Labour on minimum wage

January 27th, 2010 at 3:00 pm by David Farrar

In opposition you can propose all sorts of things, without having to worry about the consequences. We see this today with ’s private members bill to have the go from $12.50 to $15.00 in just two years.

Increases in the minimum wage can destroy jobs. Not automatically in every situation, but certainly in many situations. If this was not the case the minimum wage would be $50 an hour.

With the abolishment of the youth minimum wage, I have no doubt that the record high youth unemployment is partially because some young workers have already been priced out of the market.

On the other hand the economy had strong enough economic growth for most of the 2000s that the minimum wage was increased without a significant impact on employment.

So let us look at ’s record vs their rhetoric.

In Labour’s first term, they had a booming economy (inherited from the previous Government). How much did they increase the minimum wage by? Their annual increase were 55c, 15c and 30c.

So Labour are demanding that just as we come out of a major recession with high unemployment, the Government should increase the minimum wage by $1.25 a year, when in their first term the increases averaged 33c a year. National’s increases have been 50c and 25c, around the same as Labour in their first term, but not quite as high as a percentage. Of course a key difference is the inherited recession.

Is anyone stupid enough to think that if Labour was in Government they would be increasing the minimum wage to $15?

In fact we know this from their own election policy. All their policy said was that they would increase it to keep pace with (the greater of) inflation or average wage increases. Now as neither inflation or the average wage is at 10%, it shows how hypocritical Labour is being – now promising something they know would be bad for jobs, purely because they know they don’t have to deliver on it. If they really thought it was a good idea they would have promised it at the last election.

Labour in their second term increased the minimum wage by just 50c a year.

The one period where it did increase much faster was 2005 – 2008, but that was not because of Labour – that was forced on them by NZ First and the Greens. But even then, they never did an annual increase of $1.25.

So again, when the economy is booming and unemployment is low, Labour implements relatively modest minimum wage increases. Once they are in Opposition and unemployment is high and we have just come out of recession, they advocate the highest ever increase.

Do you really want them running the country again?

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37 Responses to “Labour on minimum wage”

  1. Samuel Konkin (7 comments) says:

    Well, given your point is that talk is cheap in opposition, there’s no way they would actually increase it in that way if in Government. Therefore, hardly seems to be something to fear.

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  2. fizzleplug (72 comments) says:

    But if they were in charge the country would be in such good shape right now. We’d probably have another $600 million to buy back the planes we haven’t yet sold.

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  3. XChequer (350 comments) says:

    “Do you really want them running the country again?”

    Short answer: No.

    Thank you

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  4. queenstfarmer (696 comments) says:

    But if you’re in Labour, the answer is simple: money grows on trees. Failing that, take it off the rich pricks.

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  5. toad (3,654 comments) says:

    And all National can manage is a miserable 25 cents.

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  6. bwakile (757 comments) says:

    25 cents too much toad.
    Many small business owners that I know have one simple policy. Employ as few people as possible.
    Nobody wants the hassle.

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  7. GMDI (69 comments) says:

    only 25 cents an hour toad? but for your supporters that’s an exra tinnie every two weeks, or an extra ounce and a half a year. i’d be rolling one up for john key if i were you.

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  8. Grendel (875 comments) says:

    i’ve got a solution Toad, get better educated and stop relying on unions to negotiate for you. be good at something scarce and you will get more than minimum wage.

    i only have one employee and she is on a hell a lot more than minimum wage but then she is qualified and intelligent enough to do a lot more.

    i would consider getting in some kids to do some work in the holidays tidying the filing room and other basic work, but its not worth $10 a hour, let alone $12.50. so thanks to people like Toad and his ilk, there are jobs not being offered.

    well done guys.

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  9. Pete George (21,826 comments) says:

    And all National can manage is a miserable 25 cents.

    Less miserable than for quite a few over the last year who have lost jobs or reduced wages, both haven’t been uncommon.

    Why don’t politician and public servant wages go down as well as up in relation to economic conditions? Especially those who have some responsibility for those conditions.

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  10. MikeG (359 comments) says:

    “If this was not the case the minimum wage would be $50 an hour.”

    What?! Where did $50/hour come from? Of course $50/hour would cause jobs to be lost – it would change the payrates of a huge percentage of the workforce. But we only have a small percentage of the workforce on the minimum wage

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  11. big bruv (12,380 comments) says:

    Does this mean that bludgers will get an increase in their benefits as well?

    [DPF: Benefits are linked to the CPI not the minimum wage]

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  12. James (1,338 comments) says:

    What the hell does the State know about market conditions that it can set wages? And by what right does it think it should?

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  13. Inventory2 (9,791 comments) says:

    Mallard is a fool if he believes that a minimum wage of $15/hr is sustainable in the present climate. Sheesh, my 19yo daughter works at the local supermarket during university holidays and reckons the $12.50/hr she gets is brilliant, and way beyond what she ( a commerce student) belives that she/the job are worth.

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  14. Bed Rater (239 comments) says:

    Mike G: You seem to forget that its not just those ‘on the minimum wage’ who would get an increase, if it were raised to $15.00

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  15. Fisiani (858 comments) says:

    Step 1 Labour Abolish youth rates with no thought of consequences.
    Step 2 Labour Pay school-leavers with no experience the same as experienced workers.
    Step 3 Labour Watch in astonishment as employers choose more experienced workers and youth unemployment skyrockets.
    Step 4 Labour Shamelessly advocate a hypothetical rise of $2.50 in the minimum wage and condemn youth unemployment to rise inexorably.
    Step 5 National Realise that 25c is the price of reducing youth unemployment.
    Step 6 National Wins 2011
    Step 7 National Wins 2014
    Step 8 National Wins 2017
    etc etc

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  16. Monty (949 comments) says:

    25 cents – those on a minimum wage should be grateful for anything. Most other people are not getting any pay increases.

    Besides those on minimum wage are hardly likely to be National Party supporters anyway.

    The minimum wage is an intervention in the free market (I know lefties hate that term) and as a result it simply is not economic to employ some people.

    Because of Labour Babysitters in the area where I live expect $12-15 per hour for babysitting – too much so we tend to stay in much more and in the process deprive the student of the $10 per hour I am comfortable paying.

    Labour are being opportunist by making a noise about $15 per hour – they clearly had no intention of making the minimum rate when they were is government – either that and/or they truely are that economically illiterate and stupid.

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  17. Pete George (21,826 comments) says:

    By the time Labour are likely to be back in government (especially if they keep making announcements like this) inflation growth will probably take the current rate past $15 anyway (at 2.5% pa it will be 2017).

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  18. Inventory2 (9,791 comments) says:

    Indeed Bed Rater – those who were earning $15.00 per hour ALREADY would have a justifiable claim for AT LEAST a $2.50/hr increase.

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  19. Manolo (12,637 comments) says:

    The socialist Labour Party is not only morally bankrupt, but also illiterate on economic matters.

    Trevor Mallard, the epitome of thuggishness, should be disqualified to opine on the minimum wage. Can you imagine this unprincipled trougher in charge of NZ finances? Perish the thought.

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  20. john.bt (170 comments) says:

    Then there are those disadvantaged more seriously by those shit for brains Labour clowns. I refer to the handicapped, especially those with mental difficulties, who now have to be paid the minimum wage and as a result get no work at all. Or bugger all. I am sure it was the drunkard Dyson responsible for putting so many IHC people out of work.

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  21. fredinthegrass (269 comments) says:

    Why do FW’s like Trevor “the Duck” not realise that statements like that alienate
    the ‘Youth” vote.
    “Great idea Mr. Mallard,. Thankyou for saying the Minimum Wage should rise to $15/hr.
    I look forward to starting work. Pity there are no jobs for me!!”

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  22. jaba (2,069 comments) says:

    Is anyone stupid enough to think that if Labour was in Government they would be increasing the minimum wage to $15?

    there are plenty of people who believe this shit and that is why Labour and their union buddies bang on about it.

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  23. 3-coil (1,184 comments) says:

    TV1 News tonight reports that today’s rise is “the smallest in almost 10 years” – spinning, spinning, spinning…TV1 toadies – still the Labour Party’s propaganda machine!

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  24. Pete George (21,826 comments) says:

    TV run propaganda for themselves, self interest rather than partisan. They will exaggerate or over-highlight the trivial to try and make a ho-hum story into something dramatic.

    In contrast, DPF tries to distract from it, and Labour gives him everything he needs.

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  25. Anthony (736 comments) says:

    My idiot socialist friend says I have no compassion for those on the minimum wage (I think the increase was plenty) even though I got a zero percent increase last year but he says that doesn’t matter because I am on a salary well above the minimum wage.

    He is a typical socialist taking a static view of the world. I was on the minimum wage once but I went back to University and ended up getting a better job!

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  26. Southern Raider (1,376 comments) says:

    What is wrong with the old way of getting a pay rise? eg working hard, getting some experience and moving up the ladder.

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  27. Southern Raider (1,376 comments) says:

    Anthony no one at my work got a pay rise last year either and many salaried workers do well in excess of 40 hours, whereas those straight hourly rates get paid for every single minute

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  28. MT_Tinman (2,793 comments) says:

    Who really gives a fuck what labour say?

    Certainly not Labour.

    The disgrace here is that the current lot have increased the minimum wage instead of wiping it and telling the lazy bastards who earn SFA to get off their asses and EARN a decent wage.

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  29. Whafe (652 comments) says:

    I thought that idiot thug Mallard would have chimed in now on this thread, no balls Trev?

    If Mallard was half an idiot before, he is a HUGE idiot now suggesting this minimum wage rise, give me strength, it is 2010 and there is still politicians speaking up about an economic topic like this and some people believe it, gordon fucking bennet!

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  30. dime (8,778 comments) says:

    BHAHAHAAHAHAHA 25 cents!

    Theres an incentive to upskill!!!

    So thats an extra $10 a week. Take off the tax these people pay.. and its still an extra $10 a week.

    Fuck em.

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  31. Southern Raider (1,376 comments) says:

    No wonder Gen Y has no work ethic. They can go into any job and automatically get the same starting wage as anyone else and then bitch to their union mates and get an guaranteed pay rise every year.

    Key should have grown some balls and keep it at the previous level.

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  32. Grizz (477 comments) says:

    The fundamental flaw of minimum wage rises for the sake of minimum wage rises is that productivity does not increase. The end result is inflation, with the new minimum wage buying the same basket of goods. People on the minimum wage need to ask themselve how they can increase output if they want to pick up a bigger piece of the pie come payday.

    Here is an interesting rant by Peter Schiff about minimum wage increases in AMerican Samoa and resultant rising unemployment. Apologies about the obsession with his own self importance, but the message is true enough. http://www.youtube.com/watch?v=_LaPGIIAyk4 The USA needs more guys like this in the Senate.

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  33. Brian Smaller (3,915 comments) says:

    If the minimum wage is not enough to live on then the 100,000 odd people who get it should train, or aim their sights a bit higher. Or work two or three jobs.

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  34. dime (8,778 comments) says:

    i had to laugh listening to the head of some union on ZB yesterday.

    when larry suggested that instead of a minimum wage increase, the govt just make it so there is no income tax up to a certain level.

    she wasnt keen on this “low income earners still need all the services our tax dollars provide, if we cut taxes they will miss out blah blah blah”.

    Not sure why larry didnt just ask her bluntly “are you a socialist?”

    why is that question never asked?

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  35. Pete George (21,826 comments) says:

    Maybe she was worried about them missing out on the dole.

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  36. KiwiGreg (3,129 comments) says:

    @ toad “And all National can manage is a miserable 25 cents.”

    It’s not actually National’s money, it comes from employers.

    Imagine the government was legislating the minimum price for haircuts. That’s how logical a minimum wage law is and the economic consequences are identical too.

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  37. MyNameIsJack (2,415 comments) says:

    and a half a year. i’d be rolling one up for john key if i were you.
    Grendel (96) Says:

    January 27th, 2010 at 3:32 pm
    i’ve got a solution Toad, get better educated and stop relying on unions to negotiate for you. be good at something scarce and you will get more than minimum wage.

    i only have one employee and she is on a hell a lot more than minimum wage but then she is qualified and intelligent enough to do a lot more.

    i would consider getting in some kids to do some work in the holidays tidying the filing room and other basic work, but its not worth $10 a hour,

    So who tidies the filing room, etc? You, you’re well paid employee or do you just leave it a mess, thus lowering your productivity for the sake of a few hundred dollars a year?

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