Minimum Wage

May 23rd, 2011 at 10:00 am by David Farrar

Stuff reports:

Business NZ chief executive Phil O’Reilly said Labour’s policy was “the worst possible news” for young people on the dole.

“The very last thing you would want to do is make it harder to employ them. I just don’t understand where Phil Goff is coming from with this.

“He already knows the reason why there’s such high youth unemployment right now is we don’t have a youth .”

Faced with such a steep rise in costs, businesses would probably lay off staff, Mr O’Reilly said.

Labour fundamentally do not seem to understand the difference between economic cycles.

If unemployment is low, and employers are struggling to find people to fill jobs, then yes one can increase the minimum wage with little impact on employment.

But when unemployment is relatively high, and many firms are still recovering from the recession, you can’t increase the minimum wage without a significant impact on employment.

They key thing is you need to get people into jobs first, and then once people are in jobs, then they are better placed to get wage increases.

A 15% increase in the minimum wage in one year would be the largest ever, and at a time when youth unemployment is at 27% or so. And they don’t see the correlation! How the hell will a 16 year old ever find a job if it is illegal for them to work for $14 an hour.

101 Responses to “Minimum Wage”

  1. Murray (8,838 comments) says:

    Labour hates:

    Farmers.

    Employers.

    Youth workers.

    Who else is on Phils shit list this week?

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  2. hubbers (223 comments) says:

    Could it be the policy makers at Labour are just plain thick?

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  3. Michaels (1,317 comments) says:

    Murray I don’t think they hate those groups as such it’s just they don’t have a brain.

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  4. nasska (10,680 comments) says:

    Murray

    There’s probably a simple answer…apparently Labour’s kitty to fight the upcoming election is a bit low. Additionally it seems that the taxpayers will no longer have to pay for their own brainwashing via pledge cards & the like.

    Phil is just budgeting resources by reducing the number of groups that Labour need target.

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  5. La Grand Fromage (145 comments) says:

    I used to think that Goff was just incompetent and had been in the game too long.

    Turns out he’s actually a fucking retard.

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  6. s.russell (1,564 comments) says:

    I think Labour’s policy generation process right now is 100% oriented towards what might they think might help them get elected and 0% towards what would actually do any good.

    Instead of asking themselves a) what policies do we think would help New Zealand, then b) can we sell them to the public; they are simply asking what policies will make us popular.

    Of course, their ability to come up with correct answers to ANY of these questions is doubtful…

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  7. Murray (8,838 comments) says:

    No I think these socialists plain outright hate the rural sector and would like it to just go away. The blind stupid part is what it is that they are going to eat and drink once thats happened.

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  8. vto (1,128 comments) says:

    So has anyone provided any evidence, actual recorded measurements and actuality evidence, indicating a comprehensive link between minimum wage rates and unemployment? Not anywhere from what I seen.

    Go on, provide some evidence.

    Or just carry on with abuse and curses.

    Or take a leaf out of John Key’s weekend notes where he claims growth in job numbers at EQC in Christchurch. ha ha ha ha ha ha ha ha ha ha ha, the man is a fool. Next he will be claiming that growth in coroner numbers is a good thing as well.

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  9. Mark (1,363 comments) says:

    This election will be Phil’s last. Key as set the election agenda and labour, already in trouble in the polls are simply struggling to find anything sensible to bring to the debate. The more interesting question it seems is how many votes ACT will take from the dry end of the Nats. After a flurry of early media attention following the hostile takeover of ACT by the Brash party machine then the somewhat failed strategy of the “Dear John”letter, Key seems to have taken back the initiative from Brash as well.

    Time will tell.

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  10. Adolf Fiinkensein (2,797 comments) says:

    Murray you are only partly right. They don’t want it to go away. They’d like to nationalise it and then get Allan Crayfar to run it for them.

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  11. slightlyrighty (2,496 comments) says:

    vto, take note.

    As I pointed out in yesterdays topic on Phil’s speech, Cabinet documents on the Department of Labour website illustrate that Labour actually DO understand the impact of raising the minimum wage beyond the level of the economy to sustain it. In 2006 and 2007, when the economy was going well (according to them) they did not raise the minimum wage to the level suggested by the Unions because they understood the negative impact on job growth and inflation that would bring about.

    The fact that they seem intent on ignoring this now marks them as economic vandals.

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  12. Viking2 (11,140 comments) says:

    Its not judst Labour that has this as policy. The are joined at the hip on this with National, the Greens, the other National party aka the Maori Party and the Possum party.
    The only Party that stands up for our young is ACT.

    Don’tjust blame Labour those others are just as bad and trying to shift theemphasis from Nationals sad behavoir won’t get the youth rates changed. They all need castigating.

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  13. vto (1,128 comments) says:

    Slightlyrighty, can you link? Happy to be proved wrong so lets have a gander and see what those Cabinet documents actually say.

    Anyone else got anything? Lets see what the real measured evidence on the ground is.

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  14. Murray (8,838 comments) says:

    vto you haven’t seen any data because you haven’t looked. I go for $25/hr as a research assistant if you want be to do it for you.

    Otherwise if I were you I start with a year books, chock full of of actual data, cross refwerence with unemployment levels to get a better picture.

    Alternately why not walk around any town and ask the owners how a 15% jump in their wage bill will impact on them.

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  15. berend (1,634 comments) says:

    You forget one thing DPF, from Labour’s point of view this makes perfect sense. Young unemployed people do not vote. They therefore don’t count.

    But what about that other party that increased the minimum wage? That doesn’t want youth wages reintroduced? They’re just as economically ignorant.

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  16. vto (1,128 comments) says:

    Murray, I have looked. And found evidence pointing in the exact opposite direction to the nats. That is why I am asking if there is evidence to back up the right’s assertions.

    Aint found none yet. And your post helped precisely zero.

    Anyone else?

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  17. John Ansell (861 comments) says:

    And do National favour reducing youth unemployment by reinstating youth rates?

    No. When push came to shove, National voted with Labour and the Greens to send youth unemployment soaring.

    Only ACT voted to lower it by allowing inexperienced kids to get a foot on the job ladder for, say, $10 an hour.

    All the other parties voted to send those first time jobseekers home to sit on the couch for $4.50.

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  18. dime (9,453 comments) says:

    vto – a ling between minimum wage rates and unemployment? or youth unemployment?

    MWR V Unemployment – just your usual wage/price spiral. we pay well over the min wage so wont affect us. i imagine it would have an impact in some industries though.

    MWR v youth unemployment – its pretty freaking obvious right now.

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  19. Danyl Mclauchlan (1,065 comments) says:

    Ah, but DPF – as you yourself acknowledge in your VERY balanced budget coverage: we’re not in an economic downturn. We’re actually on the verge of the greatest period of growth and wealth creation in modern New Zealand history!

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  20. Murray (8,838 comments) says:

    Well tell you what vto what say we make the minimum wage $25 and see what happens of you’re confident that unemployment will suddenly drop.

    Sounds like you’ve discovered a way to print money.

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  21. smttc (692 comments) says:

    What I do not understand is how Labour think this will be a vote winner. I assume most if not all minimum wage earners already vote Labour or do not vote at all. If anything this proposal threatens their jobs and livelihoods. So it may lose Labour votes.

    I wonder if it might work if they introduced a youth rate at the same time. But that is never going to happen for ideological reasons.

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  22. dime (9,453 comments) says:

    Danyl – we are on the verge.. so lets not fuck it up before it actually happens

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  23. questlove (242 comments) says:

    And do National favour reducing youth unemployment by reinstating youth rates?

    It’s only those radical right wingers that seem to support this.

    Well tell you want vto what say we make the minimum wage $25 and see what happens of you’re confident that unemployment will suddenly drop.

    Elasticity of demand. Duh.

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  24. toad (3,669 comments) says:

    Hmmm. Have a look at these graphs over at The Standard. Not even a correlation between levels of the youth minimum wage and youth unemployment to base any suggestion of causation on.

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  25. vto (1,128 comments) says:

    Dime, you just provide whatever evidence you can find that proves your assertion. Got any?

    Murray, still no evidence I see.

    Anyone else got any real measured evidence on the link between minimum pay rates and unemployment?

    Anyone? Please. For your own sakes if nothing else..

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  26. Manolo (13,378 comments) says:

    We’re actually on the verge of the greatest period of growth and wealth creation in modern New Zealand history!

    Indeed! Marvelous economic developments about to happen according to Double Dipton English. Hang on and be patient.

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  27. vto (1,128 comments) says:

    the silence is deafening

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  28. wreck1080 (3,733 comments) says:

    Labour are lurching to the left.

    I recall, they want to increase income tax, drop GST, tax farmers extra (cos they earn too much).

    Jeez, we’d be in the poo if Labour had won the last election.

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  29. David Garrett (6,447 comments) says:

    This whole minimum wage issue is a classic example of the need for economic literacy. I confess to having had some sympathy with the view that people should be paid a minimum wage and not be “exploited” by unscrupulous employers. Then Sir Roger patiently explained a fuller version of what John Ansell says above…better to have young unskilled kids on $10 an hour – or $400 a week – rather than consigned to the dole at $150 or whatever it is, learning nothing, gaining no experience, and wasting their lives at best, or becoming gang members and candidates for prison at worst.

    My point is that if someone with two university degrees aged over 50 needs it explained (I wont embarrass my former caucus colleague who initially shared my lack of understanding of the economic reality of the minimum wage) then its no surprise if union drones in the Labour Party genuinely believe an increased minimum wage is not only fair but a good idea.

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  30. vto (1,128 comments) says:

    Maybe David Garrett you have some evidence on the link between minimum pay rates and unemployment?

    If anyone has it surely you would. Please link.

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  31. Inventory2 (10,104 comments) says:

    @ vto – the evidence that slightlyrighty refers to in his 10.19am is damning towards Labour. It’s so damning in fact that I’ve blogged about it this morning.

    http://keepingstock.blogspot.com/2011/05/more-on-labours-minimum-wage-bribe.html

    The bottom line is this; Labour opposed a $1/hr rise in the minimum wage in 2006, when the economy was supposedly doing well. Labour now supports a $2/hr increase in the minimum wage when the economy is in the earliest and most critical phase of a recovery, and when small businesses in particular are on the bones of their bums, having endured three pretty tough years; if they have survived at all!

    This is nothing but a cynical election bribe by Labour that is breathtaking in its hypocrisy.

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  32. David Garrett (6,447 comments) says:

    vto: I have just confessed my semi literacy in matters economic…how does that support a claim that “if anyone has it surely [I] would?” I will leave providing evidence and theories to those who know much more about the subject than I.

    Tell you what I did discover over the weekend though…a correlation (yes I understand that is not the same as causation) between higher imprisonment rates in NZ and much lower crime….but that’s off topic here…

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  33. Brian Smaller (3,995 comments) says:

    I would be happy for my 15 year old to find a job in the holidays earning $10 an hour. It will be more than the $0 he gets now in the holidays and would teach him a few things – time management, personal responisbility, how sucky a low wage is so study hard and make soemthing of oneself.

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  34. vto (1,128 comments) says:

    IV2, I understand completely and wholly the hypocrisy of the major parties, but that is not what I was looking for. I am not a labour supporter and have in fact near always voted right. This time not so certain so looking for proof of claims to assist.

    What I am looking for is evidence for the claim made here.

    Still there is none. I will keep waiting though, for a while, and if it is clear there is no such evidence I will consign this assertion to the rubbish bin and allow such a failure to colour any further asertions by Farrar etc.

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  35. dime (9,453 comments) says:

    VTO – i dont think an increase to $15 will lead to substantially higher unemployment. I think it will go up a touch. The main issue will be inflation.

    i do think it will lead to higher youth unemployment though. the jobs will simply go to adults instead of kids. its just common sense. i suspect you’ve never run a business though.

    i feel sorry for kids that want to work and cant get a job. the kids that hate school, want to leave, live at home and still earn 3 hundy a week in the hand. its a sweet deal.

    but we arent allowed to think of them. no, we must cater to the worst case scenario and the weakest in our society blah blah

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  36. Inventory2 (10,104 comments) says:

    @ vto – the blog-post on Keeping Stock contains links to information furnished to Cabinet by Labour Dept officials in 2006 and 2007. These clearly show the consequences of each of the options considered by the then-Cabinet.

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  37. backster (2,081 comments) says:

    VTO……….The link may be largely subliminal. During the Clark oppression many large employers transferred their production overseas in response to prescribed increases in labour costs. A few more were on the margins surviving on low profits hoping for relief with a change of government. They got it through the taxation cuts that Goff promises to reverse. GOFFs proposed continuation of Cullen’s vendetta against farmers will hurt provincial towns, and even Fonterra may have to explore the prospect of processing Dairy products overseas in order to survive.

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  38. vto (1,128 comments) says:

    IV2, thanks. I have checked your links and found them to be recordings of a labour government cabinet meeting only. They are not evidence. And, as you yourself intimate, such musings of Ministers is no evidence whatsover, given their proven and admitted hypocrisy. You cannot rely on their word one moment and then dismiss their word the next.

    So, still no evidence.

    There is evidence over at The Standard pointing in the other direction. So come on you lot, shape up. Provide the evidence to back your claims.

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  39. RJL (145 comments) says:

    Garrett:…better to have young unskilled kids on $10 an hour – or $400 a week – rather than consigned to the dole at $150…

    You twit.

    Of course, it is better to be employed than not.

    However, it is equally better to be employed at a higher wage than a lower wage.

    Higher wages for workers merely mean less profit for owners, or maybe lower salaries for employees not on the minimum wage. The only problem is whether there is now so little profit that the business is non-viable.

    Possibly, that will be the case for a very small minority of businesses. But, if so, you are talking about a business that by definition is only viable because it exploits its lowest paid workers. Which means that there is something deeply wrong with that business’ business model.

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  40. James (1,338 comments) says:

    Econ 101…. raising the price of something leads to a lessening of a demand for that thing.Wages are a cost of doing business and business seek to lower their costs…like everyone else.Price inexperienced youth above their market value and less will be employed….so simple and obvious yet it still needs explaining to some….

    And RJL arrives to prove my point. The point of all business is to create profits….nothing else.You may get side benefits like employment for people but that should never be the focus of the enterprise .

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  41. reid (15,954 comments) says:

    vto: a couple of leads, which point to data and factors to consider.

    http://www.ilocarib.org.tt/portal/images/stories/contenido/pdf/Youth%20Employment/etp26.pdf

    http://www.amatecon.com/etext/mwe/mwe.html

    You twit.

    Of course, it is better to be employed than not.

    RJL. Woosh.

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  42. David Garrett (6,447 comments) says:

    RJL: your recipe sounds very like Marxism to this economic semi literate…lower the wages of the “rich pricks” (who happen to have skills and expertise) to afford to pay the unskilled who have none….and then when you have evened everyone out, they will all only take “according to their needs”…have I got that right?

    Did you ever visit East Germany by any chance, or were you still in school when the wall came down?

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  43. dime (9,453 comments) says:

    “Higher wages for workers merely mean less profit for owners”

    ah is that all? lmao

    and why should we have high profits anyway? just because we risk everything to go into business, work harder than our employees and benefit society. fuck us! lets look after the slackers! that will get the country ahead.

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  44. reid (15,954 comments) says:

    Those two links and there are lots of others, indicate that it’s a complex economic question since the outcome of youth unemployment at any given time depends on a number of factors not just the wage setting.

    So what Liarbore needs to show us, is their modelling data that takes all those other factors into account, under today’s economic conditions, were the minimum wage to be accordingly adjusted.

    I’m sure Silent-T can produce that in a jiffy. If not, why not?

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  45. vto (1,128 comments) says:

    reid, great. That first link, pages 42 and 58 were enlightening, and conclude that the link between minimum wage and unemployment is not proven. There are some pointers but nothing with enough strength to hang an assertion like Farrars and O’Reilly’s on.

    So there we have it.

    So what to do next? Well for my part I will stand up for the poorest in our land and back an increase given there is no proven effect on jobs. That’s a tick for the left on this one.

    (fwiw my business requires the employment of many affected by such an increase.)

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  46. David Garrett (6,447 comments) says:

    dime: what, you want MORE for giving up your salaried job, mortgaging your house, giving a personal guarantee of the bank loan to your business and working harder than you used to??

    straight to the gulag with you….

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  47. Viking2 (11,140 comments) says:

    ah but David don’t forget the perks that go with all that.
    All the tax you pay, staff you have to put up with while they laze around and waste your dosh, the flash car you can no longer afford. The list of positves is endless allcause you want to work for yourself.

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  48. Grendel (957 comments) says:

    Shit VTO, if there is no effect on jobs, then lets raise it to $50 a hour, then everyone will be rich!

    or in common sense land we ask other questions and look deeper.

    What of the jobs that never exist becuase they are priced out of the market?

    eg, i would consider hiring someone to do my filing, and general office monkey stuff, including the stuf i want to do, but are not actually essentional. at $10 an hour, i will do it, at $11 i will consider it. you are pushing your luck at $12.75 (the current rate?) and forget it at $15. so the job does not exist, so employment does not go up.

    So in this case you are looking an absense of growth of the employment % rather than a drop in employment.

    The other question is, how long is the tail? if you already have someone on minimum wage, and it goes up, you will probably keep them as the work may still be useful. but will you hire anyone else? once again its a job that fails to exist, rather than is lost. in terms of the tail, how long do you try to keep the person on, before you consolidate some roles and then the unemployment rises? 6 months? a year? maybe the stats show up a year later in increased unemployment due to layoffs becuase employers have had time to try and make the higher wage bill work, and now cannot so had redundancies.

    So how do you count jobs that never exist becuause of the price rather than jobs lost becuase of the rise?

    Anecdotally for youth, i know a few supermarket managers and they tell me that given any choice they will never hire a teenager over an adult due to the abolition of the youth minimum wage. simply put if they have to pay them the same, overall the adult will be a better employee. Supermarekts have to one of the main places where kids get their first jobs, and if they are not being hired due to the law change, then the law was an ass.

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  49. reid (15,954 comments) says:

    conclude that the link between minimum wage and unemployment is not proven

    Nothing in economics is proven, vto, it’s an art, not a science. It’s a dynamic system that changes over time and the causal factors can be any number of dynamic forces. What those links suggest is there are a number of factors involved in the overall question of youth-unemployment reduction one of which is the question of the minimum wage and in any given economy at any given time applying it, removing it or adjusting it, might have any given effect on youth unemployment numbers, either up or down.

    It’s not saying the linkage doesn’t exist, it’s saying it’s not the only one. So Labour can’t argue a rise to $15 won’t increase youth unemployment either, unless it shows us its modelling equations, which I asked for, above.

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  50. Bevan (3,965 comments) says:

    Higher wages for workers merely mean less profit for owners, or maybe lower salaries for employees not on the minimum wage. The only problem is whether there is now so little profit that the business is non-viable.

    Face palm moment. Hey genius, what do you think investors in a business will do if they see the dividend they receive from their investment drops? Now what do you think will happen to the business when said investors do the inevitable and lok elsewhere to invest their money? People don’t invest in business to ensure other people are employed, they do so to ensure they receive a dividend to live on themselves.

    Possibly, that will be the case for a very small minority of businesses. But, if so, you are talking about a business that by definition is only viable because it exploits its lowest paid workers. Which means that there is something deeply wrong with that business’ business model.

    But it seems you don’t think forcing a business to raise the wages of unskilled, unprofessional wage workers to be exploitation of the business? Oh thats right, all business owners are greedy Scrooge McDuck types exploiting workers and swimming in their money bins every night….

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  51. RJL (145 comments) says:

    James:The point of all business is to create profits….nothing else.

    To create profits for the owners of the business, yes. Which is precisely why interventions like the Minimum Wage are needed to limit the potential damage done to the rest of society by the pursuit of profit.

    Because while the purpose of the business might well be to create profit for its owners, but the purpose of society is not to organise everybody else for the benefit of business owners.

    Which is not to say that businesses don’t benefit society, many do. And businesses which don’t exploit their workers pay in-excess of the minimum wage, anyway.

    Dime: …and why should we have high profits anyway?

    It’s not about stopping businesses from having high profits. It is about stopping businesses from having high profits by exploting workers. If your business makes a profit and pays a reasonable wage, then your business will be totally unaffected by Minimum Wage changes — except that possibly some of your customers may have more money to spend on your products.

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  52. dime (9,453 comments) says:

    “except that possibly some of your customers may have more money to spend on your products.”

    except the retailers that sell dimes product have had to increase their margin to pay the wage increase. so whats the freakin point?

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  53. queenstfarmer (747 comments) says:

    @ vto: according to a bit of searching, check out this report which is a survey of 17 OECD countries:
    http://www.federalreserve.gov/pubs/feds/2003/200323/200323pap.pdf

    In general, our results provide evidence that minimum wages tend to reduce employment rates among the youth population. A clear negative correlation between the level of the minimum wage and youth employment-to-population ratios appears both in the raw data, and in time-series cross-section regressions
    relating employment rates to minimum wages, with controls for overall economic conditions and cross-country variation in labor market policies and institutions.

    Also referred to here:
    http://online.wsj.com/article/SB10001424052970203440104574402820278669840.html

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  54. Rick Rowling (801 comments) says:

    Graphical representation of why Labour may hate the rural sector

    http://upload.wikimedia.org/wikipedia/commons/b/b3/NZ_2008_election_night_map.png

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  55. reid (15,954 comments) says:

    It is about stopping businesses from having high profits by exploting workers.

    So can you please spell out precisely how employers do this, RJL? Can you please provide actual, real examples where employers exploit workers. From the way unionists talk, there must be literally thousands of real examples littered across the entire country, so I’m certain you can point us to at least a dozen or so?

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  56. david (2,539 comments) says:

    So MacDonalds have to have x staff to operate and therefore regardless of the wage rate mandated by central Government, they will continue to employ x number of burger flippers. Result of increasing the mandated wage ? Lower profit.

    But not for long. If he has been comfortable with the wage rates before he may have an extra body on the roster to cover for the stupid student part-timers who turn up drunk, late or don’t turn up at all. They will go. Staff turnover will increase as the employer hunts for staff who are trainable and reliable (easier said than done unfortunately). Raise prices.

    That will be the inevitable outcome for business where the number employed to operate is relatively inelastic.

    But not all businesses suffer inelasticity so you will also see part timers laid off and proprietors working even more hours than they already are of lack of viability will have operators finally throw in the towl.

    But if nothing else, the union movement is consistent. In 1980, the Secretary of the Canterbury Rubber Workers Union said to me in a negotiation – “I don’t care if we end up with only one member left, he will be paid what we say he should be paid” He got his wish.

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  57. RJL (145 comments) says:

    So can you please spell out precisely how employers do this [exploit workers]

    The way that is germane here is, by paying them too low a wage. That is what the Minimum Wage prevents.

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  58. Elaycee (4,303 comments) says:

    Vto – 12.19pm says: “So what to do next? Well for my part I will stand up for the poorest in our land and back an increase given there is no proven effect on jobs. That’s a tick for the left on this one.” and then concludes: “(fwiw my business requires the employment of many affected by such an increase.)”

    Well, there’s nothing stopping you from doing that now. Go ahead and increase the (minimum) rates you pay your staff and watch the effect on your bottom line. Unless your prices are increased to compensate for the increase in costs, your margin will be eroded. But if you happen to be in a price sensitive market (and under pressure to maintain your existing pricing), the margin has to suffer – unless you reduce the numbers of staff (the costs) to offset the increase in the rates per hour.

    Which brings us back to square one…

    Are you really in business???

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  59. slightlyrighty (2,496 comments) says:

    David, that statement from the secretary of the Canterbury Rubber Workers Union is the perfect summary of Labours Minimum Wage policy.

    They do not care about the effects of the policy, even though they are fully aware of it. It’s ideological driven bullshit that is not designed for the betterement of the country, only themselves.

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  60. slightlyrighty (2,496 comments) says:

    RJL, what happens if the minimum wage is more than the economy can afford?

    What would you rather have? $520 per week minimum wage? or $194.12 unemployment benefit?

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  61. Rick Rowling (801 comments) says:

    So what to do next? Well for my part I will stand up for the poorest in our land and back an increase given there is no proven effect on jobs.

    So, if you reckon there’s no effect on jobs, why only $2 an hour increase?

    What possible reason do you have to limit it to that?

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  62. RJL (145 comments) says:

    what happens if the minimum wage is more than the economy can afford?

    It isn’t.

    What would you rather have? $520 per week minimum wage? or $194.12 unemployment benefit?

    The choice is between $520 per week minimum wage and $600 per week minimum wage — assuming, of course, 40 hours a week employment.

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  63. Inventory2 (10,104 comments) says:

    @ slightlyrighty – that’s far too pointed a question for RJL to answer ;-)

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  64. reid (15,954 comments) says:

    RJL you’re still here, was just waiting for those examples, that’s all.

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  65. Inventory2 (10,104 comments) says:

    Danny Watson on Newstalk ZB has been taking calls on the minimum wage this afternoon – he has just declared of the $15/hr proposal that “it’s not good governance, and it’s not resposnible governance”. And he’s dead right.

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  66. Alan Wilkinson (1,816 comments) says:

    “assuming, of course, 40 hours a week employment.”

    That assumption of yours is rather the point, isn’t it? And where do you assume the extra $80 per week comes from?

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  67. shady (251 comments) says:

    Elaycee – I agree. I was going to call bullsh*t on vto being a business owner – or ever voting right – in any respect. Any time he/she has commented here has been to put the boot into National and/or DPF. I would also say that vto does not have teenagers trying to get weekend or holiday work so save for university. In fact no teenagers at all trying to do anything!

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  68. emmess (1,371 comments) says:

    Phil Goff wants to defy the laws of economics
    What next? Is he planning to float in mid-air?

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  69. alex Masterley (1,491 comments) says:

    Even talk back land is calling bullshit on the $15ph? Mr Goff can’t win a trick.

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  70. RJL (145 comments) says:

    And where do you assume the extra $80 per week comes from?

    We’ve been through this.

    The profitability of the company which is paying minimum wage.

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  71. alex Masterley (1,491 comments) says:

    Rick, even in Waimakariri and Dunedin South i bet the rural booths are solidly Blue, will the urban ones well South Dunedin is full of ferals.

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  72. Robboy (49 comments) says:

    @ reid: plenty of examples of worker exploitation for you to dig into if you can be bothered, some with immigrants and/or foreign workers:

    Fishing industry
    Removal industry
    Retail (e.g. Hollywood Bakery)
    Seasonal work
    Sex industry

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  73. dime (9,453 comments) says:

    “We’ve been through this.

    The profitability of the company which is paying minimum wage.”

    LMAO

    So, $80 a week x 5 employees and 52 weeks a year = $20,800!!!

    No worries, the average small business wont notice that coming off the bottom line lol

    Plus extra kiwi saver, ACC…

    Freakin commies!

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  74. david (2,539 comments) says:

    RJL, care to tell us what has been the cause of the declining tax take over the last 2 or 3 years? Might it just have some little thing to do with declining profitability? If so, just how on Gods green earth is the business sector going to merrily stand an increase in wage rates without either cutting staff or cutting hours worked?

    Oooooh I know …… pick me miss …… “they will put up prices” duh

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  75. david (2,539 comments) says:

    Robboy, you missd tiling MPs’ island hideaways.

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  76. RightNow (6,669 comments) says:

    “The profitability of the company which is paying minimum wage.”

    Hilarious – how many companies exist in NZ that
    a) pay minimum wage and
    b) can afford an extra $4k per worker per annum without going bust?

    My pick would be less than 10% of those that meet a) also meet b).

    The most likely outcomes are
    1) the business makes do with less staff
    2) the business shuts the doors
    3) the extra labour costs result in price rises

    The least likely outcome is that the employer simply absorbs the extra costs from their profits. That sort of thinking shows a real disconnect from reality, and explains why Labour and their lickspittles are not fit to make these decisions.

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  77. reid (15,954 comments) says:

    plenty of examples of worker exploitation for you to dig into if you can be bothered, some with immigrants and/or foreign workers:

    Those are a very specific narrow sector of the workforce, Robboy, and not at all representative of the main daily business of the unions in todays modern workforce. They’re almost the cliche categories and I’m afraid if you want to look at fishing for example, then let’s hope you’re not counting the foreign-operated vessels but only the NZ-ones, and that doesn’t count any fishing company who charters a fully-crewed foreign-owned and operated vessel either, because we’re talking about NZ employee’s only, aren’t we.

    So what are the conditions on the likes of a sealord vessel or any NZ-owned and operated vessel at all, Robboy? I think you’ll find if you bother to dig into it, they are remarkably benevolent compared to the foreign ones, which don’t count, because no NZ union members are on them, are they. But digging might shatter your pre-conceptions so I’d take care, if I were you.

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  78. Alan Wilkinson (1,816 comments) says:

    RightNow, exactly. Unfortunately stupid ignorance marshals many votes in this unlucky country.

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  79. krazykiwi (9,189 comments) says:

    @vto – I spoke to a Wellington cafe owner about this today. She is, by her own admission, a die-hard Labour supporter, and employs most minimum wage staff in her newly opened cafe. Faced with a wage increase to $15/h she would let quite a few worker-hours per day go and just take up the extra work herself. No other way to look at this than destruction of jobs.

    If you and other synapse-impaired, last-millennia socialists are so convinced that legislating for higher wages is a way to prosperity then I suggest you (a) pitch for $100/hr and (b) check out how Greece got on with this type of policy.

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  80. questlove (242 comments) says:

    Faced with a wage increase to $15/h she would let quite a few worker-hours per day go and just take up the extra work herself. No other way to look at this than destruction of jobs.

    Or, since it’s likely all cafe owners will be in this situation – the extra cost will be passed onto the consumer.

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  81. RJL (145 comments) says:

    Hilarious – how many companies exist in NZ that…

    Most employees in NZ already earn in-excess of minimum wage, and will still do so once the minimum wage is increased. So it matters little for many companies.

    This only effects those companies that are paying a large proportion of their workers shit right now.

    You are right that many may try to pass the cost on to consumers if they are able to. Which is fine, consumers need to pay a sufficient price, that the people who make/serve/etc their consumption can earn a decent wage.

    If your product is so low value, that consumers will refuse to pay a reasonable price for it, then sure the company will go out of business. By definition, such a company was only profitable when its workers were exploited.

    …care to tell us what has been the cause of the declining tax take over the last 2 or 3 years?

    The National government.

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  82. dime (9,453 comments) says:

    just a nasty little socialist aint ya

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  83. krazykiwi (9,189 comments) says:

    If your product is so low value, that consumers will refuse to pay a reasonable price for it, then sure the company will go out of business. By definition, such a company was only profitable when its workers were exploited.

    Damn those unreasonably priced Aston Martins. I feel for all those exploited workers.

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  84. mpledger (429 comments) says:

    Geneally, you look at the net benefit when raising minimum wages to see if it’s worth doing.

    For example, If 3 jobs loose a job at a cost of $1000 each but 30 people get an extra $100 per week then the policy is neutral i.e. it’s in balance. And generally, putting up the minimum wage gives a net benefit although some people lose out, lots pf people are winners.

    The market is a dynamic sytem with many feedbacks that changes in unexpected ways when policy changes. Simplistic views like “wages go up so jobs must be lost” doesn’t take into account all the consequences in such a system. Even economists can’t decide if putting up minimum wages is good, bad or neutral for jobs.

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  85. labrator (1,750 comments) says:

    @RJL So let’s say we increase minimum wage. Then the companies that pay minimum wage have to recover their lost profit and these are generally low quality service industries (supermarkets, fruit packers, petrol stations) and so the costs/prices of these go up. Of course people earning minimum wage have these suppliers as a larger percentage of their weekly outgoings (they use low cost workers because there is so much competition for the most common products) and so everything gets more expensive for these workers that you are trying to save from “exploitation”. This is called inflation. What happens next? We just keep going round and round fighting inflation with the minimum wage? What about when the NZ dollar gets depreciated because of this inflation? I thought inflation was bad (we have legislation to keep it down) so surely having one arm of the government driving it and another fighting it seems a bit silly?

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  86. Sonny Blount (1,845 comments) says:

    RJL, please define what you mean by exploited.

    By any reasonable definition, $15ph or even todays min wage $13ph is wealthy.

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  87. krazykiwi (9,189 comments) says:

    @labrator, @sonny – lost cause. Powerful, intervening state = good. Private enterprise and markets = bad. It worked in USSR, North Korea, Cuba…

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  88. Sonny Blount (1,845 comments) says:

    How to get rich on the minimum wage:

    Work 60 hours per week for $13 x 60 = $780 gross

    Sell 1 week of your 4 weeks annual leave, work 11 hours on each of the 11 annual public holidays for an extra weeks pay.

    This gives a total of 54 weeks x $780 = $42,120 per year.

    Taxed at 20% (help me on this one) = $33,696 in the hand.

    Find a room in a flat for less than $100 pw. Eat for $100 pw. Keep other expenses below $100 pw.

    $300pw x 52 weeks = $15,600 annual living expenses.

    Maintain cost structure from ages 15 to 35 and save $18,096 per year for 20 years.

    You now have $361,920 in the bank. Invest wisely and retire or if you have a partner, use the $720,000 you have together to start a family.

    If you find yourself with less than $300,000 in the bank at 35, then reflect and be happy with the lifestyle choices you have made in your life.

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  89. kiwi in america (2,437 comments) says:

    RJL
    You clearly don’t (or never have) owned a business or you wouldn’t be spouting such class envy crap.

    A business for any owner is one of the ways to get a return on their capital. Every business involves the utilization of certain assets in such a way as to produce goods and/or services of a quality and a price that customers in the marketplace will pay for. A business owner is banking on the fact that their product/service is of a nature, quality, attractiveness etc that returns to them (the owner) a higher return on their capital than other forms of investment (such as investing in the share market, managed funds, government stock or term deposits). The business owner has to factor opportunity cost into the equation – that is the price of THEIR labour or the time and energy they need to expend to run the business so that it will produce an income ABOVE the return their capital could pay them if passively invested plus their wages/salary.

    Running a business, particularly a small business, is a very time consuming and often quite stressful affair. Because NZ lacks sophisticated capital markets and thus more innovative lending instruments that involve taking security over only business assets, most small business owners can only raise capital by mortgaging their own home. This is a cost of capital that the business must cover as well as its overheads of operation and still pay the owner an income usually above that which they could earn if they worked for wages/salary for someone else and invested their capital in passive investments. Once a business’ income drops below that theshold, then it makes little economic sense for the owner to expend the time, energy and risk in the business to earn an income BELOW what all business owners know they can make if they shut up shop and go back to work for someone else.

    When the government mandates a business cost increase such as increasing the minimum wage, business owners who cannot pass this cost increase on to their customers (which is almost all small businesses in a tight low to no growth economy) then the wage increase comes out of the income the owner makes. It reduces the return on their capital and in small labour intensive businesses, it may tip the owner below that threshold where they are worse off running the business. In extreme examples they will shut up shop and go back into the workforce thus laying off all their staff increasing the unemployment rate.

    Most small business owners react to this imposition in rational and predictable ways. They often are reluctant to throw in the towel and indeed if mortgaged to the hilt with a property now reduced in value, the prospect of closing the business may mean the owner having to sell their own home and losing some or all their hard earned equity. In businesses where a preponderence of workers are lower skilled (ie at or near minimum wage) this acts as a growth constraint on the business as sometimes the cost of hiring the new worker cannot be immediately recouped as it will take time for hopefuly higher sales to compensate. In tight economic times if the minimum wage is increased it increases the length of time or the sales threshold before the new hire makes economic sense and its a risk many wont take and in these circumstances, the owner(s) hunker down and just work longer hours. Thus in this example the increase in the minimum wage results in a new job that might’ve reduced the unemployment rate not being created.

    In low skill industries, the abolition of youth rates has forced employers to choose between young inexperienced workers and older more experienced workers because now the risk of hiring the inexperienced youth worker (and the time and cost it takes in training them and coping with their lower productivity due to inexperience) cannot be offset by the lower youth pay rate. It doesn’t take a degree in economics to figure out that facing the same wage cost regardless of age that you hire the older more experienced work where you can. This means the teenage worker who would’ve got the $10 per hour job is not worth the risk at $12.75 when you can pay an adult the same and get better productivity.

    Labour and the unions pretend not to understand this because it is so easy to demagogue employers and centre-right parties for their heartless, selfish capitalism in not paying the low paid more.

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  90. slightlyrighty (2,496 comments) says:

    RJL.

    You may think the debate is between the choice of $520 and $600 per week. But if that extra 80 makes the employee unaffordable, then the $600 is a moot point.

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  91. Alan Wilkinson (1,816 comments) says:

    mpledger, it was cost neutral but job negative. Which is the point.

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  92. side show bob (3,660 comments) says:

    KIA, why do you bother, their hearing aids only pick up socialist dribble. Sad but these are the lefts really useful idiots, the banner wavers, the logically impaired , the truly naive , the green eyed monsters, the class warriors, the history deniers and the destroyers of our country.

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  93. kiwi in america (2,437 comments) says:

    ssb
    Because most lefties I meet and dialogue with are plain ignorant of these basic business principles because they’ve worked for someone all their life and fed a steady diet of left leaning MSM biased reportage. I was a lefty who came to see that socialism (or socialist type policies) were ineffective so if I can change so can others.

    Plus I prefer to silence critiques from the left with facts and debate rather than abuse and invective like Redbaiter does.

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  94. Pauleastbay (5,035 comments) says:

    KIA

    Trouble is facts and figures are something our lefties ignore because with them they have no case.

    I’ m afraid I am much cruder than you what

    RJL (46) Says:
    May 23rd, 2011 at 4:32 pm

    ………….Which is fine, consumers need to pay a sufficient price, that the people who make/serve/etc their consumption can earn a decent wage..,…………

    People that spout shit like that need to be treated with nothing but utter contempt

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  95. Falafulu Fisi (2,176 comments) says:

    VTO said…
    Go on, provide some evidence.

    Try the following review from Prof. David Neumark who has done extensive research on this area (ie, minimum wages).

    Abstract:
    —————
    We review the burgeoning literature on the employment effects of minimum wages – in the United States and other countries – that was spurred by the new minimum wage research beginning in the early 1990s. Our review indicates that there is a wide range of existing estimates and, accordingly, a lack of consensus about the overall effects on low-wage employment of an increase in the minimum wage. However, the oft-stated assertion that recent research fails to support the traditional view that the minimum wage reduces the employment of low-wage workers is clearly incorrect. A sizable majority of the studies surveyed in this monograph give a relatively consistent (although not always statistically significant) indication of negative employment effects of minimum wages. In addition, among the papers we view as providing the most credible evidence, almost all point to negative employment effects, both for the United States as well as for many other countries. Two other important conclusions emerge from our review. First, we see very few – if any – studies that provide convincing evidence of positive employment effects of minimum wages, especially from those studies that focus on the broader groups (rather than a narrow industry) for which the competitive model predicts disemployment effects. Second, the studies that focus on the least-skilled groups provide relatively overwhelming evidence of stronger disemployment effects for these groups.

    Download : Minimum Wages and Employment (click on download link at top of page)

    Also, you can dig around on Eric Crampton’s blog site on “minimum wages” and you get some excellent readings from there.

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  96. big bruv (13,312 comments) says:

    It is no wonder the union scum want the minimum wage to go up by two dollars an hour, only then can they have a chance of conning those on the minimum wage into giving over some of their wage rise by way of parasitic union dues.

    Remember, this is not about the poor, this is about the survival of the union movement, and this is why the Labour party (who have become nothing more than the mouth piece of the union movement) are pushing this so strongly, Labours masters have said “Jump” and Goff and co have been forced to reply “how high”

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  97. Seamonkey Madness (328 comments) says:

    Here is some evidence right here vto.

    http://www.kiwiblog.co.nz/2011/01/no_link.html

    Although I doubt you trust the source the way you’ve been spouting off here.

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  98. Shane Pleasance (27 comments) says:

    Love it. More of the same from all parties, only outdone by MORE of the same! If a minimum wage or a tax is as good a thing as the people believe, then the best party is the one with the biggest numbers!

    Or the lowest numbers. I’m not sure.

    Anyway, it’s much fairer, and more equal.

    Must be.

    Somebody has to pay for the coal in the nations train, everybody must do their bit. It’s only right. It’s only fair. And if you don’t, we will show you just how benevolent we really are. You’ve been given permission to work the train, and the tracks are being laid down. No man lives or can live for himself. We have a stake in you and you in us. It’s all for the greater good, you know.
    Where do the tracks lead? Why a train? No, we do not want a skyscraper. How quaint. Anyway. We are all equal, and you’ve been given permission.

    You’re so very good at keeping the passenger car clean. So very good.

    No, Galt’s Gulch is not on the list of destinations.

    Never heard of it.

    E. Toohey

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  99. Elaycee (4,303 comments) says:

    @ Shane Pleasance. Did you read what you wrote before you hit the ‘submit comment’ button? Nah – didn’t think so.

    What colour is the sky where you live?

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  100. Shane Pleasance (27 comments) says:

    @Elaycee Sadly, yes. Did you?

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  101. Elaycee (4,303 comments) says:

    Shane Pleasance: I bet the stuff you’re smokin’ / sniffin’ / drinkin’ / snortin’ / chompin’ / whatever, isn’t for sale at the supermarket….

    Now ‘scuse me while I kiss the sky…

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