Kiwis back fairer minimum wage

Written By: - Date published: 11:35 am, January 18th, 2010 - 130 comments
Categories: employment, minimum wage, workers' rights - Tags:

Traditionally, the minimum wage was set at around 60-67% of the average wage. During the Muldoon era and the 1990s, National let the minimum wage stagnate, with inflation eating away at its value. It declined to as low as 34% of the average wage under Muldoon and 41% under Bolger. Both the 4th and 5th Labour governments moved (too) gradually to restore the level of the minimum wage. When Helen Clark left office it was back up to 51%. Since then, National let it fall to 50% with the smallest increase in years.
Kiwis don’t think that is good enough. An overwhelming 61% of people in a large (2,300 person) survey conducted by the Herald favour immediately lifting the minimum wage $15 an hour from its current $12.50. That would restore the minimum wage to 60% of the average wage.
Now, I can anticipate the Right’s petty objections already. They claim the minimum wage increases unemployment. Turns out that is just another of those rightwing myths with no basis in fact.
The truth of the matter is the Right wants wages for working New Zealanders to fall because lower wages = bigger profits – in the short-term, at least. But when did capitalism ever concern itself with the long-term? Holding down the minimum wage not only cuts the incomes and living standards of the 100,000 plus people who earn the minimum wage, it also holds back wage increases for hundreds of thousands more low-paid workers whose jobs pay just above the minimum wage. That hurts families, it hurts the country, and, ultimately, it hurts businesses because they fail to invest in training and capital when labour is cheap.
Perhaps, I’ve got it all wrong. Perhaps John Key really didn’t mean it when he said he “would love to see wages drop“. Perhaps he will listen to the vast majority of New Zealanders who want a $15 an hour minimum wage. I really hope he will listen to the country on this one. It would improve the lives of hundreds of thousands of families far more than any upper-class tax cut ever could. But, given his record on wages so far, I won’t be holding my breath.

130 comments on “Kiwis back fairer minimum wage”

  1. Peter Johns 1

    Bit of a stacked poll I think.
    Surely Labour should have got it to $15/PH when they were in power & the economy was in better shape. After all they are the workers party.

    What would this do for inflation and interest rates if productivity did not increase? I am sure Marty G will know.

    How will we pay for the higher unemployment?

    What would more skilled people on $15PH want, to stay the same, no way, they would want a 20% increase as well to $18PH.

    How do you destroy an economy that is still fragile after the worst world recession in 70 years? Get a 20% rise in the min wage & don’t expect productivity gains.

    • Bright Red 1.1

      How is it a stacked poll?

      And what evidence do you have that this would increase unemployment, considering that raising the minimum wage has never hurt unemployment in the past?

      “Surely Labour should have got it to $15/PH when they were in power & the economy was in better shape. After all they are the workers party.”

      pure dumbassness. You are against a 415 minimum wage but you blame Labour for not having done it.

      Politics is progressive. Labour increased the minimum wage from $7 an hour to $12 in 9 years, a 71% increase. They increased it a lot and rapidly but that doesn’t mean the job was done. It never can be when there is inflation to contend with.

      • Peter Johns 1.1.1

        Labour increased it 71% over 9 years, under 10% PA, so you expect National to increase it 20% in 1 year and in a very tight bussiness environment! You are a complete jackass.

        [lprent: Your comments are looking increasing rational and less troll like (albeit quite acerbic). They’re not violating policy any longer. Maybe it is time to look at removing you from the spam trap. ]

        • Peter Johns 1.1.1.1

          I would appreciat that, new years resolution to try and be more civil to you lefties:)

          [lprent: You don’t even have to be that. I’m known to be an extremely uncivil commenter in that I usually make my points and then have some pointed comments about the person I was responding to.

          But you just have to use the available comment weaponry like satire, sarcasm, humour, etc to help make your points and enhance the debate. You’ve had a rather annoying tendency to simply attack the person without making a coherent point. That is what keeps you in focus for the moderators. If you do that to writers then I tend to get very annoyed because it is hard enough to write the damn posts without having some idiot ignore the post content. If you do it to comments then I merely get irritated because I have to clean up the resultant flaming.

          Removed from the auto-spam. ]

        • Bright Red 1.1.1.2

          No. The people of New Zealand want National to increase it by 20%. Because while Labour did good, it didn’t do enough.

          If I’m a jackass, 61% of New Zealanders are with me

          • Peter Johns 1.1.1.2.1

            BR – there is a difference between want & expect in this case. Of course most people want more money for the low paid, but whether they expect a 20% increase to happen is another question.

          • sjh 1.1.1.2.2

            When did anybody start taking these polls as reliable? I must have missed the memo. Does this mean we have to acknowledge that perhaps 87% of NZers really are anti the S59 amendment?

    • Clarke 1.2

      Bit of a stacked poll I think

      Yes, you’re right – it’s a Herald Digipoll, sponsored by that notorious left-wing paper and hotbed of communist sedition, the NZ Herald.

      • Daveski 1.2.1

        … they gave respondents only three options that the minimum wage should be reduced from $12.50, that it should stay at $12.50 and that it should increase to $15.00.

        If DPF is indeed correct, then the poll is quite clearly stacked.

        Funny how when the results suit, we focus on the poll results but every other time we focus on undermining the methodology.

        • lprent 1.2.1.1

          Well I’d happily criticize the methodology. However the bloody useless Granny Herald hasn’t told me in the linked article what the methodology is. It could be anything from a bloody useless open internet poll, to a rigorous statistically driven poll. They also haven’t linked to the poll results, nor mentioned who conducted the poll.

          • NickS 1.2.1.1.1

            They do mention age brackets in the article, so I assume it’s likely a phone poll, rather than a net or email based poll, which probably means they’ve at least bothered with the basics for doing the sampling. Though yes, it would be nice to see what methodologies they used.

            And I would call the questions that bad, though the 3rd question should be along the lines of “increase the minimum wage beyond $12.50” + a quick breakdown of supported increases in $1 amounts. Because as it stands, the last question really lumps all those who want the wage increased from $12.50, into increasing it to $15, and let’s face it, most people asked the question, even if they think $15 is too much are going to go for the $15 due to being human.

            Though this does depend on DPF’s claims being true, and one does suspect that the $15 option may have been merely the most popular of the responses, when people where asked what level of minimum wage increase they felt was acceptable. Or they just based it off previous survey answers.

            • Clarke 1.2.1.1.1.1

              Because as it stands, the last question really lumps all those who want the wage increased from $12.50, into increasing it to $15

              Yes, on the surface it does look like a particularly unhelpful piece of poll bias. If the question had been a bit more nuanced then there probably would have been a somewhat wider spread of results, and the Righties might have been a bit less troubled by the results.

          • Daveski 1.2.1.1.2

            I should have acknowledged likewise rather than implying it by using DPF’s comment. All good points LP.

  2. TightyRighty 2

    eddie, you say that firms won’t invest in capital when labour is cheap. what happens when labour is expensive so firms invest in capital instead and new jobs aren’t created, or old ones are cleared away? are you going to hate on the firms for responding to a huge hike in the minimum wage in an economically rational way?

    • snoozer 2.1

      I know it sounds like a paradox, Tighty, but it’s true.

      Look at Denmark, Finland, France, Sweden, Germany, the Netherlands. Very wealthy countries with high wages. The high wages encourage investment in capital, which ends up making everyone richer.

      Compare that with the third world, low wages, lots of underemployment, you get half a dozen people employed to do the job of one person in Europe, or doing things that you simply wouldn’t employ a person to do in the Europe. And the countries end up worse off because their labour is being underutilised

      • TightyRighty 2.1.1

        i completely agree that increasing investement in capital will increase dividends over time, making everyone wealthier. my issue lies with the equilibrium level of capital vs labour and the effects that an increase in the price of labour will have on that equilibrium. my initial thoughts are that it would just change the size of the slices in the pie to the detriment of the unemployment rate, and the owners of capital would earn greater returns, thereby reducing equality? now as the pie grows over time, the balance would change as it is dynamic. but in the short term unemployment is a destructive force in society and the economy.

        • snoozer 2.1.1.1

          “i completely agree that increasing investement in capital will increase dividends over time,”

          I’m not talkng about dividends. It increases wealth, how that wealth is devided between capital and labour is a function of the strength of organised labour, labour market forces (ie supply and demand), and government policy.

          “my initial thoughts are that it would just change the size of the slices in the pie to the detriment of the unemployment rate, and the owners of capital would earn greater returns, thereby reducing equality?”

          Well, that’s not the case. There is no evidence that increasing the minimum wage ncreases unemployment.

        • Clarke 2.1.1.2

          My issue lies with the equilibrium level of capital vs labour and the effects that an increase in the price of labour will have on that equilibrium

          It’s a good point, but the evidence seems to point to the fact that New Zealand is a very unequal society as far as income distribution is concerned, which is largely due to the high numbers at the bottom of the income heap. That and the fact that there doesn’t seem to be any particular problem with New Zealand companies earning a lower rate of return on their capital than equivalent companies in equivalent markets internationally would seem – prima facie – to indicate that the equilibrium has swung too far away from labour. And if this is the case, then an increase in the minimum wage would help redress the balance.

          • TightyRighty 2.1.1.2.1

            New Zealand as an unequal society is a larger argument than this and can only be quantifiably measured against arbitary points that are based on subjective reasoning.
            my point actually was that if the minimum wage being raised by a large amount makes investing in capital much more profitable in relative terms, wouldn’t the only people benefiting be the owners of capital initially, with trickle down benefits to the rest of society being some way of?

            now i am not against encouraging investement in capital at all, i think it is fantastic, however i would prefer the investement to be redirected from that other economic input, land, as i feel that labour would suffer to much initially from a large increase in it’s price. if investment in land can be discouraged to the benefit of investment in capital, then the future gains from capital can then be raised to make the pie bigger for all and then encourage higher wage rates as productivity would be increasing in step.

            • Clarke 2.1.1.2.1.1

              Um, yeah, I kind of agree with parts of what you say in the sense that anything that redirects capital from passive investment (i.e. housing) to something more productive is A Good Thing. However this is (also) somewhat wider than a discussion about the minimum wage.

              If the trickle-down theory of improving capital returns actually worked, the US would be the most equal society on earth. Unfortunately the evidence both there and in NZ indicates that there is very little linkage between improving capital returns and improving the lot of the rest of society.

              For instance, the returns to capital were much lower under Muldoon than is the case today, but were significantly redressed through the neoliberal revolution. If the trickle-down approach really worked, then the much larger returns available in the last 25 years would have filtered through to the rest of society by now, and there would be little if any in-work poverty. Yet clearly the minimum wage has stagnated in real terms, and would continue to do so if the market was left to its own devices.

              In other words, the only reason that the government needs to set the minimum wage is because it’s a readily identified area of market failure, even when there are ample capital returns.

              • TightyRighty

                There is really still no case in amongst that for raising the minimum wage. their is a case for having one, but no case to raise it to $15 p/h. an increase of approximately 19% that will not help employment.

                To many commenters on this site bang on about unemployment being to high, and then saying that the minimum wage is to low. you can’t have it both ways immediately. then the labour mp’s (mallard et al) get involved. we’ve all heard that labour was far too busy to get around to introducing a $15ph minimum wage, but it still beggars belief that the calls for it went out within six months of them losing the election.

                at the moment the pie is only so big, how about focusing on a land tax, to increase productive investement, and therefore boost the size of the pie, then we can raise wages AND have a lower rate of unemployment.

                • lprent

                  You’re talking crap. If you want to raise productivity in NZ, then one of the fastest ways to do it is to raise wages. It forces employers to start looking at how to use the workers hours more efficiently.

                  There is a chronic shortage of capital invested in productivity systems and equipment. Crappy employers tend to plug in cheaper labour instead and overwork them.

                  Sure you might get a slight unemployment effect (although I have never seen that demonstrated in reality). But the medium term effect will be to drive companies with poor productivity out of business and allow more productive ones more room to grow. It is really just lousy employers that fear changes in the minimum wage – and I really don’t give a shit about them.

                  • Herodotus

                    “It is really just lousy employers that fear changes in the minimum wage and I really don’t give a shit about them.”
                    What is the effect to protected sectors that wages at at a basic level who are funded by local bodies or central govt?
                    e.g. Bus Drivers, cleaners, retirement homes. Whist Ihave great sym with their plight, how do we cover theis gap. To others above re $500m many min wage are part timers e.g. McD wokers so the 1ook works x $2.5 may be a bit simplistic and overstate the effect

                  • ben

                    You’re talking crap. If you want to raise productivity in NZ, then one of the fastest ways to do it is to raise wages. It forces employers to start looking at how to use the workers hours more efficiently.

                    That is true Lynn – but they do it by cracking the whip. Enforcing minimum breaks and through understaffing – putting one person behind the coffee counter instead of two, and so on. Those lucky enough to keep their jobs pay for the increase with their sweat.

                    I congratulate you for acknowledging what the economic literature so overwhelmingly says about unemployment effects – that’s more than most manage around here. It is purely disingenuous and self-serving of others here to pretend that literature does not exist or has no basis in reality (the very same research processes which find those effects on minimum wage are also what allow us to understand which gases warm the atmosphere, for example – and nobody round here seems to doubt those research findings). So well done on that.

                    • While I appreciated the post and debate I think the real issue is in the video.

                      Key caught blue handed spinning shit and getting caught out. Its a pity most of our journos are to afraid to call him on a number of issues and statements. As Lange said “the media are often like a school of fish they all travel in the same direction till one goes another direction then they all follow .

                    • BLiP []

                      Craig

                      I wonder, perhaps, if you are not confusing Lange’s description of the money changers as being like a shoal of reef fish? One need not look past our current Prime Minister to see the truth in that statement.

                      Was it Joh Bjelke Petersen who described his press conferences as “feeding the chooks”? That seems to me the more apt description and, alas, it has become even more accurate, especially in New Zealand, with the passing of the years.

                    • lprent

                      ben: …but they do it by cracking the whip. Enforcing minimum breaks and through understaffing putting one person behind the coffee counter instead of two, and so on. Those lucky enough to keep their jobs pay for the increase with their sweat.

                      The crappy managers already do all of those things. To me it is the mark of the useless employer – the petty rule maker. If they’d spent as much time looking at the work flows in their workplaces as they do chasing non-critical arbitrary ‘rules’ than they’d be able to kick the efficiencies up massively and make the work easier.

                      In the example you’re describing, I can’t believe that cafes are as poorly organized as the ones I see when I go into them. Many seem to be designed to make excess work for the employees. They also run appalling slowly in serving coffee and food.

                      In some cases the building itself is at fault with weird skinny rooms and strange corners. But usually even those seem to be made worse because of the positioning of the work spaces and corridors.

                      I have to say that it becomes a pleasure with the few I’ve come across that are well designed for workflows. I get my food and coffee nice and fast, and the cleanup is as fast. Anyone who is in for food and coffee and not too much conversation frees a table reasonably rapidly. Those who are talking tend to keep sampling the food. Either way increases the profit because there are effectively dollars per table per hour. They get a lot more repeat customers. As a place to go they also seem to be really long-lived as well.

                      One of the ones I’m thinking of has now been around for a little under 20 years and has moved from being a hole in the wall breakfast joint to a up-market restaurant. Mind you, the food helped a lot as well. But then the owners didn’t have to spend as much time on stressing, and had more time to concentrate on the food and the customers.

                      Another one at the lower end of the cafes has been around for at least 15 years, had at least 3 change of owners, and essentially hasn’t changed the work flow during that time. The food is still gorgeous and very fast.

                      Both have picked up clientele because I tend to drag people along to them. Both have relatively slow turnovers of staff. At least in comparison to some of the others that I go to.

              • snoozer

                “but no case to raise it to $15 p/h. an increase of approximately 19% that will not help employment. ”

                um, the case for it is making sure that every person gets a decent reward for their work.

                We’ve already been through how the MW doesn’t hurt employment. In fact, the short-term affect is more spending money in a lot of people’s pockets (low income people, who spend a higer portion of their income), which equals more jobs. In the longer term, higher wages leads to more capital investment and a more productive country.

                “at the moment the pie is only so big”

                Yeah, it is $178 billion and $46 billion of that goes to profits. http://treasury.govt.nz/budget/forecasts/befu2009/befu09-pt6of6.pdf Half a billion more to the most underpaid workers wouldn’t even be noticed by the people (a large portion of them living overseas anyway) who get that $46 billion.

                “we’ve all heard that labour was far too busy to get around to introducing a $15ph minimum wage, ”

                In fact, Labour increased the MW from $7 to $12. And your rightwing heroes at the business roundtable etc complained every step of the way. Labour should have ignored those dicks and gone faster but they did make major and rapid increases – $1.75 in the last two years alone. National needs to take up where they left off.

  3. vidiot 3

    Figure this,

    2 Earners (with 2 kids) – 40 hours per week on minimum wage earn $52K gross per annum and get a WFF top up of $7.5K – effectively $14.30 per hour. Minimum wage increases to $15, household income climbs to over $64K and the WFF top up decreases by around $50 a week, which works out to be around $16.70 per hour.

    So a $2.50 increase in the minimum wage gives them $2.40 before any tax comes in to play.

    Great system that.

    • Daveosaurus 3.1

      So, in other words, if the minimum wage rises, the cost to the country of the WFF tax-cut package decreases.

      I’m not really seeing a down-side here.

  4. Herodotus 4

    I see thatthere is a wee flood of posts regarding this. Yet NO Labour person will tell me what a livabale wage is, how WFF and other welfare link to achieve with a min wage to a livable wage. Is it that they do not know, for any senior person on the left this and a “real” definition of poor should roll off their tongues, noty some acedamic namby pamby thing that Helen mentioned last elections leaders debate. There is mention that this is a destination $15hr, why this level, why not $19 ($36.5k p.a.). I just ask anyone what is the economic reason for this $15. Does this for a full time worker allow them to survive ?
    Please anyone on the left help me.

    • Bill 4.1

      Poverty is relative.

      66% of average wage is reckoned to be a level of comparative difference that does not impose onerous hardships on those pulling in min wages.

      • Herodotus 4.1.1

        But is that 66% on gross wages, with our progressive tax system does that not equate for an income after tax above this level. I have little (except devils advocate) with increasing the level but other than its a “nice” number what is the logic for this level or any level that we wish to achieve and this is part of the transition to this greater level.
        I still believe that a livable income is higher than anyone whats to admit, and for those below this level how can theybecome part of the lolly givaway from Lab with Kiwisaver, as if you are below this livable wage how can you then have surplus to contribute to the kiwi scheme. It then becomes another tax subsidy for the middle & rich given by Labour.

        • Bill 4.1.1.1

          Let’s assume it’s 66% of gross.

          Are you saying that a whole pile of traps exist in the form of wff etc that complicate matters and have the potential to produce inequitable outcomes?

          I think you might be right. And another layer of bureaucratic ‘fix it’ tape will no doubt be applied at some point if that’s the case…further complicating matters and necessitating another layer of ‘fix-its’ leading to increasing complexities and….

          I always saw wff as a subsidy to employers that allowed them to keep downwards pressure on wages. Maybe wff could be scrapped if our wonderful kiwi employers would pay, not just a healthy base rate, but additions to that base rate for employees with children. I did have experience overseas of an employer who did that. It wasn’t an orthodox workplace right enough. Neither were the workers exactly typical. Still, two arms, two legs and all that….humanly possible.

          But I’d only ever see even that as worthwhile if it was a step on the path to abolition of the wage system.

      • logie97 4.1.2

        Herodotus – Interesting that you see comments as right and left. I’ll answer a question with a question. What do you (from your perspective politically) consider a livable wage?

        (for your info – the little red dots under words as you type should tell you that you have spelt something wrong -ffs!)

        • Herodotus 4.1.2.1

          House hold survey from 2007 was that we spent about $950/week with a breakdown of where that was brokendown. I think accommodation was around $225. So I would think that around $700wk(Disposable) appears right to me + accom (As this would allow for regional differences). Also this level would at a streech (Did not work the speeling!!) allow for the untake of Kiwisaver entitlements.
          Now from this figure “we” could review WFF, tax and other forms of assistance to see if those below this level are able to be assisted to beable to live NOT survive. Also those well beyond this level say based on quartiles, std dev or some other distribution basis are “managed” out of being able to revieve the benefits. Then we could also look at those purely on benefits and see how they fit. I just getthe sense that all this min wage, benefits, tax is not viewed holistically so those families in need donot get left out.

  5. Ministry of Justice 5

    There’s no need to wait for Government legislation or even for the greedy employers… the unions could offer a top-up to those paid below $15/hr.

  6. Bill 6

    Let’s not mention that productivity has increased year on year since the 70’s. And profit has increased year on year too. And let us also not mention that wages stagnated in the 70’s. And let us not join the dots.

    And having not joined the dots, let us not mention the unthinkable possibility of applying the ‘mean and lean’ mantra to profit margins and share holder dividends for a change rather than to workers’ wages and conditions.

  7. Graham 7

    A question:

    A $2.50 an hour increase for the 100,000 people on the minimum wage multiplies out to $520,000,000 per year. Who’s going to pay for this?

    And let’s not forget the many other workers who currently earn around $15.00 an hour or maybe slightly more. As soon as their “above-minimum-wage” pay becomes the “minimum wage”, they will demand a similar increase. Don’t know how many people that is, but if it’s another 100,000 then we’re up to a billion dollars annually. Who pays?

    What about, rather than artificially inflating minimum wages, encouraging people to better themselves? Go to night-school, enrol in a university course, better themselves so they can rise above the minimum wage.

    Just a thought.

    From an ordinary worker, who hasn’t been to University and left school after the sixth form, but decided to study on his own time and work hard and is now doing alright thank you very much …

    • snoozer 7.1

      Half a billion dollars a year, that’s about the size of the tax cuts National gave to the rich. It’s small stuff. The county’s GDP is $185 billion. The wage bill is $80 billion. I hardly think a 0.5% increase is going to break the bank.

      • Graham 7.1.1

        Still gotta come from somewhere, so where would you take it from? Health? Education?

        • Zorr 7.1.1.1

          I dunno… maybe we can start looking for all the tax dodgers/cheats. That $520mil you mention is only $100mil more than the amount that Westpac alone stole from us.

        • snoozer 7.1.1.2

          It can come out of profits. The owners of capital have held on to the productivity gains while the minimum wage slipped from over 60% of the average wage to under 50%, there can be a fair redressing of that. The world didn’t end before when the minimum wage was 60% of the average, it won’t end now.

          It wouldn’t come out of the government budget, Graham, don’t be silly. Do you think the government pays wages of all minimum wage workers?

    • logie97 7.2

      Graham, obviously part of that extra education didn’t include time to think how the opportunities arose for you in the first place. Some people just don’t get it. Go away and study The Tolpuddle Martyrs and think about your history a little. Bet you have never needed any of the public service gains that ordinary people have fought for have you?

      • Graham 7.2.1

        Huh? “How the opportunities arose for me”?

        I bought some textbooks (with my own money), studied (on my own time), sat and passed exams. In other words, I got off my ass and worked for my own gains.

        And are you implying that I’m not an “ordinary person”? I would be fascinated to know just what an “ordinary person” is in your view, and why I don’t qualify, given that you know ABSOLUTELY NOTHING about me, who I work for, how much I earn, my political convictions, etc.

        • snoozer 7.2.1.1

          calm down, graham.

          The point is that there will always be a need for people to do jobs at the bottom rung. We can’t all be middle managers and accountants.

          The question, then, is what we decide is the minimum decent wage to pay someone for their work.

          The work needs to be done, what is the least a human being should get of the wealth produced y their work in return for working? It’s obviously something greater than zero if you don’t believe in slavery (god, I hope you don’t). traditionally, it’s been about two thirds fo the average wage. Businesses have coped with that just fine. Seems sensible to me to lift it up to that level again.

          • Graham 7.2.1.1.1

            Quite calm, thank you. I just happen to resent people like logie97 insulting me without basis or reason, and implying that I’m trying to portray myself as somehow superior or above “ordinary people” (his term, not mine), simply because I put in the effort to better myself. Especially when he has no idea who I am, and what I do to live, thrive and survive.

            FWIW, I’m not a manager or accountant (not that I believe you were implying that). I’m in a technical role.

            • snoozer 7.2.1.1.1.1

              My point is that it’s great you’re in a technical role but you still need someone to clean your office. What’s the minimum decent wage they should receive?

              A lot of righties seem to have this ‘I pulled myself up by my bootstraps (often not actually true) and f#ck anyone who didn’t’ attitude that justifies crapping on the poor. It comes down to ‘i’m morally good so I deserve to be rich, you’re poor so you must be morally bad and so deserving of poverty’

            • logie97 7.2.1.1.1.2

              Sure touched a nerve there.
              Perhaps you arrived this generation on earth… sorry, but there have been long struggles to get a public health system, welfare state, free education, the vote … the list goes on. And some would dismantle the lot at the drop of a hat. Paula Bennett uses similar language – she is an example of someone who has had the security of the state and is immediately pulling the ladder up…

    • Clarke 7.3

      A $2.50 an hour increase for the 100,000 people on the minimum wage multiplies out to $520,000,000 per year. Who’s going to pay for this?

      Just to give this a bit of context, the $520 million you’re quoting is about 0.29% of the $180 billion on annual GDP … so the short answer is that if productivity this year rises by more than 0.29% then there is no net cost to society.

      • Captain Rehab 7.3.1

        It’s also about four to five percent of the profits expatriated annually from NZ by foreign owned companies.

        And considerably less than the tax cuts companies got in 2008 under the last government.

      • ben 7.3.2

        Horrible logic there Clarke.

  8. SteveR 8

    From Graham:

    “What about, rather than artificially inflating minimum wages, encouraging people to better themselves? Go to night-school, enrol in a university course, better themselves so they can rise above the minimum wage.”

    Now imagine Graham’s utopia is achieved—who will remove his rubbish from the kerb-side?

    • Ministry of Justice 8.1

      Hopefully the sociology graduates.

    • Graham 8.2

      Those people who will not, or can not, better themselves. And there will always be plenty of those.

      Don’t see how my idea is any more utopian than the initial idea of getting paid more while doing exactly the same job, to be honest. I call it reality – you either put in the hard yards and work to achieve (the harder you work, whether physically or mentally harder, the more you achieve), or you don’t. In which case, don’t expect everyone else to give you ever-increasing wages for collecting the rubbish.

      • SteveR 8.2.1

        Your idea suggested that a fair society without a minimum wage could be achieved by people studying and getting better jobs.

        I pointed out that there would, then, be no one to do unattractive jobs.

        You seem to have responded that in fact *not* everyone would get a decent wage by studying and getting a better job.

        So, we seem to agree that for everyone to get a decent income we need a minimum wage.

  9. Draco T Bastard 9

    Minimum wage should be set @ $20/hour immediately. Anything less than that isn’t worth anyones time and the stress that being under paid gets you.

    All wages should go up in-line with the CPI adjusted quarterly.

    • Graham 9.1

      Great idea! Now we’re up to an extra $1,560,000,000 per year. I repeat: who’s going to pay for this?

      And again, you then have the many other workers who currently earn around $20.00 an hour or maybe slightly more. As soon as their “above-minimum-wage’ pay becomes the “minimum wage’, they will demand a similar increase. And by raising the minimum wage to $20, you’re including a huge swathe of people there.

      • Bill 9.1.1

        So abolish the wage system, scrap market relations and dispense with capitalism.

        Done.

        Now we can apply our intelligence and cunning to figuring ways of production and distribution that don’t depend on the ruination of human lives as well as the ruination our world.

        Yes?

        Maybe not. Too hard. Let’s just keep on scrambling over one another to the top of the tottering heap. Good idea.

        How much money you say was needed to be dangled to keep you scrambling again? How much of an added incentive you say was needed in the shape of fear and insecurity?

        Done. Carry on now. Everything is fixed and everything is okay. Welcome to the future. You’re welcome.

      • Clarke 9.1.2

        Let’s assume your assumptions are correct, and DTB’s proposal triples the cost over simply raising the minimum wage to $15/hr … even so, it’s less than 1% of GDP. So a 1% productivity gain completely pays for the higher minimum wages.

        Surely trading a 1% productivity gain (which would normally be realised as increased corporate profits) to provide everyone in the country with a living wage is a worthwhile investment, particularly given that practically all of that 1% would immediately be recirculated in the economy as increased spending.

      • Draco T Bastard 9.1.3

        The people who pay for it now but don’t get it – the workers.

      • ben 9.1.4

        A good deal of the answer to your question Graham is: workers formerly on minimum wage and who are now jobless. Not the ideal way of alleviating poverty. In act a good way to substantially increase it.

        As always, the Left hurt the very people they allegedly want to help.

        • Descendant Of Smith 9.1.4.1

          A good deal of the answer to your question Graham is: workers formerly on minimum wage and who are now jobless.

          They aren’t jobless due to any increase in the minimum wage. They are jobless due to lack of work particularly in areas such as tourism, cafes and restaurants – of which there were far too many anyway – lack of export orders due to their problems and so on.

          Lots of real estate agents and used car salesman as people have stopped spending.

          What they were paid was quite irrelevant to most of them losing their jobs.

          If pay was the primary reason then businesses could have simply laid off highly paid executives.

          Many employers have reduced their staffing to the bare minimum, taken the opportunity to clear some dead wood or closed down completely.

    • Herodotus 9.2

      As a consequence of such a change, there would be litttle reason for decile ratings in schools as then all/most families would be able to support thenselves?
      There is also a very pertant poster from a Van Halen song “Right Now” with a sign ” Right Now, someone is working too hard for minimum wage” That about sums it up.

  10. “Now, I can anticipate the Right’s petty objections already. They claim the minimum wage increases unemployment. Turns out that is just another of those rightwing myths with no basis in fact.”

    Actually no, its not a right-wing myth. What the theory and evidence tells us is that the minimum wage has little effect on the *overall* unemployment rate but this is not surprising as no one claims it does. But as Neumark and Wascher write (“Minimum Wages” by David Neumark and William L. Wascher, Cambridge: MIT Press, 2008: from Table 9.1 page 287 when dealing with the effects on employment, under the ‘Summary of evidence’.)

    “Minimum wages reduce employment of low-skilled workers; adverse effects even more apparent when research focuses on those directly affected by minimum wages.’

    That is, an increase in the minimum wage will reduce employment for those directly affected by minimum wages such as workers with low-skills or those returning to the labour force. In Chapter 9 “Summary and Conclusions’ Neumark and Wascher write

    “Three conclusions, in particular, stand out. First, as indicated in chapter 3, the literature that has emerged since the early 1990s on the employment effects of minimum wages points quite clearly despite a few prominent outliers to a reduction in employment opportunities for the low-skilled and directly affected workers’. (p. 286)

    • snoozer 10.1

      “What the theory and evidence tells us is that the minimum wage has little effect on the *overall* unemployment rate but this is not surprising as no one claims it does”

      Umm. All the rightards on this post are claiming exactly that and so do many of your MPs.

      “the employment effects of minimum wages points quite clearly despite a few prominent outliers to a reduction in employment opportunities for the low-skilled and directly affected workers’.”

      Paul quotes another of his neoliberal ideologues and expects us to swallow it. How about some actual evidence, Paul.

      In the past I see Labour governments have boosted the minimum wage by as much as 101% in a single year http://www.nacew.govt.nz/publications/files/paper-low-waged-work.pdf.

      Now, surely if your theory was true we would have seen a massive increase in unemployment in low-skill jobs at that point. Did we? No. No-one has provided any evidence that was the case

      Paul, you’re showing, once again, that neoliberal economics is faith-based ideology, nothing more.

      • Paul Walker 10.1.1

        “Paul quotes another of his neoliberal ideologues and expects us to swallow it. How about some actual evidence, Paul.”

        How about reading the book for the evidence: “Minimum Wages’ by David Neumark and William L. Wascher, Cambridge: MIT Press, 2008. That’s what the book is about. What I quoted was just a short summary of the evidence in the book.

        “In the past I see Labour governments have boosted the minimum wage by as much as 101% in a single year http://www.nacew.govt.nz/publications/files/paper-low-waged-work.pdf.”

        You mean the jump from 23.50 to 54.88 in 1975. Two things, 1) there are no inflation figures given so we don’t know what happened to the real wage. The increase in the real wage may have been lower than the increase in the normal wage would indicate. 2) there are no unemployment figure given in the paper so we don’t know what happened to unemployment. Actually the measurement of unemployment back then wasn’t great so it would be hard to know what happened to unemployment for those directly affected.

        What we do know from the Neumark and Wascher book and is that, usually, unemployment among directly affected by minimum wages increases when the minimum wage increases.

        • snoozer 10.1.1.1

          So, Paul, in conclusion. You have no evidence of any increase in unemployment linked to any MW increase in New Zealand, including a doubling in a single year (and yeah there was double digit inflation around that time but we’re talking a doubling from 68 cents an hour one month, $1.37 the next).

          • Paul Walker 10.1.1.1.1

            “You have no evidence of any increase in unemployment linked to any MW increase in New Zealand”

            Exactly. There is no evidence of any increase in unemployment because there is no evidence. There also is also no evidence that employment went up or that employment stayed the same. In short there is no evidence.

            So in this particular case we just don’t know.

            • snoozer 10.1.1.1.1.1

              So why assume that it’s a bad thing to increase the minimum wage becuase it will increase unemployment?

              Simple. Because you’re an ideologue and your reasons for opposing minimum wage increases actually have nothing to do with unemployment – it’s about keeping the division of wealth between capital and labour in capital’s favour, and labour nice and cheap.

              • “So why assume that it’s a bad thing to increase the minimum wage becuase it will increase unemployment?

                Simple. Because you’re an ideologue and your reasons for opposing minimum wage increases actually have nothing to do with unemployment it’s about keeping the division of wealth between capital and labour in capital’s favour, and labour nice and cheap.”

                You’re right the answer to your question is simple. It’s because all the evidence we do have on the effects of the minimum wage tell us that unemployment among directly affected by minimum wages increases when the minimum wage increases. This evidence is from outside New Zealand but is from many studies from many countries over many time periods, so most economists go with it. Greg Mankiw has a list of things that economists agree on in chapter 2 of his first year textbook. Number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers’ and 79% of economists agree. So this result is widely accepted by economists.

                Is it possible that New Zealand is different from the rest of the world, yes. Is it likely, no. And we have no evidence so far that it is.

                Personally I don’t care about the division of wealth between capital and labour. Also a change in the minimum wage will have almost no affect on the division of wealth between the two of them anyway. So fighting an increase in the minimum wage would be a stupid way of trying to keep the division of wealth between capital and labour in capital’s favour.

      • ben 10.1.2

        Paul quotes another of his neoliberal ideologues and expects us to swallow it. How about some actual evidence, Paul.

        Ha, great call. Paul is the one guy on this blog fully prepared to roll out the evidence.

        I havent read the rest of the thread, but here is a prediction: he wheels out exactly the evidence you asked for, you reply with name calling and accuse Walker of presenting theory that has nothing to do with the real world, and Walker points out that empirical evidence is from the real world. I will then chip in that absent evidence the only people operating on theory is the people who think raising minimum wage is a good idea, because when the evidence is examined it nearly universally finds major problems created by minimum wage and few if any prevented by it.

        Just a prediction.

        Update: well I’ve had a read and the old ‘real world’ canard is out in full force. Snoozer’s got all the answers because he’s worked minimum wage. Christ – most of us have, I’ll bet Paul has, I know I have, but I’ll trust 100 empirical studies from around the world mostly finding similar results before I let my own personal experience decide what the rest of the world looks like.

        The Left loses this argument every single time, almost never presenting what little literature there is in support of their position, and still roll out the same tired, wrong, and ultimately harmful positions every time. So who are the ideologues?

    • quenchino 10.2

      In one narrow sense Paul may be correct; increasing the minimum wage encourages employers to place a higher value on labour, and while in the short term the reaction may be to employ less labour, in the longer term there is every incentive to invest in better technology and improve the productivity of that labour.

      Lower income people on minimum wages spend almost all of their income immediately, increasing the velocity of money in the economy, increasing fiscal stimulus. By contrast the wealthy tend to either either save or reduce debt with extra income, which has a repressive effect.

      Furthermore it is now well understood that societies with higher levels of economic inequality suffer from much higher social cost overheads in areas such as health, education and crime.

      Increasing the minimum wage is a simple, proven path to improving total welfare.

      • Paul Walker 10.2.1

        “In one narrow sense Paul may be correct; increasing the minimum wage encourages employers to place a higher value on labour, and while in the short term the reaction may be to employ less labour, in the longer term there is every incentive to invest in better technology and improve the productivity of that labour.”

        What? Changing the wage will do nothing to the value the employer place on labour. The marginal productivity of labour will not have changed.

        An increase in the minimum wage will do little to change investment in technology since most jobs at that level will involve very little technology.

        • snoozer 10.2.1.1

          Paul. This is where your ideology falls to pieces.

          If you’ve ever worked minimum wage (and I don’t mean for six months at a supermarket at uni, I mean in a real job on minimum wage) you’ll know that employers view the labour as so cheap that they are wasteful with it. You are often underused (when you’re not having to do the shittest jobs around) and they don’t bother to invest in simple tools or procedures to enhance your productivity. And I’m not talking hi-tech here, Paul, I’m talking bothering to replace worn out tools with new ones that make the work go twice as fast. I’m talking simple organisation.

          Sorry Paul. I know that in your theory “The marginal productivity of labour will not have changed” and is it that which determines how employers use labour. In reality, cheap labour is treated like any cheap thing – disposable and not worth investing in to enhance.

          • Paul Walker 10.2.1.1.1

            “If you’ve ever worked minimum wage (and I don’t mean for six months at a supermarket at uni, I mean in a real job on minimum wage) you’ll know that employers view the labour as so cheap that they are wasteful with it. You are often underused (when you’re not having to do the shittest jobs around) and they don’t bother to invest in simple tools or procedures to enhance your productivity.”

            Employers are unlikely to ever be wasteful with any input. They would reduce their profits. The fact that “they don’t bother to invest in simple tools or procedures to enhance your productivity.” makes my point. Changes in the minimum wage will not effect the use of capital because the capital used in either very little or simple tools or both.

            • snoozer 10.2.1.1.1.1

              Paul. You’re not listening.

              In the real world, outside of your books and your pretty models, cheap stuff is treated like cheap stuff.

              Cheap labour is abused and underused. And employers don’t bother raising the productivity of that labour with cheap investments

              • “And employers don’t bother raising the productivity of that labour with cheap investments”

                Which makes my point. Changes in the minimum wage will not effect the use of capital because the capital used in either very little or simple tools or both.

        • lprent 10.2.1.2

          Right and wrong. You are making a presumption about where you get productivity improvements from.

          Most productivity improvements in low-income jobs do not require technology.

          They simply just require managers to use their heads about how to use their people efficiently. That largely means doing a pile of operations drudgery, figuring out a plan, and then getting buy-in from the people affected. In my experience many managers are incapable of doing all of the three. The most common reason for productivity improvements failing is the last one.

          Raising minimum wages is a pretty good way of driving the deadhead managers out because they’re usually incapable of improving productivity. That usually improves the productivity of their workers by a considerable amount when they get someone competent working with them. The best skill an employer can have to to be able to identify useless or marginal managers and fire them, it usually helps a lot with productivity.

          At this point I should reveal that my MBA major was in OR, and my family has been involved in production and operations for a few generations. So did I before I got enamored with programming.

          • Paul Walker 10.2.1.2.1

            “Raising minimum wages is a pretty good way of driving the deadhead managers out because they’re usually incapable of improving productivity.”

            Why no improve the profits of the firm, without an increase in the minimum wage, by getting rid of the managers anyway. This problem is not best solved by raising the minimum wage.

            • lprent 10.2.1.2.1.1

              Often works. But replacing incompetent managers with competent ones works more effectively. The big difference is usually having a focus on doing things more efficiently with everyone in the firm having a stake in doing it.

              Raising the base wage rates often forces that focus to happen.

              • “But replacing incompetent managers with competent ones works more effectively.”

                Which would be my point, and you don’t need to raise the minimum wage to do this. In fact using the minimum to bring this about, if it does, seem a bad way of doing it. Why not just pay more attention to management and get rid of those managers who are not preforming?

      • ben 10.2.2

        By contrast the wealthy tend to either either save or reduce debt with extra income, which has a repressive effect.

        Sorry? You do understand that savings don’t sit in banks collecting dust, right? You understand that banks lend the money out? Financial intermediaries, and all that? And that this saving is what funds investment?

  11. Wouldn’t setting the MW at $15.00 (or 60~% of the average wage) go towards increasing the ‘average’ wage which in turn would drive further increases pushing the value of the $NZ way down. This would then drive calls for legislation involving price freezing and other crazy attempts to halt inflation, then, I assume, a government in office circa 2024 will liberalise the economy and folk will spend the following 20 years complaining about the reforms of the 20’s and ‘bloody *-nomics’

    and so on and so forth.

    • Clarke 11.1

      Your logic seems to go straight from an increase in the minimum wage to economic armageddon, which seems like a long bow to draw. If real life actually worked this way then the New Zealand economy would have been reduced to a radioactive hole in the ground some decades ago ….

    • snoozer 11.2

      Did any of that happen in the past when Labour increased the minimum wage by as much as 101% in a single year (to make up for half a decade of National leaving it the same in the face of high inflation)? No, it didn’t.http://www.nacew.govt.nz/publications/files/paper-low-waged-work.pdf.

      Labour has actually made an increase of over $2 in a single year before. It was 1984 and they moved the MW from $2.10 to $4.25. Did it cause economic collapse? No

      Rightwing Theories 0 – Facts 2

      • Bed Rater 11.2.1

        In which year did Labour double the MW?

        • Bed Rater 11.2.1.1

          Sorry, I assumed you meant post 1999.

          Labour did other things from 1984 onwards, what do you think of those?.

        • snoozer 11.2.1.2

          labour doubled the minimum wage in 1975 and it didn’t cause any problems.

          Of course, there were external problems at that time, oil shocks, which were causing rapid inflation. That had reduced the MW to less than 30% of the average wage. Labour resoted it to 60%.

          I’m not defending the 4th Labour government’s record on economic reform, but they did well on a few things and the minimum wage was one of them.

          • Bed Rater 11.2.1.2.1

            You’re choosing to ignore the subsequent migration of low skilled manufacturing jobs, and now I’ve pointed that out, you’ll blame other aspects of the mid 80s reforms..

            You can’t have your cake and eat it to on that one I’m afraid, I grow tired of this argument, like shooting fish in a barrell but the fish are invulnerable.

      • Paul Walker 11.2.2

        “Labour has actually made an increase of over $2 in a single year before. It was 1984 and they moved the MW from $2.10 to $4.25. Did it cause economic collapse? No

        Rightwing Theories 0 Facts 2”

        What facts? What studies have been done on this particular event? What happened to employment for the relevant groups?

        • snoozer 11.2.2.1

          You rightes are the ones with the myth. It’s up to you to show some positive evidence. And you’ve got no evidence to back it up.

          • Paul Walker 11.2.2.1.1

            Let me ask again, What studies have been done on this particular event? What happened to employment for the relevant groups? When they moved the MW from $2.10 to $4.25 what happened?

            • Bed Rater 11.2.2.1.1.1

              I started off this thread with a bit of a sarky windup, and its devolved into “You bloody righties, heres some pdfs”… figures.

            • snoozer 11.2.2.1.1.2

              Let me ask again, Paul. What evidence do you have that increasing the minimum wage hurts employment for low-skill people in New Zealand?

              None.

              It’s not for me to disprove every silly idea you come up with.

              It’s your hypothesis, validate it.

              • “Let me ask again, Paul. What evidence do you have that increasing the minimum wage hurts employment for low-skill people in New Zealand?”

                Which doesn’t answer my question.

                But as I have already said. It’s because all the evidence we do have on the effects of the minimum wage tell us that unemployment among directly affected by minimum wages increases when the minimum wage increases. This evidence is from outside New Zealand but is from many studies from many countries over many time periods, so most economists go with it. Greg Mankiw has a list of things that economists agree on in chapter 2 of his first year textbook. Number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers’ and 79% of economists agree. So this result is widely accepted by economists.

                Is it possible that New Zealand is different from the rest of the world, yes. Is it likely, no. And we have no evidence so far that it is.

                So let me ask again, What studies have been done on this particular event? What happened to employment for the relevant groups? When they moved the MW from $2.10 to $4.25 what happened?

  12. ben 12

    Now, I can anticipate the Right’s petty objections already. They claim the minimum wage increases unemployment.

    That finding has nothing to do with left or right wing. In fact a recent survey found economists are more Liberal than average, at least in the US. Yet those economists, when they study the data, overwhelmingly find employment is negatively related to the minimum wage (Walker provides the relevant references). What you are saying is simply untrue.

    The truth of the matter is the Right wants wages for working New Zealanders to fall because lower wages = bigger profits – in the short-term, at least

    I can’t speak for right wingers, but my objection to the minimum wage is that it on average hurts the poor and unskilled – both by increasing unemployment and by reducing conditions for those lucky enough to keep their jobs. The evidence is that it has no discernable effect on poverty and may increase it. See my comments in the Standard piece cited in your article.

    But when did capitalism ever concern itself with the long-term?

    Capitalists invest in long lived assets like forests and, when given the chance, roads and power stations. These assets have paybacks in decades. How is this consistent with short term thinking?

    Look if $15 is so good, how about $20? Or $25? Ok, you’ll argue that at that level yes unemployment is going to become a problem. So what makes you think the very same problems aren’t happening right now at $12.50 with a very high youth unemployment rate? Those are the very people we should expect minimum wage to hurt the most, and – guess what – they’re finding it hard to get work.

  13. Jenny 13

    From Stuff.co.nz

    “In the midst of a recession last year businesses lobbied against an increase. Employers and Manufacturers’ Association (Northern) chief executive Alasdair Thompson suggested to the Herald an increase of between 25c and 50c an hour.”

    http://www.stuff.co.nz/national/politics/3239367/PM-rules-out-15-an-hour-minimum-wage-this-year

    So lobbying by the rich and powerful trumps majority opinion. (again)

    I dare anyone to call this democracy.

    • So you think economic policy should be made on the basis of opinion polls?

      • Jenny 13.1.1

        Paul, as I said I dare anyone to call this democracy.

        As a general rule I believe that democracy is better way of making policy than having it opposed on the majority by vested interest.

        These polls are reflecting that public policy is far removed from the popular will.

        In the ’80s the people of Eastern Europe toppled communism because it was undemocratic. (Not to mention destructive to the natural and human environment).

        Maybe in the twenty tens it’s capitalism’s turn.

        After all these two world systems are mirror images of each other.

        • Paul Walker 13.1.1.1

          But do you think economic policy should be made on the basis of opinion polls? Why do you think a vote on some policy will result in better policy? If you are ill do you get people to vote on what is wrong with you or do you go to a doctor and get the opinion of just one person, who has vested interest in medicine, as to what is wrong?

          • Jenny 13.1.1.1.1

            If I understand what you are saying Paul, you are arguing that it is all right for the rich and powerful to undemocratically dominate the making of public policy.

            Because they are the experts.

            You use the analogy of being ill. In this case you don’t get people to vote on what is ailing you, you seek expert opinion.

            I think your experts have feet of clay and are more motivated by self interest than the interest of the rest of the community.

            I am still convince that in setting public policy, democracy is far fairer than letting self appointed autocrats call the shots.

            In my opinion these sorts of people are not experts, they are self centred snake oil salesmen. In a word “quacks” not doctors, and if they didn’t have vast amounts of money, and undeserved power, nobody would listen to them.

            Every new headline confirms it.

            Big Banks avoid paying tax, despite record profits.

            Wealthy financier builds palace on Paratai Drive while stiffing his share holders.

            Big business seek tax cuts for themselves, yet want to limit wage rises at the bottom of society.

            Growth returns to business while unemployment rises.

            Price gouging,
            Tax ripoffs,
            Ponzie schemes,
            Speculative trading,
            Bailoouts,
            Record bonuses,
            Huge profits
            Leaky housing
            Reckless investment
            Reckless pollution of the environment
            High interest rates,
            Extortionate bank charges,
            Lockouts of working people for spurious reasons,
            Mass layoffs
            Forced mortgagee sales

            All these things, and more, have been undemocratically inflicted on the public by unregulated private sector business leaders.

            Do you still think that it is all right that we let these sorts of people, who have so much power in the private sector, to be able to use their influence to set public policy as well.

            I can only say if you still maintain this point of view, you are either one of them, either that, or getting some sort of financial or other material reward for supporting this form of dictatorship.

  14. Descendant Of Smith 14

    A few more points to consider:

    In the 80’s when I started work many employers did pay additional allowances to people who had families to support and income splitting also meant that the tax burden was reduced for those who had partners who were home looking after the kids.

    Society valued people raising families much more than they do so now.

    Of course the baby boomers raised their families and mum could go out to work now and aspects such as income splitting were no longer needed. At the same time wages went down, employment was casualised, lots of people lost their jobs and sole income earners couldn’t afford to support their families. Relationships broke up, in many many cases due to financial pressure, and we had a big growth in Domestic Purposes Benefit.

    Many people were moved from waged employers to contract workers and salaried employees. Property was speculated on and rents rose and landlords take an ever increasing share of someones income.

    It’s worth noting that many salaried employees get less than the minimum wage when you look at the hours they work, particularly as the salaried rate is only equivalent to 30 or 40 hours time minimum wage) and is just a way of the employer getting out of paying for overtime.

    So having caused this inability to earn enough to support a family on one income we now want to blame the victims in all this – the low paid and the poor. Blame them for their inability to earn more while the place they work for makes record profits. Of course as well as support their spouse and children we also expect them to save for their retirement and invest in their and their children’s education.

    Yep it’s their fault they don’t have a better job. It’s there just waiting for them.

    And it’s no use the middleclass people ranting about how they couldn’t afford any luxuries and are struggling to make ends meet. Shit that’s their own fault too. If they were any good they would have a better paying job and be earning more money.. It’s only their lack of effort that they aren’t millionaires.

    The tragedy of setting the middleclass on the poor is that the wealthy, who face it are not affected by the recession, is that it’s simply a diversionary tactic that appeals to people looking for someone else to blame.

    The truth is that most people want to work and if there are jobs there they will. At the same time they at least want to feel they care valued for their labour. Remember most of the current unemployed were working in the last twelve months. Numbers do not tell the whole story, you need to think about the churn through as well.

  15. Todd 15

    Employers can take it out of profits!.
    Any body know how much profit the hotel business has made over the past year.
    I will tell you SFA.
    Room rates have DECREASED by 25% or more over the past year.
    It would be great to pay ALL my staf say $17-18 per hour the problem is most people coming in the door want CHEAPER rates,I would say that alot of these same people are workers who want better pay but by their actions are putting others out of work.
    But I tell you they dont give a shit as long as its cheap for them.Any body out there know whats happened to business interest rates over the past year.Bloody gone to 12% or more.Try paying that,as most business are today.
    So tell me how it works folks,better pay and cheaper goods, im waiting.

    • Descendant Of Smith 15.1

      Actually I spent plenty of years on one income supporting a wife and three children paying over 20% on my mortgage. Having been through that 12% ain’t so bad.

      I posed a question in another forum around what businesses did with their profit when times were good – did they put money aside for difficult trading periods? The hotel industry has had some pretty good years with high occupancy rates.

      Wouldn’t prevailing wisdom be that if you hadn’t done this then you either didn’t take a long term view of business cycles therefore equating to poor management or that the industry has a surplus of beds and therefore self correcting of the market should take place with some hotels going under.

      Businesses that expected the good times to last forever surely were naive in that expectation. During this time there must have been plenty of opportunity to prepare for a recession, consider adding value, attracting a better paying clientele, building a different client base.

      You know all those things we expect workers to do to lift their incomes also apply to businesses to lift theirs. It’s surely your own fault you are in the position that you are in not the recessions.

  16. “The NZ Herald poll this morning that found that 61% of New Zealanders support raising the minimum wage to $15 per hour, underestimates the support we are getting from thousands of people every week at our campaign stalls and workplaces’ said Living Wage campaign organizer Joe Carolan, today.

    “We’re aiming for a referendum on this issue, and if just a fraction of the 61% who support our demand sign our petition by May, we’re confident that we will win it by a landslide- 70 or 80% would probably be closer the mark.

    For too long, economics in this country have been dominated by the needs of big business and the wealthy. There’s a groundswell of frustration that we’re tapping into- half a million Kiwi workers are struggling to make ends meet on less than $15ph, and the concept of a Living Wage for those who are working hard 40 hours a week is an idea whose time has come’.

    The poll also misses the reason why so many workers are supporting this very specific demand for a $15ph rate-

    ‘We’re fresh in from collecting another 10,000 plus supporters this week at the Big Day Out, Piha beach and the Parihaka peace festival, and we’re about to cross the 100,000 mark. We’re a modest sized union with some very dedicated activists and volunteers who’ve been putting in a lot of long hours gathering signatures- and we’re sure that these campaign stalls have raised consciousness about raising the minimum wage to $15ph that we see reflected in these polls.

    The Unite petition can be downloaded at http://www.unite.org.nz

    Join the Campaign for a Living Wage facebook at:
    http://www.facebook.com/home.php?#/group.php?gid=114601883528&ref=mf

    • “For too long, economics in this country have been dominated by the needs of big business and the wealthy. There’s a groundswell of frustration that we’re tapping into- half a million Kiwi workers are struggling to make ends meet on less than $15ph, and the concept of a Living Wage for those who are working hard 40 hours a week is an idea whose time has come’.”

      Yes but what about the concept of unemployment for those who are put out of work by an increase in the minimum wage?

      • Armchair Critic 16.1.1

        “Yes but what about the concept of unemployment for those who are put out of work by an increase in the minimum wage?”
        Since when did economists give a shit about people?
        And completely separately, you have commented repeatedly that a rise in the minimum wage results in increased unemployment for people at or near the minimum wage. 79% of economists agree, evidently. So how about some proof of your hypothesis with a link to some studies. Or even just some figures. Can you say how much would unemployment rise by if the minimum wage were increased to $15, and how long would the effect last? Or is this just a theory that you believe but can’t prove?

        • Paul Walker 16.1.1.1

          “So how about some proof of your hypothesis with a link to some studies.”

          Try the book I have referred to about 4 or 5 times so far. “Minimum Wages’ by David Neumark and William L. Wascher, Cambridge: MIT Press, 2008.

          • Marty G 16.1.1.1.1

            Come on, Paul. One book by two no name US neoliberal economists, whose 2007 paper says:

            “We review the burgeoning literature on the employment effects of minimum wages in the United States and in other countries that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.”

            I have had a brief glance at some of the papers they are reviewing that show negative employment effects and the typical neoliberal circular arguments are everywhere to be seen.

            See the thing aobut economics is there are almost always variables or constants whose values aren’t accurately known, so the economist assumes the ones he (it is invariably a he) thinks are fair, which just so happen to fit his pre-concieved notions. In the vast majority of neoliberal economic papers when you dig down you find there is a crucial assumption from which all the conclusions flow.

            • ben 16.1.1.1.1.1

              Marty, you have zero credibility and are in fact a hypocrite when you demand better evidence from your opponents while offering none whatsoever of your own. It is simply hypocrisy to label your opponents ideologues when they actually produce evidence in support of their position and you offer none of your own. Nobody on this entire thread has offered so much as a link to a news site, let alone actual research, in defence of minimum wage.

              [lprent: As far as I can see no-one has offered a credible reason not to do it either. Just some vague ideas about ways it may be bad in the short-term for some employers and their employees. Paul is making a credible effort (just wish I had more time to debate it).

              Perhaps you should concentrate on saying why it is a bad idea rather than attacking my writers. ]

              • Armchair Critic

                ben at 10:42
                “I havent read the rest of the thread, but here is a prediction: he wheels out exactly the evidence you asked for, you reply with name calling and accuse Walker of presenting theory that has nothing to do with the real world, and Walker points out that empirical evidence is from the real world”
                Umm, and you are above name calling?
                and again at 10:57
                “…demand better evidence …while offering none whatsoever of your own…”
                Try wikipedia – minimum wage, for starters. If you can work out what it is saying, try a google search. And ffs, read the links that don’t match your ideology. If you are capable of critical thought, have a think about what the links are saying.
                “Nobody on this entire thread has offered so much as a link to a news site, let alone actual research…”
                Neither has Paul, nor have you.
                “…in defence of minimum wage.”
                The post is about the failure of the government to raise the minimum wage, not a justification of the existence of a minimum wage. I’m not interested in your diversion, especially in the light of your confession that you haven’t read the whole thread (and it shows).

            • Paul Walker 16.1.1.1.1.2

              “We review the burgeoning literature on the employment effects of minimum wages in the United States and in other countries”

              That statement is the point. In the book they give a survey of the economics literature as it sands. Are there problems with this literature, yes, but there are problems in all empirical work. But they outline what is known from the empirical literature on this subject. It is the literature that we have. As I have also noted before, Greg Mankiw has a list of things that economists agree on in chapter 2 of his first year textbook. Number 12 on this list is “A minimum wage increases unemployment among young and unskilled workers’ and 79% of economists agree. So the basic results that Neumark and Wascheroutline are widely accepted by economists.

              Their results don’t confirm your prejudices, fine reject them, but be truthful as to why you are reject them, don’t claim that there is no evidence for views you don’t happen to like.

          • Armchair Critic 16.1.1.1.2

            “Try the book I have referred to about 4 or 5 times so far”
            Effective way to stop the discussion. Believe it or not I don’t have a copy on hand.
            Thank goodness for google – it seems there is as much out there on the subject that disagrees with your hypothesis as there is that agrees with it. And, being polite, you seem to have overstated your position.

            • NickS 16.1.1.1.2.1

              Heh, sometimes wikipedia is rather useful on esoteric subjects*:
              http://en.wikipedia.org/wiki/Minimum_wage#Statistical_Meta-analyses

              And Paul, you’re much better off linking directly to journal articles, particularly ones which aren’t sitting behind a pay-wall, since the people you’re tying to engage probably don’t have journal access, or convenient access to a university library. Or at least until the day google gives full, free or low cost, access to it’s digital book libraries.

              *like phylogenetic trees…

              • “And Paul, you’re much better off linking directly to journal articles, particularly ones which aren’t sitting behind a pay-wall, since the people you’re tying to engage probably don’t have journal access, or convenient access to a university library. Or at least until the day google gives full, free or low cost, access to it’s digital book libraries.”

                While I take your point, most of the material is published in either books or journals which are available mostly in academic libraries and/or online behind behind pay-walls. And I don’t have a way around that.

              • Bright Red

                guess we’ll just have to take it on faith from you, a neoliberal, that most neoliberal economists believe neoliberal things.

              • NickS

                @Paul

                Actually, google scholar is ridiculously useful for finding freely available pdf copies, not always, it there’s still a decent amount lurking about. That and the citation records can point towards papers covering the same ground that have a pdf copy available.

                But, yes even then often key papers are stuck behind pay walls unfortunately, and coupled with general scepticism towards economics it isn’t going to makes things easy.

            • Paul Walker 16.1.1.1.2.2

              “Try the book I have referred to about 4 or 5 times so far’
              Effective way to stop the discussion. Believe it or not I don’t have a copy on hand.

              Try a library. And no my case is not overstated, it reflects the standard position that most economists would take on this issue.

              • felix

                I’d be interested to hear your reaction to the passage Marty quoted above, presumably from Neumark and Wascher:

                “We review the burgeoning literature on the employment effects of minimum wages in the United States and in other countries that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.’

              • “I’d be interested to hear your reaction to the passage Marty quoted above, presumably from Neumark and Wascher”

                You will fine the response of Neumark and Wascher themselves on the employment effects of the minimum wage in other comments. But basically,

                “Minimum wages reduce employment of low-skilled workers; adverse effects even more apparent when research focuses on those directly affected by minimum wages.’

                In Chapter 9 “Summary and Conclusions’ Neumark and Wascher write,

                “Three conclusions, in particular, stand out. First, as indicated in chapter 3, the literature that has emerged since the early 1990s on the employment effects of minimum wages points quite clearly despite a few prominent outliers to a reduction in employment opportunities for the low-skilled and directly affected workers’.”

                There a a number of other effects of the minimum wage that I haven’t discussed and you do see variation in these results.

              • felix, you asked

                I’d be interested to hear your reaction to the passage Marty quoted above, presumably from Neumark and Wascher:

                “We review the burgeoning literature on the employment effects of minimum wages in the United States and in other countries that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage.’

                Well I think I have found the paper Marty G is quoting, and let me quote the sentence that come directly after the quote that Marty G gives,

                “However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect.”

                and Neumark and Wascher go on to say,

                “A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few if any studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.”

              • ben

                Marty has been completely owned again in this thread. Again and again and again Paul Walker has previously shown Marty’s analysis to be faulty. Now he’s caught out Marty with some highly selective quoting. Marty – your credibility is about zero.

                [lprent: Bullshit. I think that you’re fantasising. ]

  17. Graham 18

    In response to Steve at 3:13 (cos the discussion’s moved on a bit since then …)

    You said (and sorry in advance for the long quote, but I don’t want to be accused of taking things out of context):

    “Your idea suggested that a fair society without a minimum wage could be achieved by people studying and getting better jobs.

    I pointed out that there would, then, be no one to do unattractive jobs.

    You seem to have responded that in fact *not* everyone would get a decent wage by studying and getting a better job.

    So, we seem to agree that for everyone to get a decent income we need a minimum wage.”

    Do we agree? That’s honestly difficult for me to answer. Ideally, I would have NO minimum wage; in reality I think the case can be made for one but I disagree that it needs to be so high.

    In my ideal, there would be no minimum wage, period. Rather, people would simply work for a wage that seemed fair to them. Employer “A” offers a cleaning job at $5 an hour, while employer “B” offers a cleaning job at $10 an hour – who will people choose to work for?

    “Ah”, you say, “but no employer will pay more than he or she has to, so they will ALL offer $5 an hour, and people will HAVE to take those low paid jobs or starve”. Well no, because in NZ we have a relatively generous welfare state, so people will simply refuse to take any of the cleaning jobs and go on welfare. Employer “A” and all the other cleaning contractors will then realise that in order to attract any staff, they might just have to offer a wage that is slightly more attractive than welfare benefits. OR, there will be some people who don’t need to make a wage to live on but just want some extra money (eg they’re not the primary earner for their household), and those people may choose to do the jobs. (And at this point could come a digression, namely: what IS a “decent income”? Maybe that’s the real problem: define a “decent income” that EVERYBODY can agree on. Won’t ever happen.) Or again, everyone could turn around and laugh at those employers and say, “You must be joking!”

    Now that’s my ideal, but it won’t work in this country. Several reasons, but one reason, I’m sad to say, is that often people in these jobs are convinced that they have no choice, no power, that they have to work in these jobs with bastards for managers, and their only hope is to join the union (I won’t get started, but no obviously I no longer belong to a union although I did for several years, probably 7 or 8).

    But people DO have a choice. They can choose to better themselves (and I believe EVERYONE is capable of doing this if they want to – they don’t necessarily all have to become brain surgeons), they can choose to work for crap wages and conditions or they can choose to go on a benefit. They can choose to belong to a union and allow the union to negotiate on their behalf, or they can do what I do – negotiate with my employer for wages and conditions that seem fair to me. When my employer refuses to meet my conditions, I can choose to swallow my pride and accept what’s on offer, or go somewhere else in the belief that I’m worth more.

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