Mimimum Wage
The Herald puts the minimum wage into context:
New Zealand’s minimum wage is still close to the highest it has been, as a proportion of the average wage, since the late 1970s.
It is also the second-highest of any developed country in relation to the median wage, although well below richer countries such as Australia in dollar terms.
So we have one of the highest minimum wages in the world, and people want to make it even higher.
You can’t make a country richer by just passing a law demanding people get paid more. The key to lifting wages is increased productivity – that is how we will close the gap with Australia.
Internationally, OECD minimum wages are quoted as a ratio of the median weekly income of fulltime employees – a lower figure than the average wage because the average is pulled up by high earners above the median, or mid-point.
On this basis, at last count in 2007, New Zealand’s minimum wage was 57 per cent of our median income – a higher ratio than in Australia (54 per cent) and ahead of all other OECD countries except France (63 per cent).
And an increase to $15 would put us even ahead of France, with a minimum wage at 67% of median fulltime income. Can one of the poorest countries in the OECD afford the highest relative minimum wage? Of course not.
And in another story:
The Warehouse human resources manager Paul Walsh says under-18-year-olds fluctuated between 30 and 33 per cent of his company’s 7500 staff in the four years up to June 2008, then plunged to 25.2 per cent in the year to last June and 24.1 per cent from July to this week.
“It’s dangerous to draw a conclusion that it’s purely the minimum wage rate that has affected that, but you would have to say it must have had some impact,” he says.
I predict youth unemployment will remain relatively high, even after adult unemployment starts dropping.
In any case, Pacheco argues that the minimum wage is an inefficient way of tackling poverty because many minimum-wage earners are actually teenagers or second earners in wealthy households.
She says 16.6 per cent of all those earning within 50c an hour of the minimum wage between 2006 and 2008 lived in the richest three-tenths of all households.
A point I have made. The focus should be on family or household income, not individual income.
March 21st, 2010 at 4:12 pm
phil whore ya dropkick…what does your hourly rate work out at sittin on ya arse all day…tell us all how much we are paying you to stay home while you bong up large.
March 21st, 2010 at 5:41 pm
dosen’t dpf give demerits for outright personal abuse..?
oh..!..hang on..!
it’s a rightie .. abusing me..
(silly me..!..eh..?..)
carry on..!
phil(whoar.co.nz)
March 21st, 2010 at 6:00 pm
well you are a dropkick..and you do sit on your arse all day…and you are continually stoned…and Im still on topic…I want to know how much over and above the minimum wage you take home each week for doing nothin.
March 21st, 2010 at 6:02 pm
We really don’t have a hope of catching Australia do we.. At least we know who’s holding us back… and why so many good people are leaving NZ for Australia… a lot of our business leaders don’t know they are cutting of their nose in spite of their face.. when they champion NZ as a third world low waged economy..
March 21st, 2010 at 6:50 pm
The Warehouse human resources manager Paul Walsh says under-18-year-olds fluctuated between 30 and 33 per cent of his company’s 7500 staff in the four years up to June 2008, then plunged to 25.2 per cent in the year to last June and 24.1 per cent from July to this week.
“It’s dangerous to draw a conclusion that it’s purely the minimum wage rate that has affected that, but you would have to say it must have had some impact,” he says.
So, let me get this right. The guy at The Whorehouse doesn’t know the reason why fewer under 18s are employed. So what DOES he do to earn his salary?
March 21st, 2010 at 6:59 pm
If you want context for the effects of a minimum wage try reading David Neumark and William Wascher’s “Minimum Wages”, MIT Press, 2008. Chapter 3 covers the effects on unemployment and the results show that minimum wages reduce employment of low skilled workers with the results being stronger when the research focuses on those directly effected by minimum wages.
March 21st, 2010 at 7:20 pm
I do not think any employer gives a toss for youth unemployment but they do care about the cost of employing staff not least the minimum wage and all the add ons – holiday pay, sick and bereavement leave and kiwi saver, ACC, tea breaks. Nor do the Unions they want people in work to get as high wages as possible. So the youth suffer without jobs. As a potential employer but choosing to employ no-one I don’t care either it is far too expensive.
March 21st, 2010 at 9:27 pm
Question: is it better for unemployed adults to be able to get a job earning more? or for a teenager who does not need to support themselves to have a part-time job?
March 21st, 2010 at 9:38 pm
A higher minimum wage percentage than France even!!! Well I’m living/working in France at the moment and can honestly say if we go down their route we’ll be in big trouble.
Try getting anything that resembles customer service in a business that employs unskilled/young people and you’ll be searching long and hard. They seem to be more interested in having long conversations with a person at the next checkout, SMSing their mates or standing around in groups talking.
Much of their industry is the same, very union based, 2 hour lunch breaks, 45 days leave a year etc. It becomes pretty obvious that the more you give, the less people are motivated to work hard. It’s very much a quasi-socialist state even though the “right” are in office.
Don’t take NZ down the same route John and Co. Keep the minimum rate where it is and bring back youth rates.
March 21st, 2010 at 10:25 pm
Of course not, so let’s just sit back and watch our kids flee overseas, then bemoan the fact that only the oldies are left.
March 22nd, 2010 at 9:36 am
The only chance kiwis have of catching up with Australia in terms of income, by 2020 or any other date, is to get on a plane. I’ve said it before, New Zealand is the most beautiful little third world paradise on God’s earth. It is easy to be lazy, indolent and stupid, but very difficult to be entrepreneurial, productive or wealthy.
The wage gap between Australia and New Zealand isn’t the 67% figure the repeaters in the MSM spout, it is (in my industry at least) closer to 100%.
New Zealand is stuffed. 9 years of rampant socialism followed by 18 months (with no end in sight) of smiling and waving.
March 22nd, 2010 at 10:11 am
Oddly enough, a very high minimum wage will actually increase productivity – but the gain will be an illusion. By systematically removing the least productive from the workforce, which is precisely what minimum wage does by making it illegal to pay a person what they are worth whenever that is less than the regulated minimum, you get a selection bias in favour of the productive – and productivity statistics are raised.
France, which has a very high unemployment rate, has some of the highest productivity stats in the world in part because their population of low skilled people find it so hard to get a job. Lawyers and doctors, on the other hand, have no trouble.
This is why productivity as a policy goal, treated in isolation, can be dangerous. It can be used against the low skilled.
March 22nd, 2010 at 10:26 am
I’d be surprised if the $15 min wage got any traction under Key. He won’t cut the minimum wage, and he won’t get rid of the ridiculous youth minimum wage regulations, but I’d bet against his getting us to $15 other than by the usual $0.25-$0.50 move every few years. Lots of status quo bias in the current government. He’s disinclined to give us much new stupid, but he’s also very much against getting rid of any old stupid even if National opposed the old stupid when it was enacted.
March 22nd, 2010 at 5:50 pm
are people fucken in the head or somehting? what are you guys smoking? catching up with australia? doesnt that require 5 percent growth for 20 conesquetive years, nobody has ever done htat before.
Wasnt teh minimum wage 83 or 84 percent of median wage when it was first legislated.