The response to two recent posts here at The Standard (yesterday, and the day before) have shown what a contentious topic the minimum wage is. So it’s timely that yesterday also saw the release of the CTU’s summary of research on Minimum Wage and Jobs:
Minimum Wage and Jobs – CTU Releases Research Summary
The CTU has released a research summary showing the relationship between increases in the minimum wage and jobs.
Bill Rosenberg said “a major study by Dean Hyslop and Steve Stillman looking at the effect of increases of between 41 percent and 69 percent in the youth minimum wage in New Zealand was done in 2007. It found ‘no robust evidence of adverse effects on youth employment or hours worked’ and in fact, showed there was an increase in hours worked for 16 and 17 year old workers.”
“Before those increases came into effect Business NZ warned that for every 10 percent increase in the minimum wage, there could be up to 4 percent fall in employment. But this was shown to be completely wrong.”
Bill Rosenberg said “employment growth appears to be much more strongly related to overall economic conditions than to a particular issue such as the minimum wage. This is what the evidence shows and it would help this debate if the Government and business lobbyists acknowledged that.”
Alas, this government is not interested in evidence or facts. Nor is it interested in the welfare of workers, as the next topic addressed by the CTU press release reminds us:
“Similarly’ said Rosenberg, “when this Government first introduced the law allowing small businesses to sack workers with no right of appeal in the first 90 days of employment, the Minister of Labour said (11th December 2008) ‘the 90-day trial will provide real opportunities for people at the margins of the labour market’ and she said that included young people and the long term unemployed.”
“In fact youth unemployment has gone up since then from 17.9 percent to 27.4 percent and the number of long term unemployed has gone up from 19,200 to 40,200 people.”
See also the recent accounts of how desperate people are for work in National’s failed economy.
It’s well worth reading the full report itself (PDF). Note especially the American study by Dube, Lester and Reich, and the meta-regression analysis Hristos, Doucouliagos and Stanley. In the New Zealand context see Hyslop and Stillman, who “found that a 69 per cent increase in the minimum wage for 18 and 19-year-olds in 2001 and a 41 per cent increase in the minimum wage for 16 and 17-year-olds over a two year period had no adverse effects on youth employment or hours worked”.
The depressing part is that it doesn’t matter how often the political Left shows that the ideas of the Right are wrong or misguided. The political Right cling to their delusions with the blinkered conviction of religious zeal. Tax cuts grow the economy! Except that they don’t. The right response to a tough economy is to cut government spending! No it isn’t. Raising wages raises unemployment! Except that it doesn’t. Round and round and round we go…