Minimum wage rises good for workers

Written By: all_your_base - Date published: 1:31 pm, December 18th, 2007 - 43 comments
Categories: workers' rights - Tags: workers' rights

Reports suggest that the government is set to raise the minimum wage to $12 an hour. Coming toward the start of 2008, this would mark the ninth rise in as many years.

When it comes to income, one trick ponies John Key and National would like you to believe that the only thing that counts is the tax rate. This couldn’t be further from the truth.

The Dom reports that this latest modest rise to the minimum wage will be worth around $30 a week to the 200,000 or so workers on the lowest pay rates. While some may claim that the minimum wage still isn’t high enough let’s not forget the alternative. Over the years National have opposed rises to the minimum wage at nearly every turn. Their record is shameful – John Key desperately wants you to forget the injustice of the National-90s. Just check out the graph below.

In nine years in government the Nats raised the minimum wage only three times.

In nine years under the Nats the minimum wage rose a mere 88 cents.

That’s less than 10 cents a year.

I’d call it “pocket change” but it’s not. The astounding fact is that the Nats were so miserly that we don’t even have a coin of low enough denomination in our circulating currency for the Nats to have added it to your hourly pay.

Workrights are going to be a huge issue at the next election here – the same way they were in Australia. Howard’s wholesale attack on Aussie workers was one of the main reasons the electorate rejected him. Bear that in mind when National releases ~~the Business Roundtable’s~~ their Industrial Relations policy.

My guess is that it’ll be heavy on slogans, light on real substance: John Key and National writ large.

UPDATE: The inflation-adjusted figures paint an equally compelling picture. Check them out at kiwiblogblog.

43 comments on “Minimum wage rises good for workers ”

Comments are now closed

Billy 1

18 December 2007 at 1:45 pm

We could solve all poverty if the government would only set the minimum wage at $120 an hour. You know it’s just common sense. Why won’t the government of the people do this?
Sam Dixon 2

18 December 2007 at 1:52 pm

Billy, that’s so stupid.

No-one’s talking aobut raising the minimum age to $120 and it obviously wouldn’t solve poverty. However, raising the minimum wage by an above inflation amount does lift the standard of living for low-pay workers, making up for the gap tht National caused in the 1990s.

Why is it people like you can only see things in such simplistic terms? Like those of you who say ‘carbon dioxide is needed for plants to grow, therefore spewig massive quanitities of it into the atomsphere cna’t be a bad thing’
Sam Dixon 3

18 December 2007 at 1:55 pm

kiwiblogblog’s got another look at this issue – http://www.thestandard.org.nz/?p=883 – their graph is inflation adjusted, but the standard’s looks better with the colours and all
The Double Standard 4

18 December 2007 at 1:59 pm

Anyone have any figures of how many people actually receive the minimum wage over the past decade?
Tane 5

18 December 2007 at 2:00 pm

Darn it AYB, I was working on a similar post myself!

That’s some amazing progress right there – 70% over eight years. Here’s hoping Labour adopts the CTU’s call for a $15 minimum wage at the next election.
Billy 6

18 December 2007 at 2:02 pm

“people like you”

You mean Jews?
Kimble 7

18 December 2007 at 2:08 pm

Sam, Billy was making a point that you seem too stupid to understand.

You guys never listen to National’s reasons for opposing increases in the minimum wage. Even here you dont address them.

You are obviously incapable of having a dispassionate discussion of minimum wages laws. You need to grow up.

You have never even considered that the minimum wage-increase lull in the 1990’s is why Labour can increase the minimum wage now. Nor have you considered that wages may have increased beyond justifiable levels before National took power and that their industrial relations policy merely allowed the labour market to correct this mispricing.

If wages had increased at the rate they had before National (and good old Labour) what would they be now? What would inflation be? Would the minimum wage be over $25?
Kimble 8

18 December 2007 at 2:12 pm

Will there ever be an increase in the minimum wage that you wont support? If there was a Labour led proposal to double it, would you campaign against it?
Tane 9

18 December 2007 at 2:15 pm

Kimble, good to see you agree National’s industrial relations policy in the 90s was aimed at reducing wages. But given how often National talks about wages in NZ not being high enough and complains about people leaving for Australia, don’t you think it’s time they took the blame and reviewed their anti-worker IR policies?
Tane 10

18 December 2007 at 2:18 pm

Will there ever be an increase in the minimum wage that you wont support? If there was a Labour led proposal to double it, would you campaign against it?

Kimble, I’ll refer you to Sam Dixon’s earlier comment in this thread:
http://www.thestandard.org.nz/?p=883#comment-10464
Kimble 11

18 December 2007 at 2:26 pm

Actually, I said that you lot had never considered it. I wasnt stating it as my opinion, just pointing out the lack of reasoning that led you to yours.
Santi 12

18 December 2007 at 2:26 pm

What about making tax free the first 10,000 dollars of income, or even more? That’ll do more for people who really need the money.

You can almost hear Scrooge Cullen saying No way!

Where is Dunne, the Minister of Revenue and champion of commmon sense (…not!) when you need him? Missing in action, of course.
Kimble 13

18 December 2007 at 2:32 pm

Well, $1.5billion in tax cuts have been announced.

Stand back for the wall of silence from the Standard on why these tax cuts are good, but Nationals would be bad.

100 points for the first loser to say that the tax cuts are bad of course, but they will be good if it means that National doesnt win the election next year.

(With the implication that Labour is promising the cuts now but will renege on that promise if they win the election. God bless lefties and their “principles”.)
Tane 14

18 December 2007 at 2:33 pm

What about making tax free the first 10,000 dollars of income, or even more? That’ll do more for people who really need the money.

Yeah, that’d be nice too, but I don’t see why the government should use public money to subsidise low wages.
Matthew Pilott 15

18 December 2007 at 2:39 pm

Santi, increasing the minimum wage has a better effect as it targets only those on minimum wages – fair enough to assume they’re the people who need it the most.

However I agree with you that a threshold change would work if it was coupled with an increase in taxes for other brackets, especially if it was geard to income-neutrallity at the median wage.

Someone asked how many people this would Affect (TDS) – think the DomPost quoted 200,000 (this would include anyone not on the minimum wage, but below the new level i.e. between $11.25 and $11.99). I can’t recall what percentage of our workforce this compromises.

Nice to see eight years of consecutive increases haven’t negatively affected employment levels. Now where are those doomsayers?
Sam Dixon 16

18 December 2007 at 2:43 pm

Kimble – “Well, $1.5billion in tax cuts have been announced” no they haven’t the Treasury has said there is headroom for that much and the RB has factored that much into their projections… that’s not government policy.

and your “Stand back for the wall of silence from the Standard on why these tax cuts are good, but Nationals would be bad.” agian shows this lack of ability to realise that its levels not absolutes that matter.
decent minimum wage rises good – rises that would cripple the economy bad
medium-sized tax cuts good – large ones that would put the govt in deficit and boost inflation, bad
Seamonkey Madness 17

18 December 2007 at 2:44 pm

Tane,

You are deflecting the question(s). Please answer it(them).

Now being a person without time to do the research, and The Standard people being so passionate about the issue of MW – could you please graph the rise in the average FTE wage vs the MW over the same period please?
(I said please! 🙂 I don’t care what side of the argument would come out best, I would just like to see it, thats all…)
Also while you are at it, could you graph MW vs inlfation rate and/or OCR?

Also, at what level do you find it acceptable to raise the MW? You have stated $15. What about $16? $17.50? A round $20?? The public want to know how much you are willing to pay that spotty teenager, with 3 months experience behind the grill, to flip your burger. =)
Matthew Pilott 18

18 December 2007 at 2:47 pm

Kimble, incase you haven’t noticed, National hasn’t got anything in term of policy regarding tax cuts! Apart from that they will.

Bit premature there…
Kimble 19

18 December 2007 at 2:51 pm

“Yeah, that’d be nice too, but I don’t see why the government should use public money to subsidise low wages.”

Tane, are you shitting us? What do you think WFF is?
Tane 20

18 December 2007 at 2:53 pm

SM, if you want inflation adjusted blogblog’s done a graph that’s already been linked to on this thread over here:
http://kiwiblogblog.wordpress.com/2007/12/18/super-sizing-the-minimum-wage/

I don’t have time to graph it next to the average or median wage and frankly I’m not sure what the point would be. The minimum was far too low and needed to catch up. It still does. The CTU’s call for a $15 minimum wage sounds reasonable enough to me as it’s around 2/3 of the average full time wage.

If you want to see what’s happened to wages under National and Labour go here:
http://www.thestandard.org.nz/?p=527

For a copy of the CTU’s submission on the minimum wage go here:
http://union.org.nz/policy/ctu-submission-on-the-2007-review-of-the-minimum-wage
Sam Dixon 21

18 December 2007 at 2:55 pm

Seamonkey – the Standard has done median wage over the same time period before. http://www.thestandard.org.nz/?p=527 that’s an annual figure, as opposed to an hourly rate there are basically 2000 work hours a year.

(you don’t want average, you want median, don’t want to have to explain why again).

The CTU wants $15 an hour, which would restore the minimum wage to its historic level of to thirds of the average wage.
Tane 22

18 December 2007 at 2:56 pm

Tane, are you shitting us? What do you think WFF is?

It’s a tax credit targeted at families to help offset the cost of raising children. I think it’s good that tax cuts are going where they’re most needed. Some employers may see it as an excuse not to pay higher wages but they’ll find any excuse, won’t they?

But certainly I’d agree WFF is not a substitute for higher wages – no tax cuts never are. That’s where National has it so very wrong.
The Double Standard 23

18 December 2007 at 2:58 pm

Kimble – technically WFF is not a low wage subsidy, its a low wage kids subsidy.

The funny thing is though that Tane referes to public money subsidising low wages, but it is really taxpayers own money that is being recycled back to them! Reducing or eliminating taxes on the first component of income seems like a sensible idea to most, but it fails the socialist test of sticking it to the rich pricks.
Kimble 24

18 December 2007 at 3:00 pm

Treasury has said the same thing for a number of years, but now MC decides to listen to them. They must be over their bout of brain farting.

Sam, it is you lot that are accepting that the increase in the minimum wage is an absolute good. You havent justified it beyond the point that it gives people more money.

FFS, even I can justify this increase in the minimum wage better than you have!

“Nice to see eight years of consecutive increases haven’t negatively affected employment levels.”

How can you be sure they havent? What would employment levels be if there wasnt 8 consecutive years of increases? Maybe the impact of the 8 increases has been masked by the good global economy? Perhaps we wont see the impact of the increases until the economy tanks?

As I said, maybe the increases by Labour have had a limited impact because of the hard political work done by Naitonal? Perhaps Labour is reaping the rewards of the unpopular policies of the 1990’s?

If you havent ever considered these possibilities, or have dismissed them without giving them proper consideration, I dont think you can justify your current position as having been achieved through rational thought.
James Kearney 25

18 December 2007 at 3:08 pm

You’re grasping at straws Kimble. Really. It’s sounding desperate.
Seamonkey Madness 26

18 December 2007 at 3:27 pm

I just noticed the update link to KBB.
Nice graph.

What years do you consider ‘historic’ for your 2/3 of average FT wage?
I say this as the line track up…and up….and up, not back to a flatline from where National picked up the reins.
Sam Dixon 27

18 December 2007 at 3:55 pm

historic is pre-neoliberal revolution.. i’m not sure of the years but the CTU says that 2/3 of average wage was the traditional norm for the minimum wage (there has been a minimum was since 1893)
Seamonkey Madness 28

18 December 2007 at 4:27 pm

Could you please ask the KBB lads to extend their graph back another 20 years and show points where Governments take over please? I think it would be interesting and a good exercise.
Can’t be bothered signing up to it. 🙂
Kimble 29

18 December 2007 at 4:38 pm

JK, just admit you simply arent capable of thinking things through rationally.
Leftie 30

18 December 2007 at 4:39 pm

While many employers annually review and increase their starting hourly rate, many employers do not. Those that do not, generally pay their lowest workers the minimum rate. Effectively the only way these workers get a pay rise is when the government lifts the minimum adult rate. This situation happens whether productivity increases or not.

What some people forget is it can all start from the bottom. For example, the boss is not going to say “give me a 2 percent payrise” when lower ranked workers at the same place of work have received a 5 percent payrise. People that argue against any steps taken to raise hourly pay (industrial action, increase minimum wage etc.) are shooting themselves in the foot in my opinion.

Boil this up, down or any which way you want. This will directly put money into low paid worker’s pockets and put pressure on pay right through to management levels.

Kimble said:
“If wages had increased at the rate they had before National (and good old Labour) what would they be now? What would inflation be? Would the minimum wage be over $25?”

– We sure wouldn’t have the National party campaigning on the difference of pay between here and Australia.

National’s actions do not match their words. I think an honest political party campaigning on lifting wages would be happy to vote for initiatives to lift worker’s pay and conditions.
Seamonkey Madness 31

18 December 2007 at 5:29 pm

Thanks for humouring me KBB lads. And yes it does make for interesting reading doesn’t it!

Doesn’t make good reading for National does it? 😐
I guess you have to take into consideration global economic conditions, but it does paint a picture that National doesn’t keep at the 2/3rds level that is the supposed historic level.

If they really like humouring me (and perhaps unwittingly showing National up again) then have a line showing the 2/3 average(median!) FT wage. 😀

Once again, thanks for whipping that graph up.
Matthew Pilott 32

18 December 2007 at 5:37 pm

““Nice to see eight years of consecutive increases haven’t negatively affected employment levels.”

How can you be sure they havent? What would employment levels be if there wasnt 8 consecutive years of increases?”

We’re pretty much at full employment now Kimble.

KBB and Wat Tyler have done plenty on this, but from memory, if you remove the long-term unemployed, and a percentage from structural unemployment (i.e. in between jobs) you’re looking at SFA of a percent!
Kimble 33

18 December 2007 at 7:37 pm

“Effectively the only way these workers get a pay rise is when the government lifts the minimum adult rate.”

Not true. They can also use their increased experience to find new employment at a higher rate.

“This will directly put money into low paid worker’s pockets and put pressure on pay right through to management levels.”

What is scary is that you consider this unquestioningly good.
Kimble 34

18 December 2007 at 10:08 pm

“We’re pretty much at full employment now Kimble.”

If we had reached full employment a few years ago, who’s to say we wouldn’t be in a better position to ride out the global turbulence in the next recession?

And the word you were looking for was frictional. Frictional.

Structural unemployment may be what we had in the 1990’s, and is what you lefties whine about constantly never considering that without those changes NZ wouldn’t be as good a place as it is today.
burt 35

18 December 2007 at 10:42 pm

all_your_base

These numbers don’t look so flash when compared to housing affordability.

http://www.chranz.co.nz/pdfs/regional-housing-markets.pdf
Wayne 36

19 December 2007 at 1:42 am

Burt are you arguing for even higher minimum wages?
The PC Avenger 37

19 December 2007 at 11:16 am

Kimble, since they tend to be low skill, the experience minimum wage jobs provide makes it easier to get other jobs that pay minimum wage, not higher paying jobs.

By the way, since you seem to be suggesting a market driven solution to low wages, you might be able to answer this nagging question I have.

Why, if it is the best means of creating change and causing improvement, has “The Market” has been is has beaten to the punch by every piece of progressive employment legislation ever?
Kimble 38

19 December 2007 at 12:13 pm

PCA, you obviously dont know what the “Market” is, other than something to heap irrational hate upon. But lets just address the point you made before you reverted to a gibbering mess.

Does your minimum wage worker, who is stuck in that job for decades at a time with no ability to find better employment opportunities, even exist?

Is minimum wage employment merely a transitory state?

A real study needs to be done on minimum wage jobs. There are people who are paid the minimum wage (though many more who are paid relative to it I would say), but how long do these people stay in those jobs? How long are people paid the minimum wage before their situation improves?

Are there other things that mean the value of the job to them makes up for the minimum wage? For example, are most of the people on the minimum wage for their second job? In which case their take home pay is affected by the lower tax rate.

How many people on the minimum wage are employed by a family member? How many self employed people pay their spouses the minimum wage?

I doubt we have this sort of detailed information available and easily accesssible, but it would make a good doctoral thesis for some lucky young student.

Even in minimum wage employment, experience makes employees more efficient and therefore more valuable. I cannot think of a single minimum wage job where this doesnt hold, and its not as if I lack imagination. Can you suggest any?

captcha: pamela defeated (didnt she just file for divorce?)
The PC Avenger 39

19 December 2007 at 2:13 pm

Actually, the reason why I used the term “The Market” was not because I misunderstand the principle of a free market, or hate the concept, but to parody the people that advocate deregulation as the solution to all of lifes problems.

I have a minor form of dyslexia, so you’ll have to excuse the mangled grammar in my previous post.
roger nome 40

19 December 2007 at 4:36 pm

Here’s some interesting information that provides a little more historical context for this discussion..

“The minimum wage was 78 per cent of the average wage in 1948, the highest it has ever been. It was allowed to fall to 40 per cent of the average wage by the start of the 1980s. Then it was raised from 30 to 53 per cent in 1987 by the new (Lange) Labour Government. By 1988 it was higher than the minima specified in 20 per cent of prevailing awards. Since September 1990 it has been kept at $6.125 per hour and in the year ended March 1991, for example, relative to the average wage the minimum had fallen back to 1987 levels. In 1992 it has been lower still, in relative terms.”

http://www.hrnicholls.com.au/nicholls/nichvo13/vol133de.htm

Now, the minimum wage will be raised to $12 in early 2008, and assuming that average hourly rate stood will stand at around $23.00 at that time (it’s about $23.00 now) the minimum wage will be 52% of the average wage – slightly less than it was in 1987 under Lange.

http://www.dol.govt.nz/lmr/lmr-wage-growth.asp
Kimble 41

19 December 2007 at 6:15 pm

Think of free marketeers as the naturalists of the political and economic realm. They want to return to a more natural state.

It is quite easy to show that government interference doesn’t lead to the optimal (or even the intended) outcome. Think about rent controls. The problem is rents are going up too much, the government decides to solve the problem by legislating a cap on rents. Result? Less houses built, black market forms, black market prices are higher than what the market price would have been, people in rent controlled houses never move.

We would have been better off if the government hadnt bothered trying to help.

captcha: stern indifference