Right still attacking the minimum wage

Written By: - Date published: 7:00 am, May 23rd, 2011 - 194 comments
Categories: labour, making shit up, minimum wage - Tags:

Labour’s pledge of a $15 hour minimum wage is worth more than any tax cut – $66 a week net to a full-time minimum wage worker. The right is crying it’ll hurt the economy and destroys jobs. That’s rubbish. In particular, the history of changes to the youth minimum wage shows no relation to youth unemployment. The Right are just making excuses for ripping-off workers.

The youth minimum wage was introduced in 1994. Prior to that, there was no legal minimum for workers under 20.

According to the Right’s theory, this infinite increase in the minimum cost of youth labour should have sent the unemployment rate for youths through the roof. Did that happen? No. And it didn’t go up in relation to the general unemployment rate either.

What about when 18 and 19 year olds went from the minimum rate to the adult rate in 2001? Nope, no link there either.

Finally, what about when 16-17 year olds, most of whom aren’t in the work-force, of course, went to the adult rate after 200 hours’ work on April 1 2008? Nope, no link there either. The unemployment rate among 16-19 year olds, most of whom were already on the adult minimum wage, remember, didn’t start rising until six months later. And it did so in conjunction with the general unemployment rate.

It is the never-ending recession through which National has mis-managed this country that is still driving the youth unemployment upwards – it hit a new high of 27.5% last quarter. But don’t expect the right to stop blaming it on the minimum wage. They will invent any excuse to push down workers’ wages and exploit us for greater profits. We can safely ignore their bogus claims.

Instead, lets consider what a $15 an hour minimum wage will do – 270,000 people get a pay rise directly, half a billion a year in total, or $2,000 each. That’s far more than any tax cut could ever deliver. The trade-off is a 1% reduction in the net operating surplus of business, which is making $55 billion this year, much of which is going overseas.

Higher wages are the route to a more prosperous country. Both National and Labour say that. The difference is that National promises that higher wages are just around the next corner – once we earn it through higher ‘productivity’ – and at the same time market us abroad as a low wage economy. Labour, on the other hand, knows there’s plenty of productivity already to justify higher wages already, it’s a question of how fairly that wealth gets shared.

– Bright Red

194 comments on “Right still attacking the minimum wage”

  1. RedLogix 1

    Both National and Labour say that. The difference is that National promises that higher wages are just around the next corner – once we earn it through higher ‘productivity’ –

    And that has to be the cruelest hoax of all. The advent of technology since the 1980’s has doubled, tripled or even quadrupled labour productivity in many industries, yet in the same period real wages have declined 25-30% and the wage/salary share of GDP has continued to drop.

    The simple fact is that all this new ‘labour productivity’ gets captured and does little to improve living standards for ordinary people.

    • Nick C 1.1

      Well here is an economist who disagrees with you. But he must be a RWNJ. I mean, who has ever heard of ‘Paul Krugman’?

      http://bit.ly/mFyQPK

      • Pascal's bookie 1.1.1

        Glad you brought him up:

        A few years ago, Krugman, having decided that he was going to be writing about politics and so he should know more about it, did a very Krugman thing. He didn’t talk to people who worked in Washington. Instead, he started to read the political-science literature. Krugman had never understood the press coverage of politics, which seemed to emphasize its most irrelevant aspects. Why dwell on a presidential candidate’s psychology when the trends in unemployment would tell you who would win an election? But viewed through the prism of political science, politics began to seem much more familiar to him. There was a mathematics to it—you could assemble data, draw correlations, understand what was essential and what was noise. The underlying shape of politics came sweeping into view: If you arranged members of Congress from left to right based on how they voted on welfare-state issues—Social Security, Medicare, unemployment insurance—it turned out that this left-to-right axis could predict every other vote: On Iraq expenditures, on abortion, whatever. “When you realize the fundamental divide in U.S. politics is just this one- dimensional thing, and that is how you feel about the welfare state,” Krugman says, “that changes things.”

        You could see something else in the data, too. From 1979 to 2004, the income of the richest one percent of Americans grew by 176 percent, that of the richest one fifth of the country by 69 percent, and that of everyone else by less than 25 percent. Working through the numbers, Krugman came to believe that “only a fraction” of the change was compelled by global forces, which had been the standard explanation. The rest, he concluded, was political.

        It was Krugman’s Princeton colleague Larry Bartels who made the critical connection, in research Krugman devoured and still cites. Perhaps the most important influence on income inequality, Bartels argued, was something economists had not emphasized: whether a Democrat or a Republican was in the White House. Since World War II, Bartels found, wealthy families in the 95th percentile in income had seen identical income growth under both parties. But for families in the 20th percentile, the difference was astonishing: Under Democratic presidents, their income grew at six times the rate it did under Republican ones. There was, for Krugman, a kind of radicalization implied in this.

        http://nymag.com/news/politics/paul-krugman-2011-5/index3.html

        • Nick C 1.1.1.1

          Err… And what does this have to do with the correlation between productivity and wages?

          • terryg 1.1.1.1.1

            same R value (~ 0)

            IOW there is no correlation

          • Pascal's bookie 1.1.1.1.2

            Err… And what does this have to do with the correlation between productivity and wages?

            Policy will determine whether or not the growth “gets captured [by an elite] and does little to improve living standards for ordinary people.”

            Have a look at what happened under GWB with regard to productivity and wage growth, taking care to note any differences between income quintiles.

            • terryg 1.1.1.1.2.1

              Pascals Bookie,

              bugger GWB – look at what has happened in NZ wrt the growth in productivity (a lot) vs the growth in wages (naff all). Then look at the growth in (inflation-adjusted) real wages, its slightly negative.

  2. I caught a bit of the “feminist” programme Let’s Talk on Stratos last night. There was a woman complaining that raising the minimum wage would hurt small business owners (it sounded like she had a small business). She said many small businesses couldn’t afford to pay more wages and also suggested they would need tax breaks in order to keep employing some workers. The interviewer agreed with her.

    I was wondering whether such businesses really were viable businesses if they couldn’t operate without taxpayer subsidies. Though I also wondered if some small businesses could do with some financial aid in the early stage of the development of their business?

    Maggie Barry was also interviewed on Let’s Talk, but I decided I had better things to do than watch the whole programme.

    • burt 2.1

      Carol

      I think you make a valid point that a business should only be considered viable when it can afford to operate in it’s current regulatory environment. We can’t however have our cake and eat it too by changing the regulatory environment and expect all business to still be viable. I think this is the key point, increasing the minimum wage, like increasing taxation or other regulated operating costs, can make a business no longer viable. IE: Job loses.

      • RobC 2.1.1

        “Increasing taxation” ???? What planet are you on?

        You do know the corporate tax rate has gone DOWN, don’t you???

        • burt 2.1.1.1

          linke increasing taxation. Is that the best you can do to misquote what I wrote ?

      • Puddleglum 2.1.2

        But surely this is no different from any change in ‘market conditions’ which result in job losses? In that case, the usual claim is that the ‘lost jobs’ get reabsorbed elsewhere in the economy – i.e., the market reacts to the ‘new normal’. Even in market theory, there is no assumption that all conditions relating to a business’ ‘viability’ will remain constant over time. Isn’t that why ‘innovation’, etc. are always emphasised?

        Why is it that only those conditions that get altered by democratic mandate are deemed ‘distortions’ while everything else is just the market correcting to new circumstances and, so, is a ‘good thing’?

      • Draco T Bastard 2.1.3

        Incorrect burt. The business should only be considered viable if it can pay it’s employees a liveable wage. We define a liveable wage by setting a minimum for that wage. The regulation is already there and the business knows that it will be increased, ergo, if it can’t support that increase then it should go.

        • burt 2.1.3.1

          Draco

          I have no argument that they are only viable if they can pay reasonable wages. But you are talking about changing the legislated minimum. Surely you understand that some marginally viable companies become non viable – hence job loses. We could argue all day about how many though.

          I can see the argument they should have been paying better than they currently are anyway, but that’s not how it is because if it were we wouldn’t need a legislated minimum wage.

  3. tsmithfield 3

    Sorry. But the analysis is flawed.

    There are much greater macro factors that drive unemployment. Unless those are controlled for, then you won’t pick up any relationship between unemployment and the youth rate. You admit as much when you say:

    “It is the never-ending recession through which National has mis-managed this country that is still driving the youth unemployment upwards.”

    So you admit the existence of other variables such as recessions etc, but fail to control for them in the analysis. Very poor.

    • RobC 3.1

      “There are much greater macro factors that drive unemployment”

      So employers and DonKey must be wrong when they say increasing the minimum wage will cost 6000 jobs.

      • Bright Red 3.1.1

        DoL’s model claims that 6,000 jobs will be lost but they have no empirical proof that their model relates to reality in any way. Labour increased the minimum wage by 70% over its 9 years with no apparent ill-effects. I fail to see why another 15% will herald doomsday.

    • Bright Red 3.2

      The graphs show significant time periods around each major change to the youth minimum wage. They show no change in the youth to general unemployment ratio associated with these changes that we would surely expect if your case was valid.

      If you believe that there are other factors disguising changes to the employability of youth due to these changes, it’s for you to present those factors and show how they have influenced the stats at those particular points in time in an offsetting manner.

      Otherwise, it looks like you’re just blowing bubbles.

    • I agree that other variables are important.
       
      Right now we have a low wage low productivity economy.  As was pointed out to the conference on the weekend increasing the number of tourism or wine jobs will not increase average or median wages as the wages paid in those industries is low.
       
      The most productive jobs are those in niche technology areas.
       
      R&D per capita is the lowest in the Western World.  Labour’s R&D investment to me makes perfect sense.

      • I can understand the low productivity part. I’ve seen people on the minimum wage work their butts off for bosses who take them for granted and they get paid no more than the worker who turns up and does the bare minimum. They very quickly learn to conserve their energy….and while being conscientious, they don’t do more than anyone else who works there….or they risk “problems” with co-workers. Their working conditions are onerous and tipped firmly to the employer’s advantage in every way imaginable. Another aspect is that many “managers” in small business are very poor managers of people….and that applies right up the scale of the employment tree….often to the very top.

    • But the bigger point is that by Red Logix which is that the minimum wage means little compared to the almost total share of productivity gains going to Capital long term. I would add that this fact demonstrates the existence of what Marx called the ‘rate of exploitation’, that is s/v, where s = surplus value going to capital, and v = value of the wage.

    • Controlled or not, unemployment in those groups didn’t go up with the favourable (to workers) changes to the minimum wage.

    • Colonial Viper 3.6

      but fail to control for them in the analysis. Very poor.

      Uh, this is like 99% of current neoliberal economic theory.

      Research published without even the slightest hint of out of sample replication.

      So what now since you are so hot under the collar about this issue? You about to ditch conventional Chicago School economics now?

  4. Matthew Hooton 4

    If you’re right, why not go for $20?

    • lprent 4.1

      Elasticity of demand. Come on Matt, even you must remember some basic economics.

      Now if you want to stop fooling with the PR spin responses, perhaps you’d look at the proven case. That raising the minimum wage from virtually nothing to something that people can live on has virtually no effect on unemployment and even less on youth unemployment.

      I am aware that it does in theoretical studies, but theory that is not backed up with credible observation is just junk. There is no actual evidence that I am aware of that moderate increases in minimum wages have an effect on unemployment. God knows I have asked the people who argue the theory often enough for observed effects – which they have been unable to provide. It just seems to be an article of faith rather than having any basis in fact. A primitive superstition.

      Unfortunately raising minimum wages also has no real observed effect on driving shit-arse employers out of business either – which is also predicted in the theories.

    • Eddie 4.2

      how about you give us an evidence-based argument about why you oppose the proposition in front of us as voters, rather than try to argue with a strawman.

      The mere fact that you try to put up a strawman suggests you simply have no evidence to argue against $15 an hour.

    • Armchair Critic 4.3

      1. You will have spotted that The Standard claims not to be Labour. Hence, author’s here advocating a minimum wage of $20/hour would be something quite different to Labour advocating for it.
      2. A dumb question to match yours – if John Key believes wages will rise by 4%, why not legislate for it?
      3. Another one – if John Key believes wages will rise by 4%, will he commit to raising the minimum wage by at least 4%, if National are re-elected? You know a rise of at least 4% would take the minimum wage to at the $13.55/hour.

      • RobC 4.3.1

        You’re onto something AC …. all Treasury forecasts should be put in legislation and rushed through under urgency 😀

        • Armchair Critic 4.3.1.1

          🙂 It is a clear contrast between the two parties that Labour have the courage in their convictions to announce that they will raise the minimum wage to $15/hour, but National don’t have the belief in their own budget to announce a 4% rise in the minimum wage.

    • Bright Red 4.4

      hey Hoots, when you’re hooting on this on nine to noon this morning be sure to point out it will reduce the net operating surplus of business by 1% and increase the incomes of the quarter of a million lowest paid workers and their families by 15%.

    • “If you’re right, why not go for $20?”

      And, if tax cuts are so good for the economy, why not abolish taxation?

      Presumably, the answer to your question has something to do with the difference between a standard of living that is considered to be necessary to provide a base that allows individuals to have sufficient functionality to operate in our society and a standard of living that can be generated from the base of that minimum functionality. The idea is that, when a living standard in a particular society is less than a certain minimum, it is a recipe for generating – at the population level – more problems than it supposedly solves.

    • Colonial Viper 4.6

      If you’re right, why not go for $20?

      Actually the five year project is to get the median wage to $25/hr.

  5. ZeeBop 5

    Its worse than that, it harms our economy to hollow it out. Low wages hurts, in means health care cost more, crime costs more, it means we train and then export our people.

    And its stupid, since tax cuts in a economy flushed with ever cheap oil would have produced growth whichever way. Tax cuts before the oil crunch merely shifted wealth to a tiny elite and if people wanted to keep up they had to borrow more to do so. So when the crunch hit people found themselves overwhelmed by debt.

    So facts are simple, people will not expose themselves to debt any time soon.
    The NZ economy is heavily in debt. So when people do decide to take on debt
    to grow their position they will be competing with the huge private debt problem
    holding back the NZ economy.
    So why should a couple of thousand farmers, the ones in huge debt, or the
    massive numbers who paid too much for their home, be bailed out? Why
    are we supposed to chase the student loan defaulters overseas who owe
    government, but not the private debtors who spent too much, too early,
    and now are holding our economy to ransom?

    We will not innovate, if the moment someone comes up with an
    idea they get on a plane to a place that does have a risk premium on borrowing.
    Lower private debt and NZ will boom. Put a cap on capital farming,
    introduce a CGT and NZ will bloom.

  6. Peter Johansson 6

    If your figures are correct, that’s great news. But once minimum wage earners are on $15, and Labour taxes them via an ETS the net result will be? Labour offer higher taxes, because they think there is productivity to support it: people working harder for the same or less. All they are suggesting is an indirect tax on the rich – or wealth redistribution. Recutting the pie doesn’t make it bigger. Labour had 12 years to ride their “knowledge wave” to success – which has now been renamed as “R&D 2011” – and as far as I can tell, it didn’t even crest. Like the nationwide bicycle lane, it was just a riple in a bucket. National may well have mismanaged this country, no, actually they managed in NZ style i.e. not at all. But the biggest problem is that like Labour, they have no idea how to run a business that produces something. Selling money is one step up from recutting the pie, but now the pie is being bulked out with water and wheat and will pretty soon be nothing but water. That’s how recessions start.

    It is true that in order to offer wages, you must have something to sell to fund wage costs and that arbitrarily choosing a number for a minimum wage (and increasing it year by year because it is never enough) isn’t good business sense. What you end up with – best case – are a nation of sole traders and handy-men; a tiny group of innovators who have no use of loyalty to NZ; an academic research class funded by the government; and a few major corps and subsidiaries taxed heavily. None of these groups will communicate with each other openly or freely and at the slightest governmental interference the ones with the most to offer will look overseas for clients. It’s not like they’ll have to move plant and people over seas – they’ll just take their knowledge on an overnight flight. This will naturally piss the Labour bean counters off and they’ll increase restrictions and taxes and red tape to hold as much revenue here as possible. The major social problem here is that the handy-men and underclass – who will consist of what could be called “factory workers” now – will fall into poverty and welfare won’t have the resource to cover it. Don’t be thinking we’ll be able to afford to maintain modern standards in our SOEs, either. Only The Labour Party win in this scenario, through the perpetuation of the demographic they hold up as reason and excuse – the underclass.

    This is “Labour’s Vision”? Thanks, but I’ll chose option B, C, or god forbid, D. Labour should be most afraid of Option D, because unlike Labour’s vision, that one will sound great, even if it results in the same ends. Without viable ideas ( I mean viable for NZ population not the party) Labour are no longer a choice.

    • lprent 6.1

      It is clear that you are not in the research and development based industries. I have been working in building software and hardware for export for the last 20 odd years. The growth of these types of industries has been incredible over the last decade, and tis the same in all of the other research and development lead areas that I am aware of.

      The actual stats on tech exports show this clearly (I am on my way out to build some more code so I won’t look them up). So if you wish to stop consulting your navel fluff for economic cues then I would suggest looking at the stats department for actual numbers. You will find that tech and servce level exports have risen from bugger all to being about our 5th largest export industry.

      The rest of your comment shows the same level of ignorance – not worth reading really.

      • Peter Johansson 6.1.1

        So you reckon another 20 years of the same till R&D pays off in one industry? What load of bollocks. I hope you enjoy getting the same treatment Farmers are being targetted for now, then. Tax and spend, depress industry – Labour’s style. The only thng you’re off out to do is buy a pie and a coke.

        • Draco T Bastard 6.1.1.1

          Two things: 1) He said it was already paying off and 2) R&D is a long term plan. Something that you RWNJs can’t seem to understand is that to do something well takes time and so you’re after immediate pay offs which end up destroying the economy.

          • McFlock 6.1.1.1.1

            Farmers have also done pretty bloody well out of Agresearch, BTW.

            • Colonial Viper 6.1.1.1.1.1

              Peter Johansson reckons the way for dairy farmers to make money is not by investing in developing new technologies and methods, but by loading the land up with even more cows and hiring more cheap foreign workers.

              What a backward viewpoint. Its what has led NZ to its current crisis unable to create decent jobs at decent wages.

              • terryg

                …and to heavily pollute > 90% of our waterways

                • McFlock

                  100% nz, mate 😉
                   
                  My very basic understanding is that the solutions to a VERY large chunk of our waterways pollution issue have been known for some time, just not mandatory (that old “business self-regulation” at work again). Fencing off, tree planting, silage containment, fertiliser/land use, etc.
                   
                  The latest one I saw was dung beetles. Because NZ needs to let more exotic species run wild in our ecosystem /sarc.
                   
                  I quite like farms – I’d probably even like more farmers if Greenpeace reps were allowed to kick the 50 worst farm polluters in the nuts, annually. Would solve a lot of issues. And we could have an awards ceremony or something for it. It would be nice. {stating the bleeding obvious for tories – the nut-kicking award ceremony, while appealing to a somewhat atavistic side of my psyche, is not actually a serious proposal. You morons.}
                   
                   

        • lprent 6.1.1.2

          The point about the “Knowledge wave” was that it was a infrastructural shift and would require decades to come to fruition. In exactly the same way that the 1950’s and 1960’s investment in agricultural research and infrastructure caused some massive boosts and shifts in our agricultural systems and the protectionist industrialization of the 1940’s and 1950’s built a engineering infrastructure. Both of which we are still leaning on.

          The only thng you’re off out to do is buy a pie and a coke.

          Yes I realize that you’re a bit of an idiot, but there really is no reason for you to display it quite so vividly.

          Have you ever considered at a technical level what is required to keep a site like this running with the half a million page views per month (and tens of millions of hits?). And this site is just a hobby that I do when I have time. But I guess that visualizing something like that would require more imagination and understanding than a fool like yourself could muster.

      • sean maitland 6.1.2

        Wow, so you have a nice little anecdote about R and D, and that makes it true for the whole economy……sold! The fact that when the R and D credits were around still, I knew of companies using them to build systems to work out how to charge their clients more, completely refutes your anecdotes. I would’ve thought someone running this website would know better than to use anecdotes as arguments……..

        Unfortunately, the work you call “R and D” is most likely learning new technologies, that have been learnt and used millions of times before you even cast your gaze on them. If you were really at the cutting edge of R and D, you would at least have surely been smart enough to be able to protect your website from simple schoolboy IP spoofing in the HTTP requests? Surely? Anyway, what you term R and D is not really R and D – there are a handful of shops in NZ doing bleeding edge R and D, not the masses you seem to think there are.

        The elephant in the room for you lefties is that when the youth rates were abolished, you were warned that the net impact would be high youth unemployment (who in their right mind would choose a teenager over an experienced, mature, responsible adult…). Exactly that effect has occurred, and you lefties are trying to cover it up and pretend that its just a coincidence! Whats worse is then you want to actually try and make it even worse by increasing the minimum rate even further, and pretend that there will be no inverse results on the wider economy…….

        Absolutely classic!

        • lprent 6.1.2.1

          You’re talking about the government R&D funding? I wasn’t talking about those at all – I think you just brought that up to make yourself look like a idiot. In fact I’ve never used any of those funds in any business. The only ones we’ve ever used have been marketing into specific overseas markets.

          R&D is a process… But I guess you seem to think that it is a label for government funds. Probably explains a lot about your level of intellect.

          .. you would at least have surely been smart enough to be able to protect your website from simple schoolboy IP spoofing in the HTTP requests

          Why would I care about spoofing? It is not a problem for this site – the site is a open site. You don’t even have to login. If someone is desperate to get around a ban, then they can do so. But they have to avoid the behaviors that led to them getting banned in the first place because otherwise they’ll get the same treatment. You should know that better then most.

          While I am sure that there is some low level of technical skill that thinks that IP spoofing is worth doing (like yourself), I find it difficult to understand why it is of interest here. But if it has kept your dick up since you were a schoolboy – then keep pleasuring yourself.

        • Colonial Viper 6.1.2.2

          sean maitland = rich should get richer, every one else should know their place.

          Absolute classic.

          • terryg 6.1.2.2.1

            Wow, so you have a nice little anecdote about R and D, and that makes it true for the whole economy……sold! The fact that when the R and D credits were around still, I knew of….

            teh stupid, it buuuurns

            whining about anecdata, then “disproving” it with…….you guessed it…..Anecdata!

            Brilliant. Just fucking brilliant.

            FWIW the GFC hasn’t had the beneficial effects for me that I would have hoped – every time I ask my magnetics manufacturer, they are dreadfully busy, and cant immediately make me prototypes, dammit. they never saw a downturn.

            alas the plural of anecdote is not data

            • lprent 6.1.2.2.1.1

              I noticed that. Always a bit of bugger getting the tech support companies time at present…

              • terryg

                Yah Lyn,

                ISTM that the people most hurt by the GFC are those that make/do essentially worthless shit – because when we mortals run low on dosh the first things to go are the things that we dont really need – IOW the worthless shit.

                ISTM that many of the business “models” that rely on wage theft to actually make a profit are in those worthless industries.

                and for all the RWNJs here is an utterly undeniable example – engineering and associated industries that support/enable/maintain dairying. Because whil pouring thousands of tons of cowshit straight into stream is where the milk starts out, getting it to victims oop I mean consumers uses a lot of support industry.

                we LWPMs (Left Wing PolyMaths 🙂 dont want dairying et al to go away (for the above reasons), we just want the fucking filthy greedy farmers to sort their shit out (literally). And like McFlock said above at 6.1.1.1.1….. its not even very hard – but unless the state forces them to do it, they bloody well wont.

                despite what Shon Key thinks, covering your eyes with your hands and chanting “I cant hear you” wont solve problems, only exacerbate them

    • Draco T Bastard 6.2

      Wow, don’t think I’ve read such delusional drivel before. What you’re really saying is that the economy can’t support all our people and therefore we need to cater to the rich first and foremost because they’re, um, rich.

      In reality, of course, the economy can support all our people it just can’t support them and the rich. Guess what? The rational option is to get rid of the rich as they’re weighing us down and actively preventing us from reducing poverty.

    • Peter: What you describe is actually the consequences of the policies being followed by both major parties. Under current policy settings the gutting of the economy is all but inevitable….but it isn’t our political parties that are doing it. It’s the policy settings that allow goods to be easily made elsewhere, closer to larger markets and sources of resources, and then imported here. There is a reason we used to have high tariff walls and a policy of import substitution for everyday items. This created jobs here. It utilized resources here. It built a wide skills base here, offering careers to people locally instead of forcing them to go overseas. Many did anyway, but many didn’t have to to. Today, they have to again as the skills base here shrinks and career opportunities contract. From the environment of tariffs, many industries grew that could compete on the world stage in an open and free way on their own merits. But they will never get started while they have to crawl up out of the long, deep hole dictated by small scale and the tyranny of distance. For the past 30 years we have been pulling the wings off the environment that grew our industrial base and we are now in a downward, contracting spiral which you very accurately describe…..though you mis-attribute the cause. The old days and tariffs had their problems, but I suspect NOT having them will prove in the long run to be worse. We’re not there yet….but it certainly where we are headed – just as you describe it.

  7. PeteG 7

    Is their any comparable period where such a large minimum wage increase has occurred coming out of an extended recession when youth unemployment rates are already very high?

    The trade-off is a 1% reduction in the net operating surplus of business, which is making $55 billion this year, much of which is going overseas.

    That’s a very generalised statement. Some sectors will be affected far more than others – has any analysis been done on a sector by sector basis? And on a region by region basis? For example, what is the likely effect on small businesses and employment levels in the provinces?

    Or are you sticking to “businesses sending profits overseas bad” talking points?

    • Eddie 7.1

      if you think either of those issues are problems, you present the evidence, don’t expect us to negate every one of your wild ideas.

      God, the Right is so lazy.

      • PeteG 7.1.1

        Get real. It’s up to Labour and supporters to justify a radical change to minimum wages.

        You present the evidence to support it being a great idea with no significant adverse effects, compared to no change, or changing it to something like $14 or $16.

        Or it just looks like cynical vote buying – again.

        • wtl 7.1.1.1

          The post already does that in general terms. You are saying that the effects will be different due to a specific set of circumstances. It’s up to you to prove the general case does not apply under those circumstances.

          • PeteG 7.1.1.1.1

            wtl – it’s not up to me to prove anything on this, just like it’s not up to me to prove God doesn’t exist except in some people’s minds.

            Labour should either make a case for their proposed policy or treat it as an election lollypop.

            • Colonial Viper 7.1.1.1.1.1

              Just like tax cuts for the rich are an election lollipop to the rich.

              Except the already wealthy don’t need it to put dinner on the table. Let alone lollipops, you moron.

            • mickysavage 7.1.1.1.1.2

              AAAAAAAAAAAAAAAAAAAAAAAAARRRRRRRRRRRRRRRRRRRRRRRR
               
              PeteG stop trolling.  If you want to read a case for an increase in the minimum wage read the fecking guest post above.

              • RobC

                Remember MS …. mock and smile ….

              • PeteG

                I read it and I think it misses some key points. I asked about them and all you and others have done is try to avoid and divert attention. That makes it look (to me) like a PR campaign more than a case.

                • wtl

                  No, we’ve asked you to come up with evidence for what you’ve asserted. All you’ve done is prove that you can’t be arsed doing that.

                • McFlock

                  Your  “key points” are on the face of it pretty dumb – “sector by sector” we’d expect any negative effect to be in low-wage service industries like fast food or cleaning. Point being that:
                  a) there is  a bit of squeeze space in the food corporates’ profits; and
                  b) cleaning still needs to be done.

                  So attributable impact on employment would be quite low, if any.

                  Region by region would generally only apply in the case of disproportionate weightings towards low wage industry sectors, so your second point is redundant.

                  So, at first glance, your “key points” appear to be grasping-at-straws bullshit. If you have a specific, publically verifiable counter-example, feel free to present it. 

                  • PeteG

                    Do you think a country wide minimum wage should be based on what is deemed a “decent living wage” in the most expensive places to live like Auckland and Queenstown, for the neediest families?

                    A minimum hourly rate doesn’t come anywhere near addressing a “decent living wage” anyway, it’s the total household take home pay including tax deductions and credits like WFF, and the number of people in a household, and the needs of those people, that matter.

                    And even then the requirement varies considerably, even between neighbouring towns like Queesntown and Kingston.

                    • Draco T Bastard

                      Do you think a country wide minimum wage should be based on what is deemed a “decent living wage” in the most expensive places to live like Auckland and Queenstown, for the neediest families?

                      Back when we had a slightly fairer society than today all wages were set nationally. Seemed to work quite well. The biggest problem was the National government that massively overspent.

                      A minimum hourly rate doesn’t come anywhere near addressing a “decent living wage” anyway,

                      Correct, it doesn’t.

                    • McFlock

                      Dear PeteG,

                      While I would love every family to have a case manager who can assess each person’s income and either adjust their government grant level or act as their union rep and dictate award rates in that region, I don’t think it’s something we will ever see, especially under NACT (who I acknowledge that you have not in any way made a decision to vote for, and you might still vote Labour, hence your concern for how the left presents its case).

                      In the meantime, the minimum wage would probably have to be restricted to that which will enable an individual support an average family unit with average overheads at a dignified level, with the difference made up by regional supplementary benefits and/or provision of state housing if required.

                      As you suggest, the minimum wage is not the be all and end all of social policy, and this should be evident to anyone with half a brain cell. But thankyou for your concern, anyway.
                       
                       

            • wtl 7.1.1.1.1.3

              No, my statement refers to how an honest argument would work, e.g.:

              A says we should do B because B is good because of reason C.
              B says no, B is bad because of reason D.
              A points out that the evidence actually supports C, not D.
              If B wants to argue for D, then have to come up with evidence for it, NOT just say, “I don’t believe you because of X, prove to me that X doesn’t apply”.

              But we know it doesn’t apply to you. Besides, even if someone did come up with evidence, you’d probably just come up with a different argument and ask someone to prove its not the case. e.g


              A points out that the evidence actually supports C, not D.
              But PeteG then says “I don’t believe you because of X, prove to me that X doesn’t apply”.
              A comes up with evidence showing that C also applies under those circumstances.
              PeteG then says, “Sorry, but I still don’t believe you because of Y, prove it to that Y doesn’t apply”.
              And so on, forever…

              Who in their right mind would want to engage in such a discussion with you?

            • Puddleglum 7.1.1.1.1.4

              “Labour should either make a case for their proposed policy or treat it as an election lollypop.”

              But Labour – and the Guest Post – has made a case for it.

              Have you ever heard of the phrases ‘the case for’ and ‘the case against’? Labour – and the Guest Post – have made a ‘case for’ (contra your claim). It is up to those who might oppose the suggested policy to mount a ‘case against’. Then discussion begins.

              Your points are interesting questions, but I see no reason why the obligation is on Labour – or the Guest Poster – to pursue answers to those questions, as opposed to others (e.g., what would be the psychological and social effects of not raising the minimum wage during a recession? Has anyone looked at that? These questions are easy to generate, almost endlessly.).

        • mickysavage 7.1.1.2

          PeteG with the greatest of respect you have no comprehension of the events of the last 40 years.  There has been this dramatic shift of resources from the poor working and middle class to the uber wealthy.  And the longer it goes on the worse things get.
           
          Having a minimum wage is an attempt to address this transfer of resources back. It is not a cynical attempt to buy votes, it is a badge of honour for the left.
           
          How about you persuade us why trickle down is such a good idea and present a bit of evidence while you are at it?
           
           
           

          • PeteG 7.1.1.2.1

            …an attempt to address this transfer of resources back…
            …it is a badge of honour for the left.

            That sounds like an ideological policy, not a policy based on sound research and facts.

            • Colonial Viper 7.1.1.2.1.1

              Yeah it is an ideological policy.

              One which says that those who work a full hard week should be able to earn a living wage, enough that they can support themselves and participate in society.

              You got a problem with that dude?

              • PeteG

                Someone plucking a neat round figure out of the air and trying to insist that represents “a living wage” is not my problem.

                For example, it’s far more than a living wage for a teenager living with their parents and working in a supermarket in Tuatapere.

                It probably isn’t an easy wage to live on for a sole parent with three teenagers who works in an Epsom rest home.

                • Colonial Viper

                  Yeah and it’s more than a fair living wage for a 19 year old still living in Dad’s millionaire mansion and who gets the use of his parents HSV every day.

                  Any other stupid examples to make your point with?

                  It probably isn’t an easy wage to live on for a sole parent with three teenagers who works in an Epsom rest home.

                  Get those three teenagers into real jobs at $15/hr and I do not think that life for that family would be a problem.

                • The criteria for what constitutes a ‘living wage’ in a particular society has to be pitched at the population level. It is actually mischievous to ‘divide and conquer’ by pointing out differences in individuals’ circumstances.

                  Policy at a national level (in fact all laws) are inevitably unequal in their effects on individual circumstances because those circumstances inevitably vary (‘natural variation’). But that’s not the point – the aim of policy at the national level can only be to affect population level phenomena and measures in particular ways.

                  What constitutes a ‘living wage’ – at the population level – is part ‘objective research’ (e.g., some comparative measure related to average or median wages, etc.) and part social consensus.

                • terryg

                  PeteG you smarmy disingenuous fuck,

                  there is no supermarket in Tuatapere

                  the closest one is in Riverton, and thats 50km away.

                  so said teenager has to drive 100km every day to get to and from work, which will take about 1.5 hours return

                  thats 500km per week and 7.5 hours driving time (a whole fucking work day sitting in a car)

                  how the fuck much will they spend on petrol eh?

                  and how much is left of their already miserable fucking wage

                  the only possible way a teenager could do this at all is by living at home, because then the parent(s) will stump up for food, accomodation, no doubt the car, etc.

                  typical ignorant arrogant RWNJ – make a bullshit point without even bothering to check its relationship to reality – which is precisely the opposite of what you are “claiming”

                  [deleted sentence]

                  [lprent: Removed out of bounds argument. ]

              • RobC

                He has plenty of problems 😀

                PeteG there are actually some “facts” behind it. I can’t lay my finger on it, but I have seen a graph of percentage increases in wages by decile over the last 20 or so years which basically show how wages in lower deciles have not increased to the same extent as wages in higher deciles.

                There was some media a few weeks ago about pay rises to certain top execs averaging 14%.

            • mickysavage 7.1.1.2.1.2

              No PeteG
               
              It is based on the reality of what is happening.
               
              Go on, show how it is not true that there has been this huge transfer to the wealthy.  Then persuade me why this is good for ordinary Kiwis.

              • PeteG

                I don’t have to show anything, I’m not trying to win an election. Labour need to show that they are not offering too much to buy votes.

                Working For Families was a good idea but it became too generous for too many people.
                KiwiSaver was a good idea but it became too generous for too many people.

                A minimum wage is a good idea but if it becomes too generous for too many people it will have a significant adverse impact on the economy and employment. No one with any clues can deny that simple reality.

                It’s not up to me to convince me that the Labour policy is not too generous. But I guess Labour isn’t trying to attract votes from people who think, they are after votes from people who want (more money regardless of affordability).

                • wtl

                  I didn’t know that “thinking = refusing to accept evidence when it doesn’t agree with your beliefs”. But I guess different words mean different things to different people.

                  • PeteG

                    I haven’t refused to accept evidence. I thought the evidence may not cover the situation we are currently in, and that thought is strengthened by the diversionary response.

                    I’m concerned that past experience may be repeated – and the minimum wage policy is one of “raise and hope” – and hopefully it’s not “raise and don’t care what might result”.

                    • Colonial Viper

                      Gee mate, “pray and hope” describes Bill English’s plan for 4% growth in the economy and wages perfectly.

                    • wtl

                      But can the evidence really cover the “situation we are currently in”? Evidence is always going to be something that happened in the past and things cannot be the same now as they were at then. If you want to be picky, there is always going to be a reason to refute the evidence that is available. Therefore, the default position should be to accept the evidence as it stands unless someone can point out evidence to the contrary.

                      Perhaps minimum wage arguments in the post don’t apply in the present circumstances, but then it seems to me that it is pretty dishonest to just say, “well, I can think of a reason why that evidence isn’t applicable, so prove to me that it is/isn’t the case”. Instead, you should be the one showing that the evidence doesn’t apply under those circumstances.

                      As I pointed out earlier, if others are always expected to prove something to you to justify your criticisms and you aren’t going to do any work yourself, you could just be more and more picky each time and refuse to believe the evidence no matter what. That is the reason people are not responding to your request for ‘evidence’. Why would anyone want to waste their time doing that?

                    • Draco T Bastard

                      …you could just be more and more picky each time and refuse to believe the evidence no matter what.

                      Yep, that sounds like PeteG and RWNJs in general. Put evidence in front of them and they’ll refute and deny it until the heat death of the universe but not actually come up with any valid evidence themselves. Intellectually dishonest, lazy and shows a disconcerting disconnect from reality. It’s even more disconcerting considering that these mind-sick people are presently running the country.

                • The Voice of Reason

                  “But I guess National isn’t trying to attract votes from people who think, they are after votes from people who want (more money regardless of affordability).”

                  Fixed the typo for you, Pete. (You were talking about borrowing nearly $400 million a week to pay for tax cuts for the greedy, thoughtless rich weren’t you?)

            • Roger 7.1.1.2.1.3

              And that looks like a strawman argument to me. Attacking minimum wages is an ideological argument that is divorced from fact.

        • Deborah Kean 7.1.1.3

          Juast saw your buddies on 3 News saying what they always say, Pete.
          An older woman whining about going off overseas if she has to pay to eliminate poverty. Selfish much? Frankly, I thought “off you go then, lady!”
          Vicky

  8. Peter 8

    One question this post raises for me is this. How much of every dollar of income (wages profits interest rent) earned in NZ actually goes off-shore.

    • Colonial Viper 8.1

      I remember seeing a chart package from Treasury recently, from memory it was roughly one in every seven dollars of GDP. The banks alone suck $2.5B p.a. back to Australian shareholders.

  9. ianmac 9

    Recently I heard of analysis on the effect of raising the minimum wage. The criticism from the Right is that it will mean fewer jobs. The analysis showed minimal effect on employment. Sounds like an Australian research but I wish my memory could produce the stats. Somewhere it is.

  10. Lanthanide 10

    PeteG almost made this comment above at #7, but not quite. I didn’t read the replies however, so he or someone else may have brought it up.
     
    I think what is being argued now, is that with unemployment as high as it is now, employers will choose to employ someone older to do the job, because they have more experience. So we may not see an increase in outright youth unemployment, but an increase in the ratio as general unemployment drops.
     
    The difference, this time, is the backdrop in which this change is being made. Essentially it means we might see a longer lag before youth unemployment starts to decrease at a notable rate than we otherwise might if the minimum wage were not put up.
     
    Also, I’d suggest that the 200 hours requirement for 16 and 17 year olds is actually very reasonable, especially when you couple it with the new 90 day no-rights period. 90 days works out to roughly 12 weeks. If someone is being employed 10/hours a week it will take them 20 weeks to get up to the full wage – if they’re slacking around and don’t deserve the job within 12 weeks, turf them out, you still saved money in the meantime vs hiring someone older.
     
    Seems like National want to have it both ways – you can’t increase the minimum wage because it will cost jobs, but at the same time the 90-day bill period will create jobs. Don’t these two cancel out?

    • Draco T Bastard 10.1

      There’s no evidence that the Fire at Will Bill created any jobs. Lots of evidence to show that it increased the abuse of employees by employers though.

      • The Baron 10.1.1

        By lots of evidence, do you mean the handful of videos made by the CTU? Anything, ah, credible?

        • Colonial Viper 10.1.1.1

          Yeah the videos and accounts collated by the CTU. But don’t worry about it, 90 day right to fire is going to be repealed, every voter will know that Labour policy pretty shortly.

        • Draco T Bastard 10.1.1.2

          Got anything to refute the videos made by the CTU? No? Then it’s credible and the only person who isn’t is you as you go around disbelieving reality – again.

          • infused 10.1.1.2.1

            Yeah two videos eh, by shitty employers. There will always be someone. The 90 bill was a blessing.

            • Draco T Bastard 10.1.1.2.1.1

              Got evidence that it was a blessing or is this just more of your unsubstantiated, ideological belief that you’re spouting?

  11. pumping 11

    For a bit of historical perspective, I paid my way though university pumping gas on weekends (remember double-time?) at $13/hr…. in 1982.

  12. Colonial Viper 12

    Frankly what PeteG’s philosophy boils down to is: 14% pay rises for the rich = good, same for the minimum waged = bad.

    He’s a mouthpiece for the capitalist owners of course.

    • Peter Johansson 12.1

      What yours boil down to is rich = pricks, poor = politically useful. Anytime you want to turn over strategic business decisions to barely educated factory floor staff you go right ahead. But then not even Unions do that. It’s get in at bottom and get in line. Hypocrisy of the Left. They don’t care about raising anything, they just want to be in control.

      • mickysavage 12.1.1

        You are now showing your prejudices.  Some of the most perceptive intelligent people who knew how the business operated were on the factory floor and their views are valuable.
         
        Of course the rich and educated like those working in Wall Street have always run the capitalist system for the benefit of all concerned.

        • terryg 12.1.1.1

          and lets not forget what a fucking marvellous job the “business” professionals have done. pick a finance company, any finance company. the world economy. Quite frankly the decomposing corpse of a retarded shellfish couldnt do a worse job.

          and surely the “best of the best” have to be the ratings agencies like S&P, right? they must, by definition, know exactly what they are doing. Yet all of them competely fucking missed every aspect of the GFC. well done.

      • Colonial Viper 12.1.2

        Anytime you want to turn over strategic business decisions to barely educated factory floor staff you go right ahead.

        Oh fuck off, most CEOs couldn’t do a collate, staple, copy and fax by themselves if their lives depended upon it.

        BTW if the factory floor staff is barely trained don’t you think its the fault of a piss poor senior management? Or are they too busy living it up to worry about small details like how shitty and unproductive their “leadership” has left New Zealand?

  13. tsmithfield 13

    The analysis above has a number of problems, and just goes to show the danger of a little bit of knowledge.

    1. As I mentioned earlier, it doesn’t control for other more powerful variables such as recessions etc. (sort of like denying the moon exists because it can’t be seen due to the sun).
    2. Secondly, it could be open to accusations of cherry picking since it only picks out two examples when in reality the minimum wage has been changed many more times than that.
    3. It makes the assumption that the effect will be seen in the same time-frame as the cause, when in fact there may be a lag between the effect and the cause.
    4. It assumes that the effect should be identical in varying economic conditions. However, in reality, there may be much less effect in bouyant economic times when businesses can absorb extra costs compared to recessionary times when extra costs such as this could have much greater impact.

    I don’t think that many would disagree that increasing costs for business will have a negative impact on employment, especially during recessionary times. Therefore, it doesn’t seem too much of a stretch to assume that unemployment for youths will increase if the minimum rate goes up.

    • RedLogix 13.1

      ts,

      Yes increased wages are an increased cost to business… but at the same time they represent an increased income to the business.

      Because the lower paid spend almost all their income every pay period, this money has a very high velocity, ie it’s circulated very quickly.

      Which is exactly what you want in a recession.

    • Roger 13.2

      Regarding 2: The graphs are over 5 year periods, the post only mentioned a few points of interest but the graphs cover most of the years from 1990. So most of the minimum wage rates and changes are included and have shown no serious correlation between unemployment, or ratio of youth unemployment to total.

      Regarding 3: The theory of wage rises causing inflation is based on the idea that wage costs rising cause businesses to lay off or hold off employing staff, therefore the lag effect is limited to the time it takes for businesses to react to the change. Long term lag may be from businesses that hold off employing staff because higher wage rates pushes businesses to invest in capital to raise productivity. This grows the pie and helps raise the standard of living.

      Regarding 1 and 4: If there are more powerful variables that have prevented the effect of higher wage rates on unemployment from taking hold over the last twenty years then clearly it stands that the effect between higher wages and unemployment is either non-existent or weak. It does not assume effects should be identical in all circumstances considering that the state of the economy in each point raised was not identical. The graphs include most years since 1990, New Zealand was in recession in the early 90’s just before minimum wages were introduced and the last graph includes the current recession period with it’s conspicuous lack of volatility or rise in youth unemployment ratio to rest of population despite National also raising the minimum wage.

      • Puddleglum 13.2.1

        Adam Smith in Wealth of Nations:

        In raising the price of commodities the rise of wages operates in the same manner as simple interest does in the accumulation of debt. The rise of profits operates like compound interest. Our merchants and master-manufacturers complain much of the bad effects of high wages in raising the price, and thereby lessening the sale of their goods both at home and abroad. They say nothing concerning the bad effects of high profits. They are silent with regard to the pernicious effects of their own gains. They complain only of those of other people.”

    • lprent 13.3

      I don’t think that many would disagree that increasing costs for business will have a negative impact on employment, especially during recessionary times. Therefore, it doesn’t seem too much of a stretch to assume that unemployment for youths will increase if the minimum rate goes up.

      It depends on how severe the increase in the cost of labour is. But for moderate increases you are quite incorrect. So yes I dispute it – it is the sign of someone who doesn’t understand some basics of economics.

      Quite simply most industries are not limited by the cost of labour. They are mainly limited by their sales and the cost of capital (and if they are limited by the cost of labour, then they should be improving their management because they are clearly not invested in productivity gains). Rising wages allow employees to purchase more because they have more disposable income. Purchasing more allows liquidity because it effectively increases the velocity of money thereby improving its efficiency of use in terms of return on capital.

      You really should have a look at some basic economics. This was pretty well proven in the 1930’s which is why most of the worlds governments operated in much the same way in response to the recession and why it didn’t drop into a classic 19th century depression (which is what your argument would cause). The economic arguments since the 30’s have tended to focus on non-recessionary periods.

  14. Richard 14

    anyone else thinking, that 6000 jobs, while sounding alot, is a drop in the bucket as to how many have lost their jobs under National? Heck, National couldnt even count Christchurch unemployed in their last stats for unemployment as it’d ‘skew’ the data (heres some news National, if you’re unemployed, you’re unemployed, whether from an Earthquake, Aliens blowing up your house, or you got made redundant as CEO of telecom)

    • Colonial Viper 14.1

      If people have more money in their pocket to spend, those jobs will be back again in no time.

      Further, the work done by those 6000 people today still needs to be done. That work doesn’t go away anywhere.

  15. Tangled up in blue 15

    Is their any comparable period where such a large minimum wage increase has occurred coming out of an extended recession when youth unemployment rates are already very high?

    That’s a fair question. In the UK a higher minimum wage led to increased employment though one of the contextual factors was “Strong Economic Growth”.
    http://econ.economicshelp.org/2008/04/why-has-higher-minimum-wage-increased.html

    So it does have to be asked whether in this economic climate NZ business’s can absorb the extra wage costs.

    I suspect that they can but won’t wont to have to do so.

    • Colonial Viper 15.1

      Increased wages leads to more disposable income, and a multiplier effect as that money is spent through the retail and services sector.

      The only killer to the multiplier effect now is that our financial system is foreign owned. When people pay off their bank debts and mortgages, that money gets shuffled straight out of New Zealand, to Australia.

  16. PeteG 16

    I still haven’t seen anyone try to justify an increase to $15 as being the optimal increase with an acceptable level of risk.

    Obviously bumping it straight up to something like $20 would have a large effect on wage rates, business, and probably employment levels.

    Putting it up to $14 would give a noticable lift to low earners with less risk of adverse affects. So would putting it up by 5% per year over three years, less risk, and arguably it could be a better re-election reminder in 2014.

    Instead we have a stated policy with no apparent justification for it being the best amount, and any questioning of it is dissed off. Feels like we are being told to just accept the word of the strategists. I trust them less than the economists.

    • Lanthanide 16.1

      If anything, the $15 needs to be adjusted for inflation, and should be more like $15.50 now. Labour were calling for the minimum wage to go up to $15 by the start of 2011 back in 2009 or 2010.

    • Roflcopter 16.2

      Because by saying $15 per hour, they’ve made Matt’s Unite party irrelevant.

    • wtl 16.3

      I haven’t seen any justification for the cut of the Kiwisaver government contribution by half. How can we be sure that cutting it to by 25% or 75% might not be better?

      Why is National committing to selling $5-7 bn of state assets? Are we sure $1bn won’t be better? Why not $10bn?

      Why cut $1bn in public spending without detail as to where this is coming from? Surely a cut of $2bn would be better? But if we don’t even know what is being cut, why are we planning to cut at all? So is $1bn really the best option? Please show me the analysis that it is.

      • PeteG 16.3.1

        You should show proof of your varied assertions, that’s the way it’s supposed to be done here.

        [lprent: What specific assertion(s)? Doing an open-ended statement like you did here is just irritating

        Reminder: It is assertions of fact that I get annoyed about people not backing. wtl made none of those that are not part of stated policy in the budget. Questions (like wtl asked), and clear opinions are not subject to that restriction. ]

        • wtl 16.3.1.1

          LOL, trying to have it both ways?

          But you are missing the point. I’m not arguing that any of those options is the ‘best’ from a cost/benefit viewpoint (although I have my own opinions on them from a political viewpoint), I’m pointing out your blatant hypocrisy in refusing to criticise things that the National government does without good* reason, but at the same time you criticise Labour for doing something similar. (* = good in a cost/benefit sense)

          For the record I don’t think $15 is necessarily the ‘best’ number but I do think the minimum wage does have to be increased. Other options e.g. $14 or $16 may be ‘better’ in some sense, but in saying that the ‘best’ option for something like this is always going to be a matter of opinion, which will vary from person to person. I can clearly understand why $15 was chosen for political reasons – a number of unions have been campaigning for this for a few years and AFAIK $15 is the current Australian minimum wage. Obviously, for a Labour party going into an election, $15 therefore is a good number to choose.

          • PeteG 16.3.1.1.1

            I was just demonstrating your apparent wanting to have it both ways.

            [lprent – I was having a dig at wtl trying to do the same thing further up the thread.]
            [lprent: Ah – you should make it clearer. When I read something like a reference to the site policies then I assume someone is asking for arbitration. As you know, I get grumpy when I exert myself for nothing much. ]

            I’m pointing out your blatant hypocrisy in refusing to criticise things that the National government

            You’re make a bad assumption there – I criticise National often enough. If I do it here it just floats in the wind with everyone else.

            • Colonial Viper 16.3.1.1.1.1

              GIve Brash your loyalty mate, you know he is the only guy who deserves it.

            • wtl 16.3.1.1.1.2

              Ok, fair enough, I should have been more specific. I was pointing out the hypocrisy in you refusing to criticise National’s budget in any way (let alone for cost/benefit reasons) but at the same time criticising Labour for formulating an election year policy regarding the minimum wage. I believe that the two things are related, and if you demand that Labour make good policy for fiscal/economic reasons, you should demand National do the same.

              I believe you when you say you do, in fact, criticise National. However, in my view, if you want to be consistent regarding your opposition to the $15 minimum wage Labour policy being the ‘best’ number, then you should also have some reservations about the budget. (You may well have some, but I have not seen you voice these here).

              • wtl

                To put it another way, for the following policies (chosen as I believe they can be relatively easily be assessed from a fiscal/economic sense):

                1) Sale of $7bn of assets
                2) Cuts of unspecified $1bn from the public budget.

                Do you believe these provisions in the 2011 budget provide optimal changes with an acceptable level of risk? Are these policies in the budget adequately justified in terms of the amounts chosen?

                For the record, I do not believe that they are justified in those terms, and instead I believe they were chosen for political reasons. In the same way, I accept that the specific $15 level was chosen for political reasons as part of the Labour’s goal of increasing the minimum wage

                • PeteG

                  Re the partial asset sales, they are obviously part ideological, but they go nowhere near far enough for the righter righties. National are very aware of the need for a soft approach from an election point of view, but if they did nothing on this it would risk them losing more votes to Act.

                  I can also see some practical reasons for cautious part sales – it’s common for individuals and businesses to sell some assets to allow for investment in other things, so I don’t see why the government shouldn’t do the same. And both National and Labour are promoting the need for us to save more – asset sales give us more good options for investment in our own country.

                  So I give them a 50/50 on this, part ideological, part cautious pragmatism. And I don’t by into the family silver crap, it’s not like they’re trying to sell the Beehive or Government House. If they part sell but maintain control of a few SOEs they are likely to keep operating much as they do now, and KiwiSaver funds will have more options.

                  • Draco T Bastard

                    …so I don’t see why the government shouldn’t do the same.

                    Because, due to the nature of the assets they’re looking at selling (ie, natural monopolies), it would end up costing us far more as the foreign owners push prices up and investment down (see Telecom) to maximise returns.

                    …asset sales give us more good options for investment in our own country.

                    No they don’t. They give us less options as the return from those assets far exceeds the countries cost of borrowing which would make it so that we would have less money available.

                    And I don’t by into the family silver crap, it’s not like they’re trying to sell the Beehive or Government House.

                    That’s probably because you’re a RWNJ. Selling the Beehive or Government house wouldn’t hurt us anywhere near as much as selling productive assets to foreign owners. We end up without any means to control those assets (Again, natural monopolies) which means we lose a little bit more of our sovereignty.

                  • wtl

                    We are getting a little off topic, but I think they are both the above policies are very political, and balanced in such a way to appeal to those on the right but not scare those in the centre or left. The assets sales are framed specifically as ‘partial’ to try and soften the image. I agree with Draco, selling an unproductive asset would be nowhere near as bad as selling productive ones, since we are losing out on the dividend gain from this, meaning we will effectively get a short term gain for a long term loss of income. It makes no sense whatsoever to do this if the costs of borrowing are less than the dividend from these assets, as pointed out by Bernard Hickey and others, which makes it seem even more political.

                    On the other hand, I’d say the cuts to public sector are being done in a highly cynical way – showing a cut to please those who want a cut, but not saying what would be cut so as to seem like services won’t suffer.

                    Anyway, the whole point of my questions was to point out that ALL political parties will create policies from a ideological point of view. I am very much for a more evidence-based approach to government policy (drug laws are an excellent example). And it will be good if things move in that direction. In saying that, however, for many things choices will always be made in ideological and political terms to a degree, the minimum wage is a good example.

                    Of course, you might not support this particular Labour party policy, as it does not agree with your ideological framework. Or you require a lot of evidence before you will change your mind. That’s up to you. But even so it is no different from most other policies proposed by political parties at times of an election. It does have benefits. It does have risks. Every voter can evaluate those benefits and risks in their own terms. To criticise all those who would support such policy as not thinking and simply ‘wanting more money’ is not only disrespectful but also unfounded, given that there is a lot of the evidence presented here in support of it.

              • PeteG

                I have just said I don’t like how they have restructured KiwiSaver.

                Like many others I’ve previously said that some of the projections are eyebrow raisingly optimistic, and if we don’t come close to hitting growth targets we’ll have more problems.

                I haven’t previously said – the public sector cuts are risky, especially if they bite as we still struggle to get out of recession. And if they impact on essential services then I’d be critical of them.

                On the 4% wage growth projections – if they break with recent innaccuracies and turn out to be correct, then a wage growth spurt has to be taken in to account on top of the effects of Labour’s proposed substantial boost to low wage rates. If both happen together that’s going to heighten the risk a wage/price spiral.

                • The Voice of Reason

                  I don’t think it will risk a wage/price spiral at all, Pete. The rise to $15 is a substantial one in percentage terms (15%, roughly), but it only applies to perhaps one in ten workers. Perhaps another one in ten will also get something, given that anybody on between $13 and $14.99 ph gains from it, but that still not many from the total workforce. And any extra money that group gets, they will spend. Which is good for the local economy.
                  But that is still not a game changer in terms of inflation. 4% for everyone else merely equates to the current inflation rate, so there is no actual gain in spending power. And given that Key specifically said public servants could go fuck themselves if they wanted a rise in the next two years, it doesn’t even apply across the board.
                   
                  Nah, my feeling is that external drivers like oil prices, bankruptcy payouts to rich investors and paying bribes to American film companies will do more damage to our economy than paying low wage kiwi’s better ever will.
                   

                • Increases in profit have a greater ‘pernicious’ effect on the price spiral than do increases in wages. At least that’s what Adam Smith thought. But what would he know?

          • Draco T Bastard 16.3.1.1.2

            Australian minimum wage is AU$15 which, according to the gadget on my desktop, is a little over NZ$20 ATM.

        • dave brown 16.3.1.2

          What about a wage increase because workers need it to live? If employers go bust that’s because they rely on cheap labour, not technology, and to remain competitive have to decrease wages.
          That has been NZs fate since the deregulation of the 80s. The market has responded with 100s of thousands of workers moving to Australia. Economically speaking the biggest variable we have consider is the fact that the NZ economy is integrated into the Australian economy and increasingly into the Chinese economy. That is why it helps to start by thinking of NZ as Australia’s Eastern Territory (because the NZ state will soon have no more sovereign autonomy as the Northern Territory) or China’s Great South Islands (similar reasoning). One could add that NZ bosses have outsourced our ‘cultural’ – read entertainment – sphere to Hollywood so that if the TPAA comes into effect, our thoughts will be owned and subject to 25/7 control by the US – hence Wellywood.
          The only question is whether workers will remain passive and see NZ slotted into a Greater Pacific division of labour where Labour and Capital mobility is unrestrained, or whether workers wake up and demand a living wage and as a consequence realise that they have to take power to make this possible.

          • Colonial Viper 16.3.1.2.1

            Employers are generous benefactors and workers should be grateful supplicants, happy to even have a chance at a job in society.

            • terryg 16.3.1.2.1.1

              Right. our parents used to wake us up at 10 O’clock at night, half an hour before we went to bed, drink a cup of sulphuric acid. work 29 hours a day down ‘t mill, unpaid for the privilege of working, and when we got home our mum and dad would slice us in two wit bread knife, and dance about on our graves singing hallelujah

    • Galeandra 16.4

      Well,PeteG, before I ask you to hop off to the cycleway for a bit more oxygen to the brain, what say that the minimum wage isn’t increased to $15 but to whatever amount is deemed by a panel of independent realists to provide a sufficient ‘family’ wage (which must include some of life’s pleasures) when applied to a full working week AND we stop subsidising employers through WFF. How does that appeal to your sense of need for an ‘ acceptable level of risk’?
      How you have the gall to accept services from people and pay them a measly $12-13 bucks an hour I don’t know. Course that’s all you expect for your labour, right?

    • RobC 16.5

      To PeteG (12.31): The justification of a rise in the minimum wage is not economic, it is social.

      By framing discussions about the minimum wage in economic language largely misses the point. To help with re-education, some bits from my good friends, the CTU (2009):

      3.1. The minimum wage is currently 50 per cent of the average hourly wage, a slight improvement on the same time in 2007 when it represented just under 49 per cent of the average hourly wage. However, this ratio is well short of the 66 per cent recommended in 1973 after the Royal Commission into Social Security and even further behind the ratio of 83 per cent when the minimum wage was first introduced in 1946.

      3.5. The most effective way to ensure that the minimum wage is set at a reasonable level is to index it to the average wage. As noted by Dowrick and Quiggin there are sound reasons to index the minimum wage to average or median wages. They state that in order to avoid further widening of inequality, and to avoid the exacerbation of poverty traps, minimum wages need to be indexed not to the Consumer Price Index but to the average or median wage – allowing workers in low-pay occupations to share in the benefits of rising productivity. Indexing is also recognised as a vital mechanism to maintain the value of NZ Superannuation.

      3.6. The CTU submits that it is time that the New Zealand Government accepted the International Labour Organisation guideline that the minimum wage should be based on the general level of wages and index at approximately two-thirds of the average wage which is not only close to the recommended European Social Standard but is also the level recommended in 1973 in New Zealand by the Royal Commission into Social Security.

      • RobC 16.5.1

        P.S. 66% of the average wage is somewhere around $17/hr (can’t be arsed getting the exact figure), so $15 isn’t far enough for some.

  17. Nickc 17

    “According to the Right’s theory, this infinite increase in the minimum cost of youth labour should have sent the unemployment rate for youths through the roof.”

    Wrong. I must admit I dont know what the youth minimum wage was when it was introduced in 1994, but if it was below the market clearing price for the unskilled labor of U20 year olds then it would have no effect at all. E.g. If we set a minimum price for new cars at $100 it would have absolutely no effect on the market for new cars; despite it being an ‘infinite increase’.

    • Armchair Critic 17.1

      Are you aware that there are some fundamental differences between cars and people, and that assuming these differences have no impact on the validity of your comparison is not automatically justified?

      • Nick C 17.1.1

        How about you point out what the relevent differences are…

        But my point would remain if the example is changed. If you lift the Youth Min Wage from $0 to $1 you will get no change in unemployment whatsoever despite this being an ‘infinite increase’.

        • Tracey 17.1.1.1

          Can you explain why tax cuts which left “everyone better off” didn’t increase employment?

          • PeteG 17.1.1.1.1

            Can you explain if you know whether they affected employment levels or not, or might still affect employments levels in the future? It’s only six months or so since the tax cuts took effect.

            Many policy changes will not have an immediate effect, some may have a significant lag. It’s possible the reduced taxes will play a part in a faster recovery once it eventually gets going.

            On the other hands it may have minimal effects, or the effects may be impossible to determine due to many complicating factors.

            • Pascal's bookie 17.1.1.1.1.1

              They were supposed to turbo charge the economy into an aggressive recovery. They didn’t.

              • PeteG

                Was it supposed to be instant?

                I’d have thought most employers would be very cautious about re-employing until they were confident we were properly out of the recession.

                • Lanthanide

                  “Was it supposed to be instant?”
                   
                  John Key said it would start in the second half of 2010 and throughout 2011.

                • Pascal's bookie

                  In the twnety ten budget he reckoned 170K new jobs. and yeah, turbo implies pretty instant to me.

                  What does it mean to you?

                • Colonial Viper

                  Was it supposed to be instant?

                  Oh, you’re saying that Bill and John have used the fortune tellers trick of making a prediction but not saying which lifetime its going to happen in.

                  Well that’s useful isn’t it mate.

                  These NATs are running totally on hope and pray.

          • Nick C 17.1.1.1.2

            You can’t know that they didn’t have a positive effect on employment. It may well be that they did but there are other factors which have pushed unemployment up that Key didn’t count on.

            Anyway that is way off my original point, which was just about showing why this guest poster doesnt understand very basic economics.

            • Armchair Critic 17.1.1.1.2.1

              If that’s your point, you went about making it in an obscure way. Seems like most of the replies you got missed your point.
              So, according to Nick C, Bright Red has shown they don’t understand very basic economics because they said, and I’ll paraphrase:
              “The right say an increase in the minimum wage will hurt the economy and destroy jobs.
              However, previous increases in the minimum wage, including large increases, has shown no correlation.”
              Your proof is that, if we assume that the large increase met some specific conditions (a special case of the general theory Bright Red provides), no correlation would be expected. Sorry to say, Nick C, but that neither proves the general theory (as per BR’s post) is wrong, nor does it show a lack of understanding of economics by BR. If anything, it agrees with BR’s point. Sure, you can be disappointed that BR didn’t discuss your special subset of the general theory, but toughen up.
              As for the differences between cars and people – I’ll take it you stand by your comparison, and you did consider and dismiss the differences.
              The most important differences, as I see them, are:
              A wage is paid regularly and repeatedly, whereas the purchase price for a car is paid once.
              If a wage is too low the recipient suffers, wheras cars have no feelings and do not suffer.
              Recipents of a wage can vote, whereas cars are not sentient and therefore are not trusted to vote.
              This lack of sentience also means that cars do not protest, riot or commit crimes such as theft when their purchase price is too low.
              Wages are paid to a person, the purchase price of a car is not paid to the car.
              The payment of wages does not transfer ownership of the employee to the employer, as current laws prevent one person owning another.
              The recipient of a wage can decide to change employers (if National haven’t mismanaged the economy and there are jobs available), whereas cars have no opinon on, or say in, who purchases them.
              That’s off the top of my head, undoubtedly I’ll think of more. Maybe you will, too. Point is you seem to take a very narrow view of the world, and is refelcted in the comments you post here.

            • Draco T Bastard 17.1.1.1.2.2

              So, you’re saying that the minimum wage at that time was below what was being paid by employers? Got any proof?

  18. Lanthanide 18

    Goff is saying that they’ve costed the policies: R&D will cost X, and they’re going to get X from the ETS.
     
    I don’t see any specific costing of the impact of $15 minimum wage on government departments. Many many cleaners are employed at, or just above, minimum wage, and there are certainly many cleaners in the healthcare industry, both hospitals and in other services run by the DHBs.
     
    How are these services going to pay $15/minimum wage without tightening the screws elsewhere in the health system?

  19. wtl 19

    Lanthanide: There is some analysis of the costs here. Have a look at the pdf. The biggest increases will be around $90M for the MoH and $20M for ACC.

    • Lanthanide 19.1

      Ok, but I don’t see Labour as having costed this, like they said they did for all their policies now.

      • wtl 19.1.1

        You might get a more definite answer if you ask Labour directly. But the way I see it, since it has been costed by the DoL in that pdf, you could forgive them if they based their policy on those numbers.

  20. PeteG 20

    Does anyone know if increasing the minimum wage by $2 to $15 will push wages above that up as well, or will it just create a bigger proportion on or near the minimum wage?

    • Lanthanide 20.1

      That’s up to the individual employers and employees to decide whether they deserve a pay increase.
       
      It is likely that there would be at least some pay increase for some workers. But it’s not ‘automatic’ or guaranteed.

    • Blighty 20.2

      the minimum wage tends to push up near-minimum wages too, people who are in slightly more experienced or difficulty jobs than minimum wage colleagues can fairly expect higher compensation.

      • Colonial Viper 20.2.1

        Yes but it will take up to 12 months, maybe more to flow on through as people get their wage reviews etc.

        Further Labour won’t raise the minimum wage to $15 in one go. It could go up to $14/hr in December, and then $15/hr late 2012.

        No panic, no shock, all very well managed. The world is not going to end because of it.

  21. The Baron 21

    Sorry guys, I disagree – people will lose hours for this, and be poorer for it.
    I say this on the basis of anecdote alone – small town retailers where I live who have a fixed total amount for wages in the medium term; and an wage increase like this, in the current sales climate, means hours will have to be cut, or people not replaced.
    Maybe that’s worth it for the wider cause – I dunno. But I do feel for the people in my town who will go from 36 to 32 hours a week to pay for it.

    • The Voice of Reason 21.1

      Will those same local businesses get the benefit of the extra $65 pw their lower paid neighbours will be taking home under this initiative?

    • Colonial Viper 21.2

      No store does well when people haven’t a spare dollar to spend.

      Giving hard working people a decent wage will turn that around.

      • Herodotus 21.2.1

        To max profit stores and more specifically their finance coys (attached to the stores) do exceedingly well when those who purchase based on x months interest free. Then when D-Day arrives are unable to pay the full amount. then they find out that they are up for the FULL penalty and interest payments . The interest free is based on the full deb being paid off on or before the interest period expires.
        Same applies with credit cards, no interest charged if paid before a certain day. Not pay off the full amount of the credit card then you are up for interest of your account based on a daily balance. And with low interest rates credit cards are still charging 18-22%.
        Increase min wage what is the expected rate of under the table payments below this level or means of getting around this by the likes of internmanship with a min retainer?
        Also what gains do the govt get from reduced WFF, housing suplements etc payments as families incomes increase their entitlements will reduce, and the offset from the reduction of coy tax based on potential reduced profits?

        • Lanthanide 21.2.1.1

          Actually I’m not sure that the “1 day after interest-free period ends, you get pinged for interest back to date of purchase” is still legal.

          Low interest credit card from ANZ is 13.90% although it does have a more expensive annual fee.

          • Herodotus 21.2.1.1.1

            It still is if specificed within the small print. The interest still accrues over time. Just that if payment is made by or before that date it is “rebated off”, it still exists and is calculated in the background, pay your debt off a day late and see the interest 1 day will cost you 🙁
            re credit cards my rate charged is 19.95% and annual cash advance is 22.2%. Also as a note everyone should read the conditions on their credit card statement especially “Interest & Charges” and see how thier interst change is calculated. Even the senior finance manager with the bank I deal with did not even know that the interest is NOT calc by the outstanding balance, but by the daily balance and he is the contact person for the likes of David henderson and SCF no wonder they went crapup.

            • infused 21.2.1.1.1.1

              He’s just a retard then as that’s how most cc’s work.

              • Colonial Viper

                yeah its bloody usury and credit card interest rates should be limited to 10%.

            • Lanthanide 21.2.1.1.1.2

              Pretty much all interest bearing instruments I’ve ever dealt with, both debt and deposits, calculate interest on a daily basis.

    • Colonial Viper 21.3

      But I do feel for the people in my town who will go from 36 to 32 hours a week to pay for it.

      Extra 4 hours at home playing with the kids.

      What’s the problem again?

      • Lanthanide 21.3.1

        Baron didn’t engage brain before posting.

        Or, extra 4 hours a week working on your own projects that may turn into your own business, an extra 4 hours studying for a qualification, an extra 4 hours volunteer work…

    • McFlock 21.4

      Isn’t this just a variation on the “increases unemployment” unsubstantiated BS?

      Less hours = less EFTE = higher unemployment? For which there is no evidence? Anecdotes don’t count as data.

  22. Draco T Bastard 22

    More research finding that increasing the minimum wage makes little to no difference in unemployment.

  23. ianmac 23

    Darien Fenton @ Red Alert found the research I was looking for. Should be a denial for Nat.
    There’s research on both sides, most of it now a little dated, but someone drew my attention to this much more recent American study by Ari Dube, a Labour economist and Assistant Professor at the University of Massachusetts.

    It tracks the effect of minimum wage increases over a period of 20 years and looks at differentials across state borders where the minimum wage is higher on one side of the border than the other. The findings are that increasing the minimum wage does not impact on job loss either in the short or long term.
    http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=5650

  24. RobC 24

    DonShonKey at his press conference today:

    “Governments have tried for years to actually legislate wages and that’s not terribly effective”

    Well put your money where your mouth is. Repeal the Minimum Wage Act 1945. Prick. Go on asshole, if it’s “not effective”, get rid of it.

    • Colonial Viper 24.1

      Minimum wage needs to be indexed to 70% of the AVERAGE full time working wage.

  25. James 25

    http://www.stuff.co.nz/national/politics/5039314/Goff-defends-election-policies

    How do Goff quotes still come last in an article that bears his headline??

    fuck that’s annoying.

    “Goff also attacked opposition to the increase in minimum wage saying it would not cost jobs and everyone deserved to earn enough to live on.

    “Every time we lifted the wage under the last Labour government, unemployment went down.” ‘

    last paragraph of the article.

  26. PeteG 26

    Goff has it all sussed, he was on the news saying employers could afford to pay for his election promise ($15), and farmers could afford to pay for his other election promise (ETS).

    He didn’t say how farmers who employee workers at the minimum wage would get on, they’ll probably just avoid even more tax so it shouldn’t affect them and it won’t affect Goff’s election advertising handout we give him.

    • RobC 26.1

      Yeah he does have it all sussed. Glad you’ve finally seen the light.

      • PeteG 26.1.1

        Roy doesn’t think he looks convincing here: Labour Party 28% (down 3%)

        • RobC 26.1.1.1

          Poll before the Budget. Judgement reserved.

          It’s well known intelligent people are in the minority, anyway.

        • Colonial Viper 26.1.1.2

          Roy doesn’t think he looks convincing here: Labour Party 28% (down 3%)

          Then National has no reason to be nervous or to pay blow hard cheerleaders then, does it? And it could have been far harsher in the Budget if it was actually confident, right? 🙂

          • Tiger Mountain 26.1.1.2.1

            So why did Shonkey interrupt good Sunday drinking time to run a ‘media event’ yesterday? Can’t the Natz handle Labour disrupting the narrative for one measly afternoon, let alone introducing positive policies. Johnny will have to get used to such interruptions in coming weeks.

        • Lanthanide 26.1.1.3

          Roy Morgan doesn’t report ‘undecided’, only people who give a specific party. It’s quite conceivable in the next poll, done post-budget, to see the numbers not change much, but actually a large number of National voters could be saying “undecided” and not showing up in the stats.

          Also, Labour might be down 3, but Greens are up 2.5 to the highest equal in that series, at 10.

          • McFlock 26.1.1.3.1

            yes – hopefully post budget we’ll see labour kick off, and seeing that national have been pretty active already the government have two big issues, poll-wise: pacing themselves so they don’t over-promote, and of course their shite policies epitomised in a zero-help budget.
             
            Then there’s just the wee matter of having coalition partners as they’ll probably slide a bit as the election approaches – it’ll probably all come down to winston1, again.
             

  27. Frank Macskasy 27

    This might be interesting to folk…

    12 April 2008

    “… I think it would distract us from the real agenda of lifting after tax wages in New Zealand, so thats the first thing …”

    “… Well personal freedom’s about choice, so personal freedom’s about being able to say that you can make a decision for yourself and your own family to do the things that you want to do, and I think you’ll see from us in quite a number of areas, firstly we’ll be lifting after tax wages, we’ll be giving people the opportunity …”

    http://tinyurl.com/4xm3swt

    26 April 2008

    “… The one driving goal is to lift after- tax wages and conditions. That will be one clear signal that our plan is working. …”

    http://tinyurl.com/3ar5omr

    23 May 2011

    “… But Prime Minister John Key said the Labour Department had calculated a lift to $15 an hour would cost 6000 jobs.

    “Labour has learnt absolutely nothing in 2 1/2 years. This is the same prescription that got us into trouble.” …”

    http://tinyurl.com/3tkgaqe

    Funny thing.

    When John Key was campaigning to becopme Prime Minister and lead a National Government in 2008, he never mentioned a thing about increased wages “costing 6,000 jobs”.

    Or I must’ve missed that bit.

    • Lanthanide 27.1

      The quotes you cherry-picked from Key, he is conspicuously saying “after-tax wages and conditions”. He didn’t just say raise incomes or wages, but specifically after-tax wages. It’s simply dog-whistling that they were going to cut taxes substantially, nothing more. Those quote were from early April, when they would have been formulating their tax cut plan and before Labour unveiled there’s in the budget, or right when National’s mantra about tax cuts was reaching fever pitch.

      • Frank Macskasy 27.1.1

        “Cherry picked”?!

        Not at all. The links are there for folks to read the comments in their entirety.

        And Key did go into the election, promising greater parity with wages in Australia. It was one of the key (excuse the pun) planks of his platform.

        Or are you suggesting that,

        (a) we imagined it?

        (b) we should’ve ignored it?

        And when Bill English trumpeted the fact that, by being 30% cheaper than Australia, in terms of wages, we were more competitive – National was quick to qualify that remark with,

        “Mr Key said Mr English had simply been stating a fact – and that did not detract from the Government’s goal to raise wages. ” – http://tinyurl.com/3t9aw4v

        Perhaps what it comes down to is that, once again, politicians are not to be trusted… Or, more realistically, that we should not be so eager to be conned.

  28. Georgecom 28

    I have heard comments from John Key that the only way to achieve higher wages is through higher productivity. The simple answer to that statement is that wages have not increased at the same rate national productivity has. Had it done so wages could be 30 to 50% higher. The question is then, where did all that extra productivity gain go?

    I imagine some went offshore through the process of privatisation in the 1980/90s. And here we once again have a government wanting to sell off state assets for the benefit of overseas interests (because we know that is where owneership will end up).

    The wages & productivity is explained a little further below.

    page 52-53
    http://union.org.nz/sites/union.org.nz/files/NZCTU%20Alternative%20Economic%20Strategy_1.pdf

    When labour productivity increases are taken into account, wages in 2008 should have been around 56 percent higher than they were. Even if we look only at the 20 years since 1989, real wages still rose 18 percent to 2009, and a real wage 28-31 percent higher could have been justified in 2008 by productivity gains. So the average ordinary time wage could have been $38.60 in 2008 if it had received its share of the productivity gains since 1980, and $31.60 if it was only since 1989. Instead it was $24.47. In other words, business has taken almost all the gains of labour productivity. There has been a long term trend which has changed the balance in the economy between income to employees and returns to capital – “Gross operating surplus” or profits and interest, in the accompanying figure.

    • Colonial Viper 28.1

      Australian banks have pumped around $10B offshore in the last five years, out of New Zealanders’ hands. Does that count?

    • Nice to have it confirmed that most if not all productivity gains go to profits. This is capitalism after all. That means that workers work a diminishing amount of time to earn their wages so the rest of the labour time goes to producing surplus value. Under socialism we would collectively decide how that surplus would be used to meet our social needs rather than have it appropriated by capitals juggernaut…”they mutilate the worker into a fragment of a man, degrade him to the level of an appendage of a machine, destroy every remnant of charm in his work and turn it into a hated toil; they estrange from him the intellectual potentialities of the labour-process… they transform his life-time into working-time, and drag his wife and child beneath the wheels of the Juggernaut of capital”. (Capital, Vol.1 Ch.25)

    • Draco T Bastard 28.3

      In other words, business has taken almost all the gains of labour productivity.

      Not so much business as capital, especially banks. A short analysis here.

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