Hoary old lies from the Prime Minister

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Imagine for a moment that the Remuneration Authority said MPs should receive a 50c per hour increase in pay. This would be a 0.68% rise for a backbench MP or a 0.23% rise for the Prime Minister.

(Just for the record the Prime Minister and MPs received a 2.2% increase on their already inflated salaries last November courtesy the rules the Remuneration Authority works under – as set by MPs of course)

But an extra 50c an hour rise is what the Prime Minister says New Zealand’s lowest paid workers deserve from April 1st.

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It represents a $20 per week gross increase in income for someone working 40 hours per week but most workers on the minimum wage are on contracts with no guaranteed hours. On average they can expect perhaps an extra $10 or so before tax.

Wages are so low in New Zealand that a gobsmacking 40% of families in poverty are those where at least one parent is in full-time work. Instead of requiring employers to pay decent wages taxpayers subsidise employers through mechanisms like Working for Families.

Defending his 50c increase for the poorest working New Zealanders John Key says a higher rise would mean jobs would be lost and unemployment would increase. This is a hoary old lie the corporate sector trots out regularly as though they actually care about unemployment.

I’m no great fan of the New York Times but in an editorial two weeks ago even this right-wing rag debunked the common myths about the minimum wage. The paper posed the question “Does it kill jobs?” and answered like this:

“The minimum wage is one of the most thoroughly researched issues in economics. Studies in the last 20 years have been especially informative, as economists have been able to compare states that raised the wage above the federal level with those that did not.

The weight of the evidence shows that increases in the minimum wage have lifted pay without hurting employment, a point that was driven home in a recent letter to Mr. Obama and congressional leaders, signed by more than 600 economists, among them Nobel laureates and past presidents of the American Economic Association.

That economic conclusion dovetails with a recent comprehensive study, which found that minimum wage increases resulted in “strong earnings effects” — that is, higher pay — “and no employment effects” — that is, zero job loss.”

The editorial also debunks other myths such as a higher minimum wage would push up prices precipitously saying this:

“Research and experience show that employers do not automatically cope with a higher minimum wage by laying off workers or not hiring new ones. Instead, they pay up out of savings from reduced labor turnover, by slower wage increases higher up the scale, modest price increases or other adjustments.”

Employers and their political representatives will always tell big porkies like these as they continue class warfare against workers. It’s not about the truth or the community good. It’s always about maximising their profits.

 

17 COMMENTS

  1. While I hate to use them as an example, yet again, it is such a glaring example and that is, of course, the army of caregivers in this country, whose skill and experience often nets them little more than minimum wage, while the shareholders take their dividends each year, and the profit making of these outfits proudly declare in large headlines in the papers how much profit they make each year.
    Personally, I think these shareholders should hang their heads in shame, knowing they are pocketing the money that the workers whould be getting

  2. I`m a “Care giver/ Community support worker” I found myself in this vocation about 3 years ago, it is a job that requires compassion, positivity, honesty, integrity, and morals, basically all the good things a person needs to lead a productive, and fulfilling life.
    It also requires, that the people in this line of work, hold a NZQA qualification. My employer has been putting me through training and I am currently a “level 3 C.S.W”. I am not afraid to tell you how grateful I am to my employer for this opportunity.

    There are three main area`s in this industry I am able to work in, Aged care, Intellectually disabled care and Mental health, the latter requiring extra papers. I am currently earning less than the “living wage”, and to be honest, living in Auckland is too expensive, I have my nose just “above water” at the moment and I am literally “treading water” to keep it there.

    I am not able to save, if there were to be any unexpected expenses (and there will be, it`s just a matter of when) I do not know how I will be able to cope. I support my partner, as she is unable to work due to illness. She was on the sickness benefit, but due to someone “dobbing” her in (winz`s reason, we were in a “marriage type” relationship) she no longer receives government assistance.

    This government is not helping us hard workers, it`s run by some of the most despicable people I have had the displeasure of been exposed to. To have a public instigated referendum, and then to have it thrown in our faces and ignored should tell the people of New Zealand something. “This government has no intention of listening to you” It is going to do what it wants to, ignoring any advice given to it by people qualified to do so.

    When a government ignores advice given to it by the ” Law Society” you have to wonder. To tell the people that they wont sell our assets, then do the total opposite, makes you wonder, to tell the people, “if you have nothing to hide you have nothing to worry about”, then refuse to table the documents about a world changing trade agreement, makes you wonder. To lay off workers, then pay billions to consultants, makes you wonder. Get my drift?

    Our deficit is a joke, last look at the debt clock, it was up to 78 billion and rising, as I type this. “Rock Star, economy” yeahhh right. Even the Banks are in on it, “due to New Zealand`s favourable economy, you should be looking at a business loan” lol, When banks start lending money, you ought to be dubious, They must have created more “something from nothing” in the last week.

    This election I hope will see a new government.

  3. How is a comparison of poiticians salaries relevant to a minimum wage argument? The two groups have vastly different skill sets, hence why they are remunerated in different fashion.

    “It represents a $20 per week gross increase in income for someone working 40 hours per week but most workers on the minimum wage are on contracts with no guaranteed hours. On average they can expect perhaps an extra $10 or so before tax.”

    Citation needed here. I wouldn’t have thought too many supermarket, fast food or service station workers were contractors. What about the self-employed, will a Mana government guarantee self-employed the minimum wage?

    I am also perplexed as to the relevance of the American study to New Zealands environment. The US has a far lower minimum wage when compared to median or average wages than New Zealand. In fact I believe New Zealand has the highest minimum wage to median wage ratio in the OECD. Citing an American study is like comparing apples with oranges.

    You fail to analyse minimum wage vs technology in your article. We are seeing more and more self-service checkouts at supermarkets. How will raising the minimum wage affect this? Cheaper to employ one person to assist with six terminals than to employ one person per checkout. Service stations will move further to pay at the pump technology and employ one person to run the shop rather than two to run the station.

    By raising the minumum wage to these levels we are pulling up the ladder. The ladder that allows our lowest skilled members of society to get a job and start learning on the job, thus gaining skills that lead to higher paying work in the future. It is a short sighted move that will have adverse consequences for the next generation of Kiwi workers.

    • How is a comparison of poiticians salaries relevant to a minimum wage argument? The two groups have vastly different skill sets, hence why they are remunerated in different fashion.

      Actually, it’s entirely possible that the two have close to the same skill sets. It’s not just the unskilled (who don’t actually exist) who are unemployed.

  4. You actually should try care-giving for your loved family members. I will always support care-giver’s in the industry…absolutely!! and they definitely deserve so much more – if not better than at least the MAXIMUM that any nurse in said industry. By the same token, PARENTS AND CHILDREN that have to look after their OWN who are all of the ABOVE? Deserve more than a sickness benefit of $213.00 a week – because this is what they are subjugated too – and HOW FUCKING PATHETIC IS THAT! 24/7.

  5. John, it is really refreshing to hear someone talking about class warfare again, thank you.It’s been a marginalised term since the neo-lib con started, and IMHO that marginalisation has enabled a lot of the reverses in pay, conditions and quality of life that workers have suffered while the elite got ever richer.Divide and rule has certainly worked for the elite and against the rest. I dearly hope that we see more of this from the left in the coming election, it’s long past time that this debate was framed for what it really is, class warfare.Those at the top won’t stop till they own everything, and everyone.Sadly I suspect only Mana will have the balls to do it, with both Labour and the Greens equivocating furiously.

    • Those at the top won’t stop till they own everything, and everyone.

      Yep, what we’ve been seeing over the last thirty years is a return to feudalism under economic justification that happens to be wrong.

  6. John have you ever run a business? Ever employed people? Ever had the responsibility for ensuring you can meet the wage bill next week?

    This latest rise won’t cost jobs, but believe me that much more would have. Much more WOULD have cost 3 jobs in a factory I am closely involved with in Auckland. You probably don’t care about 3 jobs, John. You can go on writing your vitriol, and be none the wiser. But the fact remains that there are small businesses all over NZ for whom labour is a big element of their cost, where the work is relatively unskilled, and where jobs will be lost.

    • Intrinsic value. Don’t attack the messenger!

      It can’t be much of a business that can’t find an extra $60 per week (to pay 3 workers $20 a week more for 40 hours work) through rationalising other expenditure that might be seen as frivolous and indulgent (eg, internet, fly buys, free phone, giveaways, sponsorship).

      I have heard bosses crying poor when they take several overseas holidays a year, own two or more houses, and drive a leased Jaguar. They have lost their perspectives.

    • Intrinsic value. Don’t attack the messenger!

      It can’t be much of a business that can’t find an extra $60 per week (to pay 3 workers $20 a week more for 40 hours work) through rationalising other expenditure that might be seen as frivolous and indulgent (eg, internet, fly buys, free phone, giveaways, sponsorship).

      I have heard bosses crying poor when they take several overseas holidays a year, own two or more houses, drive a leased luxury car, and always eat out. They have lost their perspectives

      • Oh I’m not attacking anyone. I’m simply wondering if John is in any way qualified to write on this subject. As to your other comments, they’re a joke. There are many businesses who hang on by the skin of their teeth, mostly because they don’t have the resources to reengineer to meet the modern economy. Sometimes the owners hang on until retirement, making a modest living and nothing more. For them, an extra $60 a week might well before than they can afford.

        • Quote: mostly because they don’t have the resources to reengineer to meet the modern economy.

          Why not?

          Has that question arisen?

          If National represents business and has the interests of SME at heart WHY, after however many long years of their laissez faire, have they not enabled the sort of assistance that helps businesses to go to the next level at least?

          Because they are NOT small business friendly. Never have been. Might miraculously be so some day far distant.

          Meantime, they keep on scuttling round and shifting the goal posts. Upsetting the business environment. Killing off the customer and client base with their stupid stand back and pontificate attitude.

          Yes, Dear Intrinsic Value, I have run my own enterprise, sweated blood over the challenges, met payroll – and gone without to keep the biz afloat. I hope you are, too. Then I decided that National and its clones were so terminally stupid there was no way they could see the talent and opportunities and potential simply aching for a chance to grow – yet endlessly hampered by o so cautious banks.

          Just for wonders – how much of that venture capital that was budgeted actually got past the same old same old to the capital hungry enterprises that aren’t so slick?

          Don’t know – yet a keen ear can probably hear a slushing sound in the vicinity.

          Remember – National is NO friend to SMEs, and their ideology has too much impact in a small country with a small population, unfortunately.

          PS How about trying the experiment of paying that little bit more – and valuing the non-academic skills of your workers. You know you’d be out of business tomorrow without them.

        • Gee if you have never had a business then your not qualified to blog on this. Same rubbish as the 81 tour supporters, if you haven’t been to SA you can’t possibly judge.

          • @ Michal, well I’ve had business experience and I can confirm that National is no friend to SMEs.

            As for “same rubbish as the 81 tour supporters, if you haven’t been to SA you can’t possibly judge” – I think history has left you waaaaaaay behind. Welcome to 2014!

            You’re welcome.

  7. Want to know what the biggest drivers of unemployment is?

    People who are paid more than ~$100k and the shareholders who want money for nothing.

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