Post World war Two: A note on Minimum wages and a universal family benefit

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In 1946, the year after the end of World War Two, New Zealand introduced a minimum wage that was 83% of the average wage and a universal family benefit of 10  shillings a week for every child. This benefit was made universal, tax-free and not means-tested.
Female fertility was 3.45 then compared to 1.75 today so families were much larger.
I have often wondered what 10 shillings would be worth today. In relation to the male minimum wage hourly rate of 2 shillings and ninepence, it would be about 4 hours’ pay. Women were only paid one shilling and eight pence per hour and so was worth more like 6 hours pay at minimum wage for women.
In today’s wages that would be nearer $100 a week for every child. The money had to be paid to the primary carer – usually the woman.
Families could also capitalise the benefit up to age 16 for a deposit on a home. That would be $5000 a year for 16 years or $80,000 to buy a first home.
During the height of the Second World War low income earners paid 12.5% tax, but the highest income earners faced a top rate of 90%.
The TEARA website notes: “When the Labour government left office in 1949 the top income tax rate was 76.5%. The working class paid little tax. A top-ranked butcher on £460 ($29,000 in 2008 terms) a year, with two children, paid no income tax after exemptions and rebates. He paid a £34 social security charge, but received £52 a year family benefit for his children. The tax system was very friendly to families.”

8 COMMENTS

  1. It was the same in the UK when I was a kid. There was the ‘family allowance’. Even as an ACT supporting liberal, capitalist I can see the benefit of that system:

    > The money was paid directly to mothers in the UK so none of it was spent down at the boozer

    > It supported nuclear family with an employed father

    Its subsequently removal was one several misguided steps that have steadily undermined the family in our society and been a driver for fatherless boys, child abuse, depression in young men, suicide and criminality. All done with the best of intentions but have led us down the wrong path.

    • The point of welfar is to spread the risks out, so that welfare equals the annual damage and liability plus profit and overhead for the the government. Tightening the belt with targeted austerity isnt the business of taking on losses.

      If it is universal then your risk is already spread out. At that point it’s cheaper to just not have treasury calculations eat the cost of losses rather than pay an adjusted top tax rate.

  2. A much wider range of taxation is needed for govt to support families and health.

    Any surplus can always be distributed to families as a Labour Govt showed when each family got 100 pound.

    GST hits the low income food and rent bill hard.

    • So grateful for people like you who point out the glaringly obvious to the glaringly ignorant. And by glaringly ignorant I mean right wing trolls who either were not born early enough or who choose to stay willfully ignorant of the era Mike talks about right up until 1984.

      There were PLENTY of millionaires in NZ before that date. Scads of em. And whats even better, the money by and large stayed in NZ and wasn’t doshed out to the Aussies or the Indians or the Canadians or any other slimy, greedy little Tom , Dick and Harry..

      It stayed HERE ,- in NEW ZEALAND.

      And we had Utilitys – later known as assets that became the playthings and cash flow for the Rogernomes, – after DECADES of careful building through the taxes, hard work and the determination of prior generations , – and particularly of the working people to not let this country devolve into a South Pacific backwaters. So much so , – NZ enjoyed in the late 1960’s one of the highest standards of healthcare and education globally and in 1968, – was the 6th wealthiest nation on earth per capita,- just behind Denmark.

      That was , of course , – until the grubby , treacherous, treasonous neo liberal filth headed by Roger Douglas and carried on by Jim Bolger and his arsehole Finance Minister Ruth Richardson and her ‘Mother of all Budgets’ and her Employment Contracts Act 1991 bullshit thought it was theirs to get their dirty, filthy, grubby little greasy fingers on what belonged to the people of NZ and flog it off at a fire sale to their local and overseas mates.

      Wankers.

      Don’t even get me started on the anti democratic way they rammed through policy’s that the public patently and clearly demonstrated they did not vote them in for. For the modern generation, think of the anti TTP protests nationwide as the most recent example with the same sort of grabastic neo liberal arsehole in power at the time, – John Key. Some things dont change and neither does the toxic poison of the right wing neo liberal weasel.

      Mike Treen has shown it can be done, that it WAS done , and there never ever WAS such a thing as TINA,- that is just a cock and bullshit conveniently termed fantasy designed to convince an uncertain public that they had the answers. Well I’ve got news for them. That unless they want to risk widespread global unrest and anger by the citizenry directed towards them, .. they’d better start crunching numbers and work out we outnumber them tens of thousands to one. And no amount of far away retreats or underground bunkers are going to be safe when that day comes.

      And , like a defeated enemy who wishes to speak terms, they’d better come out of their fetid little foxholes and include in those terms THEIR obligations to pay their fair share of tax, to lessen taxation for middle and lower income workers, to discard their bullshit lies with their minimum wage fear mongering about job losses if wages were raised (Ha !, – just look at them now sacking thousands of workers and rejecting govt subsidy’s as they think only of themselves and their profits ) to keep rents , mortgages and food at a reasonable level (and not THEIR preconceived level of what constitutes ‘reasonable’ either, – rather what WE , the general populace deems reasonable ).

      But when it comes to them , – they are first to jump ahead in the queue and hold out their cavernous and equally as pathetic gluttonous maws , – ready to take govt bail outs like ravenous shrieking pelicans to be rescued yet again by the taxpayer. Remember ‘Too big to fail’ a few years back?

      Let that ring in your ears a minute…

      ‘TOO BIG TO FAIL’.

      How many suicides, how many family’s broken up , how many struggling small businesses went under and the ensuing unemployment figures, how many made homeless, – all because these fat , craven , overstuffed narcissistic bastards were allowed ,- nay, – selected into positions whereby they could unleash their warped psychopathy on the rest of us?

      Fuck them.

      And fuck their ‘big business’.

      We, – global humanity , – are owed by them such a colossal debt that they can never repay save bloody revolution and their very heads , and even that wouldn’t be far enough,- so the very least they can to do assuage the coming economic meltdown and the rage that is to follow and to start repaying that debt.

      Pronto.

      And pay their bloody fair share of the tax burden.

  3. The tax working group at great expense advocated a number of changes that based on a CGT would have made more money available too lower the burden on middle and low income taxpayers and created a move toward a more fairer level playing field.

    Winston has scuttled any chance of worthwhile tax reform this term.

    Just moving on taxing higher incomes more would make a huge difference and send the message that we all carry the load equally and for the benefit of the whole country.

    https://thestandard.org.nz/the-tax-working-group-proposals/

  4. Work and Income’s benefit rates for orphans, unsupported children and foster care allowance presumably indicate what successive governments think it costs to raise a child. Should these be the goal for universal child benefits?
    Weekly rate, non-taxable:
    Aged under 5 years $175.71;
    Aged 5 to 9 years $200.55;
    Aged 10 to 13 years $219.11;
    Aged 14 years or over $237.59.

    • Okay, I’m just going to cover the basics first.

      First of all a UBI assumes relatively higher taxes on what can be taxed that isn’t a UBI. So the tax system would have to be still set up to ensure people would benefit from making more money.

      The next bit about UBI is it assumes that cost of living is set up in a reasonable situation, and that people only on a UBI can live comfortably plus universal health, education, plus state housing, cheap energy (that’s a big one) and public transport, and plus supplementary benefits for rent assistance or something, there’s always variables (this is where we put the stuff we’ve missed, in the variables of supplementary benefits, the orphans, the disabled, god the woke lose there minds about not including disabled but they are included in supplementary benefits if we had to list all the variables there’d be so many it would be unreadable, and now I will finish this paragraph by talking about the poor and down trodden), rather than whatever the markets will pay due to inelastic demand elements, and every person regardless of ability can access them at government subsidised rates in enough areas to support the people in lower income zones, even with increased numbers of people needing to work, it is harder to find people willing to produce precinct developments that cater to all income levels.

      You also can’t have UBI while things that are clearly inelastic, like health care, work based on insurance, UBI will only work properly once universal health is fully covered, provisioned up to the teeth for everyone.

      UBI assumes that technology has reached the point where we’ll have abundance of basic necessities even if all people who wouldn’t work when given it stop working. It does not assume that UBI is going to lift people entirely out of poverty and let them live in any of the states or cities they want to. Instead, it assumes the people on just UBI will move to live wherever the cost of living is one they can afford on UBI and that such places exist and are relatively safe, and have potential for upward mobility like education so that people who change their minds about being just on UBI, or the children of people on UBI, have access to the fundamental building blocks of a job.

      This means a UBI can’t be done if, say, we can’t feed the entire population if we need UBI recipients who would stop working to work in agriculture, which means agriculture might have to be automated more than it is currently.

      UBI also doesn’t work while schooling, including university and college and technical school, or any other sorts of things that could count as training towards employment, cost money. You’d have to have the government take over all universities, and improve the quality of all of them up to a much higher minimum standard than currently exists. This means no more school closures, the government will have to fund and manage all schools the same as the top schools.

      You need to heavily shift culture to encourage people to work, even if they don’t personally need to, similar to how it is in Star Trek.

      The reason UBI would be required is because the economy can’t offer enough jobs (due to automation) to support the population, while still producing more than the necessities to live for the population (thanks to that automation).

      UBI also might not work properly without a single, unified government to manage it. A situation where the wealthy just leave the country with a UBI and take out the tax base needed to support it, or tons of poor or jobless people from countries without UBI flood into the countries with it is not a situation that would work out, so UBI would likely either mean a country that can survive entirely without trade and is willing and able to keep people from coming or going with military force, or a single world government so that everyone is on the same UBI around the whole world, and all taxed to support that UBI around the world.

      UBI is very difficult to make work, and we might not quite have all the tech and automation levels needed ironed out yet, or the educational systems either, or various other aspects.

      The problem is, we can ready adults for a UBI but not children. We will how ever have to make ourselves ready for a UBI asap, because it’s illegal to be closer than 2 meters of one an other so businesses have to automat in response. What could screw things up much worse without a UBI is rapidly dawning on us, and we’re already seeing the detrimental effects on various countries and the global economy not keeping up with job seekers during a pandemic (particularly in areas where job-seekers have lower qualifications or potential qualifications, such as below average intelligence people who can’t pull off a degree or other technical stuff, and some who can’t even get a proper high school certificate, but still want jobs and need them in the current economic system to get by in a comfortable and healthy and non-criminal way).

      Part of the assumptions behind UBI also assume that it is cheaper than the potential literal class warfare and criminal behaviour/riots likely to happen if UBI isn’t offered, and that because the ‘top end’ beyond UBI of the economy is still pseudo-capitalistic, it prevents some of the problem normally caused in communism.

      This doesn’t mean UBI will be practical any time soon, particularly in the current policy framework. Things are likely to get MUCH MUCH WORSE before the will to push a UBI down on children unless some miracles happen.

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