National’s excuse for illegally* failing to complete the annual review of the minimum wage is that it wants to ensure any increase doesn’t cost jobs.
So, it seems pertanent to ask, does raising the minimum wage result in job losses?
Every year, the Department of Labour, presents the Minister with a regulatory impact statement with a set of options for the minimum wage, including a prefered option. Here’s what the last one says about the employment consequences of the different options:
No change: No loss of jobs
Match inflation: No loss of jobs.
30 cent per hour increase above inflation: 300-1400 jobs lost, 0.015%-0.065% of the workforce. Small as those numbers are, they’re also just theortical. In practice, it’s impossible to separate any job loss from such an increase from other varibles. We can’t actually prove that any jobs are lost from a marginal increase.
Yeah, if you were going to increase the minimum wage to 30 bucks an hour it would cost a lot of jobs but no-one is talking to kind of increase. The DoL reckons even a large increase of $3 an hour to $15, as proposed by the Greens and Labour’s Trevor Mallard, would cost as few as 2,500 jobs.
Put that in context, the rise to $12 directly increased the incomes of 120,000 people and many more got increases to maintain their jobs’ margin above the minimum wage. An increase to $15 would directly boost the pay of 450,000 – nearly a quarter of the workforce.
So, remember when National says it’s protecting jobs by keeping the minimum wage increase small, they’re doing no such thing. And, also remember that National campaigned on turning us into a higher wage economy.
*[s5(1) of the Minimum Wage Act 1983 reads: “The Minister of Labour shall, in each year ending on the 31st day of December, review [the minimum wage]”. Kate Wilkinson failed to do so. Anyone feel like playing Fitzgerald to her Muldoon?]