in aggregate the market supply curve can be any shape at all

              While that's mathematically true, there's no empirical evidence that the labour market works like that. There is however, plenty of evidence that the supply of labour behaves entirely conventionally in an upward-sloping supply curve sense.

              Of course the point about if firms are price or quantity adjusters is that equilibrium is only a relevant concept if they are price adjusters.

              This is simply an incorrect representation of what equilibrium is in a market and how it can be reached. The entire field of study into how small export nations like NZ respond to global price/demand changes (i.e. "price takers") cover this.

              To me the relevant facts seem to be, if minimum wages were lower many employees would earn less and this would be unfair in many of those cases.

              Here I sort of agree with you. The field of economics is very good at identifying what is 'optimal' but struggles with what is 'fair'. However, only 2.3% of US workers earn at or below the minimum wage (BLS, March 2018) so it's hard to say how the market generally would respond to a situation where the minimum wage was lower or abolished. What we can be confident of is that the individuals hurt the most by that kind of change would be low-wage and/or unskilled workers, and that would definitely be a bad thing for society.

  3. mikesh 3

    Introducing a $50.00 per hour minimum wage is a great idea. However, to make it affordable, we would have to considerably reduce the multi million dollar salaries that many company CEOs "earn".

  4. weka 4

    Lol. What is Seymour's salary again?

    • Sacha 4.1

      Not good value.

    • Tricledrown 4.2

      You would think Seymour would be happy to see minimum wages increase.

      As it would mean good employers wouldn't have to top up bad employers with working for families accommodation top up ups etc.

      Seymour during Covid was making wild claims about unemployment hitting 13% debt blowing out to astronomical levels he was advocating Austerity to minimize damage to the economy.

      Only the UK is partially following his dumb Austerity policy .Look at the mess the UK is in when you lower your economic out put by Austerity you have a much higher mountain to climb to return to the previous levels of economic activity.

      Grant Robertson has got most things right including going hard and early with the refinancing our economy.

      Boris Johnston is taking the UK down adding Brexit to the mix the UK economy is in a worse place than Thatcher's nightmare.

      Now the UK has decided to late to try Keysian policy ,but their levels of debt are already extremely high because of the damage of Brexit the Tories haven't got enough money left to reprime their faltering economy because they are constricted by their own straight jacket of Austerity.

  5. Pat 5

    The Government is under pressure and Seymour is grabbing every opportunity to add to it…the validity of the argument is of no importance to him

  6. AB 6

    My doctor said 10mg/daily of amlodipine will control your hypertension. I said – "why not a kilogram daily? That would be even better!" He told me I was an idiot and asked if I was an ACT voter.

  7. Ad 7

    David Seymour is doing everything he can to be Jim Anderton and the Alliance for the right: he's going for 20% vote share in just 3 years from now.

    And if he keeps this up he may well get it.

    • greywarshark 7.1

      There are good lines in this speech from Jim Anderton of 2000. He should bone up on them, they sounded good then and can be recycled to a hopeful and trusting populace.

      https://www.scoop.co.nz/stories/PA0003
      /S00156.htm

      Jim Anderton Speech: New partners, new directions
      Friday, 10 March 2000, 10:54 am
      Speech: New Zealand Government

      …The missing ingredient in intiatives that have unfolded around New Zealand has been central government. There are some unique contributions that only central government can make.

      When I announced the establishment of the Ministry of Economic Development and Industry New Zealand, I said the era of ‘hands-off’ for central government is over.
      I make no apology for saying that a new era is beginning. It’s an era of genuine partnership.

      The objective of the Government’s economic development programme is to provide increased opportunities for employment and rising incomes for all New Zealanders, no matter where they live…

      …We need to combine well-judged public investment in education, infrastructure and science and technology with creative private sector investment focused not just on adopting technologies already available but on continuously creating new products, processes and designs…
      Universities receive only 18% of public sector funding for R&D, compared with an OECD average of 27%, even though they are internationally recognised as hotbeds of innovation and new business formation. ..

      Better jobs and higher incomes are crucially linked to the development of skills.
      Innovation and investment cannot occur without a well-educated population, equipped with a high level of industry-specific training….

    • Tricledrown 7.2

      Seymour's pretty face is more appealing to National voters than scary movie Collins add in tax cuts for the rich and cutting govt spending he will keep stealing votes off National making it harder for National to appeal to the Centerist vote National need a new leader who can keep ACT's tails from wagging it.

  8. Henry Filth 8

    A view from The Economist.

    Probably not what dear David would expect. . .

    https://www.economist.com/schools-brief/2020/08/13/what-harm-do-minimum-wages-do

    • Tricledrown 8.1

      Henry Filth I wouldn't put to much trust in the economist's (News Corp/ Murdoch)opinion using outdated evidence.

      The OECD did research on the economy of every state in the US and found those states with the highest minimum wages have the least unemployment and highest economic growth.

  9. vto 9

    I'm in business and have been for some decades now. It is better, far better, for my business if the lower rungs of society are strong and prosperous, as I have many buyers. It is absolutely no good if they are weak and struggling, because I just dont have as many buyers.

    Push the wealth down and society strengthens and prospers…

    Push the wealth up and society weakens and fails…

    Lordy know why so many business people are blind to the benefits of a strong and prosperous society… methinks they don't think

    • RedLogix 9.1

      Yes. My partner was in a retail business when Ruth Richardson's 'motherfucker of all budgets' was introduced. She still recalls the immediate and sustained drop in turnover that happened as a direct consequence.

      • Descendant Of Smith 9.1.1

        Yep. I recall 50-60 local businesses vanishing within six months. Most long established small businesses who looked after their few staff and who had a loyal customer base.

        What replaced them – the expansion of corporate businesses, franchises paying minimum wage, $2-00 shops, liquor stores or nothing at all.

        People and communities became worse off.

        And what people didn't get was how much money was being sucked out of the local economies that was then extracted via high executive salaries and overseas profits.

        Locals were now working and spending their money for it to go out of the local economy.

        Weekend trading had the same effect – benefitted the chains, franchises and the corporates. I miss for instance the weekly chats I used to have with the owner operator wine merchant – an ideal business for a man who was gay and could not get a job elsewhere in the small-minded city in the 1980's. Supermarket wine sales killed that business but we did enjoy drinking some of the more expensive wine at the end.

  10. AUSTRINGER 10

    No longer a living wage, just a tattoo, known wage, for those that do not speak to their employer without permission, or speak through a Union, further the tattoo shall have embedded code that lets us know about your disregard for our card carrying welfare point social care program.

  11. Gyrogearloose 11

    Seatle has done the experiment.

    The city funded a study ( link is to The Seatle Times report on study. Link to pdf of the study is in the article )

    Quote from the article

    ""The city’s escalating minimum wage has meant a slight increase in pay among workers earning up to $19 per hour, but the hours worked in such jobs have shrunk, a study commissioned by the city found. It estimates there would be 5,000 more such jobs without the Seattle law.

    Seattle’s minimum-wage law is boosting wages for a range of low-paid workers, but the law is causing those workers as a group to lose hours, and it’s also costing jobs, according to the latest study on the measure passed by the City Council in 2014.

    The report, by members of the University of""

    There are criticisms of the study due to it not including some classes of workers.

    • Ad 11.1

      Has that study shown that the lower-quality menial jobs decreased as a whole as a result, or that they stayed the same?

      • Gyrogearloose 11.1.1

        Ha. Your question showed up after made my post #11

        Without re reading for specifics, I recall it claimed a drop in the number of lower skill requirement jobs.

        • Ad 11.1.1.1

          What we are seeing is the burning-off of those floating globalists in seasonal jobs.

          That's a great start.

          Then we can start to see more of our people who have low skills absorbed into those jobs, and keep our unemployment as low as possible.

          I would hope to see we then start to see more of those crap jobs replaced by agricultural automation.

          • AUSTRINGER 11.1.1.1.1

            So a job at any cost,labour exploit dignity in work, ok if i can use the social caring amenities, non of them on site, carry on working.

  12. Gyrogearloose 12

    I had looked at a number of articles on this a couple of months ago.

    One consistant theme I recall was it hurts the lower skilled people as employers become more selective.

    • The Al1en 12.1

      So there would be more money available in the tax pool to pay more to the passed over unemployed.

      Nice socialist thinking there, I like it. Well done, comrade. yes

  13. Sabine 13

    ahh, Comrade Hologram is bitten by the same bug that has bitten the Labour party.

    Namely the harebrained idea that one can eliminate poverty by raising wages alone, while ignoring cost of living, healthcare, commute etc.

    So Holograms wage would be 100.000 a year, and rent for a moldy unheated truly kiwi flat would be then 90.000 a year. And people still go to the foodbank for a hand out ask for the accommodation benefit.

    Just shows that all our suits are empty and devoid of ideas. Mind, he ain't the leader of our fair country, but i guess its easier laughing about the Hologram then the Prime Minister who is really now known for doing fuck all in regards to high cost of housing, food, electricity, communications, and stuff.

    Who really cares? Neither him, nor her, after all they got theirs.

    • Gyrogearloose 13.1

      To try to eliminate poverty by simply raising the minimum wage and welfare payments has a cost. The money comes from somewhere.

      It is like the govt forcing interest rates down to stimulaye the economy.( yes l know, the reserve bank does it, but in the end who controls the reserve bank…)

      People with mortgages have more to spend, but where did that money come from???

      A good portion came straight out of retired peoples pockets, as deposit rates drop on their savings. So they have to spend less….

      The poor of today are better off than the middle class of days gone by.

      This was a consequence of people saving and investing in building more houses, businesses etc building up the total capital stock of the country.

      Every extra dollar that is given to say beneficiaries does give them more ti spend, and it is likely that it will be spent on consumption than saving to invest.

      Chances are that that dollar was taken from someone that was in a position to invest it, increasing the capital stock of the country, and hereby increasing the total wealth of thd country.

      From a purely economic perspective, I think any shifting of money from the rich to the poor will have an overall negative impact on the overall wealth of the nstion

      However from a social viewpoint, there are serious social downsides to not having a social welfare net.

      So this issue is not one for economists, but purely a moral issue.

      I have no problem having a chunk of my tax going to support the less fortunate or less able, or even to the deliberatly lazy who choose to not work.

      The only question is what standard of living are we as a society prepared to give them.

      Push taxes on the rich too high and they leave…. that is the lessons from history

      Push the standard of living of the poor a lot higher works for a while but the long term effects kick in.

      Think Venezuela….. possibly a clasic example

      Oil rich country, largest oil reserves in the world enacted lots of policies to lift the poor out of poverty. Worked for a while but gone broke…

      • Drowsy M. Kram 13.1.1

        The poor of today are better off than the middle class of days gone by.

        Were "the middle class of days gone by" encumbered by debt equivalent to the average $26,000 per person enjoyed by the 'bottom' 10% of today's NZers? Such debt must be crippling both financially and psychologically – maybe families ‘adapt‘ to it?

        The bottom 10 percent has a collective $13 billion of debt. The top 10 percent has $800 billion in wealth – more than the other 90 percent combined. [14 Oct 2020]
        https://www.newshub.co.nz/home/money/2020/10/revealed-how-your-wealth-ranks-compared-to-other-new-zealanders.html

      • greywarshark 13.1.2

        edit
        Loose gears I think. Had your WOF? Money is made on the hoof, it does not have to be eked out of old age pensions with a can-piercer. However it must be made judiciously, and in this country that means with a legal right to charge up to a huge amount of interest – that is to poor people who are a huge risk. The banks are stabilised with low interest rates, and we hope the borrowers pay all their taxes , other bills and subbies where appropriate. You GLG are quoting school lessons and National cant.

        • Gyrogearloose 13.1.2.1

          All gears smashed to pieces as they clashed trying to work out what you were trying to say….

  14. ken 14

    How about a maximum salary?

    No more than ten times the lowest paid worker in the company.

    • Gyrogearloose 14.1

      Bit torn on max wage….

      On one hand, I have been exposed to a few high paid "proressional" directors and generally their primary skill was the ability to convince people that the dog turd they scooped up off the pavement is actually caviar….

      And saw an article recently that looked at the track record of 19 top ranked high flying grads tof top business school that got fast tracked to CEO,s. Within a few years 14 of the companies had turned to shit…

      So no real loss

      On the other hand, the truely competent will be syphoned off to other countries.

      A country loosing its most skilled and productive workers will struggle.

      The west has been doing this to third world countries,

      Just look at our immigration policies, you are alowed to become a citizen if you are highly skilled.

      Low skilled workers alowed in for the season then back out. They pay taxes here, in effect contributing to the super fund they will never see any of.

    • Pierre 14.2

      Lenin proposed a 6:1 wage differential across the Soviet Union in the early 1920s. A ratio of 10:1 within companies a century later would be a reasonable demand.

  15. Jackel 15

    A minimum wage should gradually nudge an economy towards producing more higher end goods and services. Which I would have thought would have been a good thing in terms of greater wealth and a natural progression for an advanced economy like NZ.

    I wonder if many employers realise that they are selling to people just like their own employees. Perhaps they should think more about investing in their employees rather than seeing them purely as a cost.

    I've always been a bit suspicious that the Act libertarians are really closet lefties hiding out on the further right. Seymour at least here seems to confirm that view.

    Many things that work in practice often don't work in theory.

    • Maurice 15.1

      Henry Ford was well aware of that paradigm way back when making Model T cars … "modern" capitalists seem to have forgotten that truth.

      Seymour does seem to resonate with a growing number of ALL persuasions

      • Pierre 15.1.1

        I love that response to the automation of labour:

        Henry, how are you going to get [these robots] to buy your cars?

        Try as it might, capital can never break free from the working class.

  16. Stuart Munro 16

    I'm sure we all hope Seymour had a great gazpacho soup day yesterday. Never forget.

  17. Duncan 17

    This is the reason Roger Waters wrote the lyrics for Pink Floyd's Dark Side of the Moon.

    It was a warning, about people like Seymour.

    How quickly we forget.

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