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Waldegrave responds to ‘Living Wage’ critique

Written By: - Date published: 3:17 pm, February 5th, 2014 - 45 comments
Categories: Economy, wages - Tags: ,

Charles Waldegrave has slammed Brian Scott’s critique of the method used to calculate the Living Wage in New Zealand.

In a detailed and interesting analysis, he addresses the databases used to develop the Living Wage and compares the New Zealand approach with that of other countries. He shows Scott’s critique, and that of the Treasury, lack an informed understanding of the definition of a living wage and confuse market wage rates and welfare transfers.

He also demonstrates how Scott selectively applies international comparative data and consistently misapplies the use of Statistics New Zealand’s Household Economic Survey database. Further, he states Scott provides no evidence for his assertions about the negative impacts of the living wage on workplace morale and productivity.

Waldegrave cites the evidence of the balance of studies that have shown positive business and economic outcomes from living wage policies internationally.

*The living wage level was set at $18.40 per hour in February 2013. Scott’s paper has been given prominence on David Farrar’s Kiwiblog 3 January 2014

 

 

 

45 comments on “Waldegrave responds to ‘Living Wage’ critique”

  1. Disraeli Gladstone 1

    “It is not suggested that the minimum wage be lifted to the level of the living wage.
    They are quite separate entities.”

    I sometimes feel like that get lost in translation to both the left and right. The right goes “oh no! look at this massive increase” and the left goes “everybody gets it!”

    It shouldn’t be statutorily enforced. I like the London scheme which is similar to a fair trade badge. You get the logo if you pay the living wage. I’d certainly tailor that knowledge into where I shop.

    • framu 1.1

      thats pretty much my view as well (living wage, not minimum wage)

      yes the market can decide – and the purchaser is as much a part of the market as the employer (and the use of the badge is a good idea). But theres no reason why the govt (who is a player in the market too) cant lead the way

      it will only work by showing it works and by building the expectation and demand. It wont work and is too easily undone if its a top down imposed thing

    • McFlock 1.2

      personally, I’d want very good reasons why the minimum wage is not set at a living-wage level.

      As always ( 🙂 ) I’d be looking for a phased increase rather than a blanket dictat, but everyone is entitled to live in dignity and participate in society. That includes a right to work 35-40 hrs per week, and to work only 35-40hrs per week.

      I was amused that Waldegrave’s response had to continually address the fact that tories have no idea what “dignity” means, and that it’s not the same as “minimum”.

      • weka 1.2.1

        “but everyone is entitled to live in dignity and participate in society”

        What would you do with benefit rates in that case?

        • One Anonymous Knucklehead 1.2.1.1

          +1 Weka.

          Set benefit rates at living wage rates. Or don’t you want to live in high waged economy? Politics of envy handicap?

        • McFlock 1.2.1.2

          probably along the lines of what oak said above, especially for longer term benefits. Ideally the unemployment benefit is a bridging benefit, but that requires full employent policies

      • Lanthanide 1.2.2

        The only argument I could think for why the living wage should not be the minimum is that the living wage is targeted at families with particular assumptions in mind. There are many single people or small families that could ‘live’ well on a lesser amount, and similarly many families that would need more than the calculated living wage to ‘live’ well, particularly if they have high-needs family members.

        Of course the minimum wage should be $15, preferably $16, so the leap from there to $18.40 isn’t all that much.

        • just saying 1.2.2.1

          …there are many single people or small families that could ‘live’ well on a lesser amount,…

          Sure,
          If they were puritans, exceptional budgeters, already set-up with low miaintenance, free or affordable accomodation, and hit no unexpected bumps along the road….ever

          Unless you mean short-term……but for many, many, people, it’s not. And even short term in the best of all possible circumstances, why shouldn’t workers be allowed to splurge a little – have a nice meal, a holiday once in a while…..

          • Lanthanide 1.2.2.1.1

            Sure,
            If they were puritans, exceptional budgeters, already set-up with low miaintenance, free or affordable accomodation, and hit no unexpected bumps along the road….ever

            Note that I’m suggesting a minimum wage of $16, and that therefore someone who was single could ‘live well’ for $16/hour.

            If you’re saying that the difference between $16 and $18.40 is so marked that all of the things you’ve mentioned here are true, for a single person, then I can only conclude that you would also consider $18.40 to be too little to raise a family on, which is what the living wage was calculated for.

            • just saying 1.2.2.1.1.1

              If you are working fulltime on $16 per hour an extra $2.40 per hour is not “chump change” it could mean you could afford to see the dentist, for example.

              Btw, I live quite well on less because I’m pretty well-set-up (though not a puritan). But when that bump comes I’m fucked, and you know what? – that’s an incessant life-sapping stress.

          • gem 1.2.2.1.2

            +1 But somehow the commensurate argument about the top of the scale never gains traction; i.e why on earth does the head of an SOE need 50 times or more the minimum wage? The double standard is a bit like John Galbraith’s ‘private opulence and public squalor’, except now we have a quasi corporate public sector where the head of the postal service gets 28 times the minimum wage.

        • karol 1.2.2.2

          It evens out in the long run as people’s circumstances change. Most single people will eventually have children. Most people with children will eventually be empty nesters. Several along the way will have others to care for – older people, injured, sick or disabled, etc.

          Good if one can have a few good times before having children. Maybe also save a little.

          • Lanthanide 1.2.2.2.1

            Yes, savings is a good point I hadn’t really considered.

            Anyway, I said that was the only argument I could think of, I’m not necessarily putting that forwards myself. Like I said in the post, I’m in favour of a minimum wage of $16, and I see $2.40 as being chump-change on top of that (extra 15%), so while I wouldn’t necessarily support a raise to $18.40, I also wouldn’t oppose it.

        • stargazer 1.2.2.3

          “the living wage is targeted at families with particular assumptions in mind. There are many single people or small families that could ‘live’ well on a lesser amount, and similarly many families that would need more than the calculated living wage to ‘live’ well, particularly if they have high-needs family members.”

          the living wage is based on a family of 2 adults & 2 children, with one person working 40 hours per week & the other working 20 hours per week. a single person wouldn’t be getting the wage from the additional 20 hours. the living wage also takes into account working for families entitlements. a single person without kids would not get any working for families payments.

          so taking both those things into account, a single person would be getting a significantly lesser amount in terms of their overall income. bigger families would get a higher working for families entitlement, so a higher level of overall income.

          • Lanthanide 1.2.2.3.1

            Thanks stargazer, I wasn’t aware of those specific details.

            In that case yes, $18.40 for a single person seems like a reasonable rate.

    • KJT 1.3

      A minimum wage should be at the same level as a “living” wage.

      Why should your employees, subsidise, your business?

      Capitalism 101. Businesses which cannot pay the true costs of the resources they use, including people, should be allowed to fail, to make room for those who can use their inputs more effectively.

      • Macro 1.3.1

        +100

      • Disraeli Gladstone 1.3.2

        The true costs of the resources they use (people) is not the living wage. The true cost isn’t even the minimum wage. It would be what the market decides (probably far below the minimum wage).

        That’s why we have statutory guarantees on a wage limit because capitalism would lead to an effective minimum wage that would be far too low.

        So, no. Not really Capitalism 101.

  2. One Anonymous Knucklehead 2

    Waldegrave clearly doesn’t understand how right wing facts work. His work has been subjected to a process of denial therefore it is flawed. No fact-based analysis can compete with this.

    • Macro 2.1

      Sad but true.

    • QoT 2.2

      At some point we really do have to let go of the idea we can convince the right with facts. They don’t want the people at the bottom of the ladder to have fulfilled, satisfying lives. They cannot be reasoned with on this point.

      • One Anonymous Bloke 2.2.1

        I think the best strategy is to make their arguments the subject of ridicule.

      • RedLogix 2.2.2

        Yes. When I contemplate the gulf between the two ways of thinking – I’m tempted by the idea that there must be some irreducible genetic difference. By alas therein lies the madness of eugenics.

        I have this clear memory of an old picture from a mountain equipment catalog from the 1980’s. It was a gorgeous photo of a climber casually cooking dinner, while ensconced in a suspended bivvy dangling on one of the massive vertical faces in the Yosemite. The contrast between the eerie exposure of his position, with the domestic familiarity of what he was doing was the striking element. The caption said, “humans are the most adaptable species”.

        I guess that is what I hang onto – that we are all inherently capable of adapting to new circumstances. Change the circumstance and most people will change with it.

        Humans have arrived at one of the extremes of our adaptability. We’re an highly agonist, hierarchical and competitive society, and we are so heavily adapted to it we have trouble imagining an alternative. Or perhaps more to the point, most people have so much personal energy invested into the adaptation they really cannot let go.

        It’s my observation that it’s takes something bigger than the individual to trigger that letting go, to allow the possibility of transformation. Traditionally it has been a belief in a strong leader, the tribe, village, state or race which energises us. Or a belief system, benign or otherwise, such as the almost universal religious experience.

        Yet none of these traditional modes of transformation seem adequate any longer.

        OAK – yes but ridicule goes bpth ways.

        • greywarbler 2.2.2.1

          Red Logix
          +100

          • karol 2.2.2.1.1

            Then it just becomes a nasty, aggressive, slanging match.

            Best just to keep repeating your values and position – sometimes with facts, at other times with humour, at other times just the position, etc – there is no one way that fits all responses/contexts.

            • greywarbler 2.2.2.1.1.1

              That’s a Good simple little adage to remember karol. Well put, I think I’ll keep it. It’s a bit like How to implement a mission statement.

            • One Anonymous Bloke 2.2.2.1.1.2

              Yeah plus one Karol. Suit the tactics to the terrain.

        • One Anonymous Bloke 2.2.2.2

          RedLogix, are you sure we haven’t just adapted to having lots of cheap energy? The true range of our adaptability is determined by our environment. Easy to survive in the tropics. At the poles, in the deserts, not so much.

          As for a trans-formative experience, hang on to your hat, Dorothea.

          • RedLogix 2.2.2.2.1

            Yes and no. The Innuit have managed just fine in the Arctic and the Kalahari San thrive in an environment quite the opposite.

            What would not survive so well without cheap energy is all the technology. (Right now I’m working in an innovative mining area which is addressing urgent challenges around how to extract minerals from increasingly lower-grade ores without the energy costs going beserk – so your comment makes perfect sense from that perspective.)

            What does interest me a lot is that when you look beyond the relatively narrow confines of our own current society there are a myriad other possible ways of living. We keep making the mistake of thinking that because we have constructed a highly competitive, hierarchical, individualistic society and because people have adapted to this – that this is the ONLY way people can behave. That’s just flat-out not true.

            Almost all behaviour (as distinct from our motivations) is a social construct and is a result of the circumstances we construct and tolerate. Change these circumstances and people’s beahviour will adapt with an extraordinary flexibility.

            Jared Diamond (who I keep on referencing) used the example in his book Collapse. How Societies choose to Succeed or Fail used the example of an isolated group on a tiny, remote Eastern Pacific atolls who faced with environmental collapse chose to ban the raising and eating of pigs. This was a very big and difficult decision for them to make – but enabled them to survive an otherwise almost certain collapse.

            Part of Diamond’s argument is that when the decision-making elites of a society become too isolated, insulated, from the conditions of ordinary people – then it becomes impossible for them to make these challenging and critical reconfigurations essential to adaptation. Which always results in social collapse.

            It has been of course a religious belief in the god of progress that has sustained our society in it’s present configuration. When that god fails us – right about the time the oil fails – we will be desperately in need of a wholly new and transformative ‘idea bigger than ourselves’ to shape the way we behave.

            • One Anonymous Bloke 2.2.2.2.1.1

              That’s my point: the “transformative ‘idea bigger than ourselves’ to shape the way we behave”, will be our environment, as always.

              The price of oil and the costs of climate change loom large.

              • Colonial Viper

                Problem is, the environment is a highly lagging indicator.

                By the time it’s obvious to ordinary people in ‘advanced western nations’ how changed (for the worse) things have become in the global environment, it will be far too late.

  3. Tracey 3

    But joyce says that labour and greens are lying about the numbers. He wouldnt lie.

    • Macro 3.1

      Yeah! The lying bastards! I mean what do they know about wages and living?? Whereas Joyce knows how to live it up – and pay minimal wages.

      • One Anonymous Knucklehead 3.1.1

        Pretty sure any payroll administered by Steven Joyce would be a monumental fuckup. Not a dig at Novopay – his feeble ideology is the only connection he has with that.

        Nah, I’m saying he lacks the day-to-day diligence and care too.

  4. greywarbler 4

    I was interested in who this Brian Scott is. He is not Graham Scott from Treasury in case anyone thought that. And found some interesting links and quotes as well which I throw in to show attitudes from various people in society.

    http://www.tvhe.co.nz/2014/01/03/some-links-against-a-living-wage/
    The Visible Hand in Economics – Matt Nolan

    One site said he was a – Researcher Brian Scott
    From Home Paddock summary – But Brian Scott who has recently completed a Bachelor of Commerce and Administration with first class honours, has done a very thorough critique of the living wage proposal.

    On HomePaddock – In the critique.
    P 33 10 About the Author
    Brian Scott, 50, is currently taking a middle-age gap year after successfully completing four years of tertiary study at the Victoria University of Wellington. On completion Brian was awarded a Batchelor of Commerce and Administration (1st Class Honours), majoring in Information Systems. In addition to the degree, Brian was also awarded a prestigious “Excellence Award” which recognises the achievements of the top five percent of Business School graduates. He is not, and has never been, a member of any political party or movement.
    The BCA (Hon) is a research degree, with a focus on research and critical thinking.
    brianscotthamilton@gmail.com
    http://homepaddock.wordpress.com/2014/01/03/living-wage-already-raised/

    Then from stuff – http://www.stuff.co.nz/dominion-post/comment/columnists/9606501/Living-wage-policy-is-poor-solution-to-complex-problem
    Wellington City Council’s adoption of a living wage policy represents a failure of governance, writes Nicola Young.
    “Mayor Celia Wade- Brown has defended this Alice in Wonderland approach”
    (Nicola Young is a Wellington city councillor. Last month she attempted to delay the implementation of the minimum wage to allow for consultation. Her motion was defeated eight votes to five.)

    And following on but eagerly pushing forward is dahdah – Lindsay Mitchell: Living wage critique
    lindsaymitchell.blogspot.com/2014/01/living-wage-critique.html‎
    Jan 3, 2014 – Brian Scott has published a critique of the so called Living Wage, and it … No all we need is a half-way competent economist to point out what every business- owner and every job-creator in NZ knows: … February 3 in history.

    (Unfortunately Brian Scott has never been in involved in any movement. Pity he didn’t move his brain more aside from the channel of Commerce towards Humanity when he was tudying.)

    • KJT 4.1

      Just goes to show that an education doesn’t always bestow wisdom.

    • joe90 4.2

      heh

      Look whose stickies are all over it.

      Brian scott (1 comment) says:
      January 3rd, 2014 at 12:02 pm
      I would be remiss if I did not mention that Lindsay Mitchell reviewed drafts and gave me valuable feedback. Thanks Lindsay.

      Open mike 03/01/2014

      • greywarbler 4.2.1

        Thanks joe90
        I thought – birds of a feather. Makes me think of the Blues Brothers – dedicated and on a Mission from God. Only these ones echo Victorian Dickensian times. I prefer the Blues Brothers – they can sing Rawhide, which Lindsay and Brian would like to deal out to the terrible types who want more, please.

  5. adam 5

    Blah blah blah – f&^k the labour market. Wages have been going backwards for years. A minimum wage is a joke, it means victory for bad bosses and slack, nasty owners. Ffs come on people, if you going to work for someone else they need to pay you and pay your fair. It seems to me all this statistical analysis is a smoke screen so employers can carry on being ass-holes.

    If your not getting $27 a hour – why are you getting out of bed?

    Plus screw the moaning right wing d*&kwads if there so good with money, why does the economy keep collapsing? And why do they keep making the middle class and poorest classes pay for their bloody mistakes?

  6. freedom 6

    here is a simple table of income realted info doing the rounds today, might be useful to some.
    https://scontent-a.xx.fbcdn.net/hphotos-prn1/l/t1/q71/s720x720/71612_10152260667576477_1557799566_n.jpg

    As broadstrokes go it is quite clear, so let’s not be too pedantic on it

    • weka 6.1

      Very useful table.

      How come the person running Housing NZ earns half the person running Superannuation? (and other discrepancies).

  7. tricledrown 7

    Who less than half of the lotteries commissioner!

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