Wellington Employers’ Chamber of Commerce on Living Wage

December 11th, 2013 at 9:00 am by David Farrar

Raewyn Bleakley writes in the Dom Post:

Wellington City councillors today will debate at committee whether to accept a proposal to pay the to council workers. It’s a decision that could have far-reaching effects on the local economy.

Further, Treasury analysis, matched with earnings information from IRD, shows that almost 80 per cent of New Zealanders earning less than $18.40 an hour, including young people and students, don’t have children. In fact, two-parent two-children households make up just 6 per cent of families earning less than $18.40. And of those earning below that, one in five have family incomes of more than $80,000.

Anyone who votes for the living wage is voting for the most badly targeted policy in recent history. The living wage is a calculation for a two parent two child family, and as pointed out they represent just 6% of families earning less than $18.40 an hour. To apply that calculation to the other 94% of families is bizarre and daft.

Giving low-paid workers a 30 per cent increase without having a well-thought- out plan for how to create a corresponding lift in performance, and while doing nothing for other workers, is not the way to go. A business wouldn’t survive operating that way. Ratepayers deserve better management of public money from the council.

How many councillors will vote for ratepayers to fund a living wage, but don’t pay a living wage themselves? Bet you there are a few hypocrites out there.

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25 Responses to “Wellington Employers’ Chamber of Commerce on Living Wage”

  1. Manolo (14,049 comments) says:

    Economic terrorism practised by the alliance of progressives/Luddites at WCC.

    But of course, they are redistributing wealth: money extracted from ratepayers, not anything Wade Brown’s minions and bureaucrats have ever generated.

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  2. freedom101 (509 comments) says:

    Hopeless local government. Let’s all stand in a circle holding hands to save the world.

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  3. Ashley Schaeffer (513 comments) says:

    It’s easy to support these feel-good initiatives with other people’s money.

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  4. Weihana (4,585 comments) says:


    Still, even if international competition isn’t an issue, can we really help workers simply by legislating a higher wage? Doesn’t that violate the law of supply and demand? Won’t the market gods smite us with their invisible hand? The answer is that we have a lot of evidence on what happens when you raise the minimum wage. And the evidence is overwhelmingly positive: hiking the minimum wage has little or no adverse effect on employment, while significantly increasing workers’ earnings.

    It’s important to understand how good this evidence is. Normally, economic analysis is handicapped by the absence of controlled experiments. For example, we can look at what happened to the U.S. economy after the Obama stimulus went into effect, but we can’t observe an alternative universe in which there was no stimulus, and compare the results.

    When it comes to the minimum wage, however, we have a number of cases in which a state raised its own minimum wage while a neighboring state did not. If there were anything to the notion that minimum wage increases have big negative effects on employment, that result should show up in state-to-state comparisons. It doesn’t.

    http://www.nytimes.com/2013/12/02/opinion/krugman-better-pay-now.html?ref=paulkrugman

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  5. Inky_the_Red (761 comments) says:

    I think the supporter of a living wage in the below link is rather right of centre
    http://www.theguardian.com/society/2012/nov/05/living-wage-adopted-government-boris

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  6. Ashley Schaeffer (513 comments) says:

    @Weihana
    Minimum wage is not the same as living wage.

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  7. Weihana (4,585 comments) says:

    “redistributing wealth”

    “other people’s money”

    Except the wealth that people can create and the money they hold is influenced by 1. consumer demand and 2. by the services that government provides. It is a fallacy to assume that if you didn’t have to pay government X dollars in taxation/rates then you would thus retain X dollars in your pocket since the money you make in the first instance is influenced by those services government provides and consumer demand which is influenced by macroeconomic regulations. Therefore the correct question is whether any particular activity improves government services or whether it improves macroeconomic conditions…

    … or one could just stick to the same tired old cliches and rhetorical devices directed at like minded people in the trivial pursuit of more thumbs up.

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  8. Weihana (4,585 comments) says:

    Ashley Schaeffer (224 comments) says:
    December 11th, 2013 at 10:06 am

    @Weihana
    Minimum wage is not the same as living wage.

    They are both price floors for wages, so yes they are the same essential thing. The living wage is simply a proposal to increase the current minimum wage.

    Although in this instance it is a proposal for a local council to do it unilaterally which I probably wouldn’t agree with.

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  9. Martin Gibson (247 comments) says:

    DPF: “How many councillors will vote for ratepayers to fund a living wage, but don’t pay a living wage themselves? Bet you there are a few hypocrites out there.”

    One of the key ingredients of the “wouldn’t it be nice?” politics prevalent in lefty circles is a lack of practical experience in the areas you profess to be an expert. Not too many employers among the proponents who know what it’s like to be unable to train someone up on $18.50.

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  10. srylands (414 comments) says:

    “@Weihana
    Minimum wage is not the same as living wage.”

    No and neither are we the USA. Compared to the median, the New Zeland minimum wage is already extraordinarily high. If the 18.40 “living wage” became a defacto (or legal) minimum it would be by a long way the highest minimum wage in the world. You really think paying unskilled teenagers $18.40 per hour would not adversely affect employment?

    My prescription:

    – Forget the “living wage”
    – Reduce the minimum wage to $10 (about 38% of the mean).
    – MW of $8 for 16-17 year olds

    – Demand all unemployed people without kids move to where the jobs are (Christchurch for starters) and pay for their training. Accomodate them and give them pocket money.

    – Increase upfront welfare payments (including DPB) for the first 12 months to help people recover from life shocks, but phase down to a lower level after 12 months and a 5 year life time limit on benefit receipt.

    – Seriously tackle institutional problems in education (unions/middle class capture) and give the next generation of adults a better shot.

    The two greatest public policy challenges of New Zealand are:

    (1) the education problems
    (2) long term welfare dependency

    A “living wage” will make things MUCH worse. And BTW – whether or not the Government owns an electricity company simply does not feature in New Zealand issues to worry about.

    http://stats.oecd.org/Index.aspx?DataSetCode=MIN2AVE

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  11. Yoza (1,906 comments) says:

    The more money those at the bottom of the socioeconomic heap get, the more money circulates through the economy; the more money those at the top get, the more money is removed from circulating through the economy. It isn’t hard to understand, it is just politically toxic to the dogmatically inclined neoliberal order.

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  12. Weihana (4,585 comments) says:

    One of the key ingredients of the “wouldn’t it be nice?” politics prevalent in lefty circles is a lack of practical experience in the areas you profess to be an expert. Not too many employers among the proponents who know what it’s like to be unable to train someone up on $18.50.

    The same would be true of $13.75 an hour if the minimum was $8.

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  13. Weihana (4,585 comments) says:

    srylands (104 comments) says:
    December 11th, 2013 at 10:23 am

    No and neither are we the USA.

    No we are not, but the punishment cure you promote is as good as any Republican could come up with. :)

    My prescription:Reduce the minimum wage to $10

    Thereby reducing consumer demand and thus productivity and thus income.

    – MW of $8 for 16-17 year olds

    The two greatest public policy challenges of New Zealand are:

    (1) the education problems

    I agree with this but probably in a different way. Although I do agree having a lower minimum for youth helps youth employment, their employment also simply takes away from adults in low wage employment and increasingly adults are dependent on that sort of income. More importantly, the “education problem” is the reality that all unskilled labour is going to be eliminated by increasingly capable AI and the focus should be getting youth to acquire advanced skills (engineering etc.) less susceptible to automation.

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  14. Martin Gibson (247 comments) says:

    There are some teenagers I could not justify initially paying more than $8 per hour, but once they learn to work they’re worth $20. At the start they’d get more out of the relationship than me. If the alternative is sitting on their ass at mum and dads drinking Vs and playing video games, it would be a great $40 bucks a day for them and whose business is it but ours?

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  15. srylands (414 comments) says:

    “The more money those at the bottom of the socioeconomic heap get, the more money circulates through the economy;”

    Yoza what does that even mean? Are you saying that lifting the MW substantially will increase NZ’s GDP per capita? Because it won’t.

    Since 1999 the ratio fo the MW to the mean wage has gone up substantially. If your theory was correct (which I interpret as “lifting the MW makes NZ wealthier”) NZ’s GDP per capita would have risen relative to other OECD countries. It hasn’t.

    Argentina’s MW is going to rise by 25% on 1 January 2014. All that money “circulating” through the economy. Yoza style. How do you think that will work out for them?

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  16. Manolo (14,049 comments) says:

    The more money those at the bottom of the socioeconomic heap get, the more money circulates through the economy…

    Give that man lefty the Nobel Prize of Economics!

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  17. Weihana (4,585 comments) says:

    srylands (105 comments) says:
    December 11th, 2013 at 11:03 am

    Yoza what does that even mean?

    It’s obvious what Yoza means and that is that economic activity is linked to aggregate demand.

    Since 1999 the ratio fo the MW to the mean wage has gone up substantially. If your theory was correct (which I interpret as “lifting the MW makes NZ wealthier”) NZ’s GDP per capita would have risen relative to other OECD countries. It hasn’t.

    This does not follow. You have provided no comparative analysis of other countries and even if we assumed that every other country remained static, it does not follow that the productivity of New Zealand is influenced by the Minimum wage/median wage ratio alone. The difficulty of economic analysis is running an experiment where everything stays the same except one variable that we want to test.

    Argentina’s MW is going to rise by 25% on 1 January 2014. All that money “circulating” through the economy. Yoza style. How do you think that will work out for them?

    Even if their productivity increased significantly it wouldn’t be proof that the increased MW was the cause.

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  18. Fentex (1,025 comments) says:

    Giving low-paid workers a 30 per cent increase without having a well-thought- out plan for how to create a corresponding lift in performance

    This statement asserts the position that staff are not underpaid for what they currently do, a position I think the need for the discussion undermines.

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  19. The Scorned (719 comments) says:

    Yoza: :”The more money those at the bottom of the socioeconomic heap get, the more money circulates through the economy; the more money those at the top get, the more money is removed from circulating through the economy. It isn’t hard to understand, it is just politically toxic to the dogmatically inclined neoliberal order”

    Broken windows fallacy 101…

    Yoza blanks out the fact that a higher State mandated wage for some workers simply makes the tax-rate payer who’s funding it poorer…so they spend less….so nothing changes (except the pollies who clip the ticket on the way making the economy worse off )..Its the oldest and prevalent fallacy in economics…and still persists.

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  20. Weihana (4,585 comments) says:

    The Scorned (703 comments) says:
    December 11th, 2013 at 2:44 pm

    Yoza blanks out the fact that a higher State mandated wage for some workers simply makes the tax-rate payer who’s funding it poorer…so they spend less….so nothing changes

    That’s a circular argument. You’ve merely assumed that productivity hasn’t increased (or at least remained stable) as a result of increased aggregate demand which is the point in contention.

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  21. MT_Tinman (3,257 comments) says:

    Ratepayers deserve better management of public money from the council.

    No, they don’t.

    They voted in the nutters with full knowlege that they (the nutters) would waste ratepayer money on this type of bullshit.

    The ratepayers deserve everything they get.

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  22. OneTrack (3,223 comments) says:

    All those 16year old council employees deserve $18.40 an hour. And a captive audience (especially those ratepayers on the minimum wage) is paying for it. Arent I generous, please pat me on the back and tell me how progressive I am. High five.

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  23. Harriet (5,124 comments) says:

    “…All those 16year old council employees deserve $18.40 an hour…”

    They sure do – all 3 of them!

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  24. Yoza (1,906 comments) says:

    Your greed is hurting the economy

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  25. CharlieBrown (1,027 comments) says:

    MT_Tinman – unfortunately ratepayers are the minority in most places. Local elections aren’t limited to just ratepayers. That means beneficiaries, renters and students can all vote. I personally believe that only ratepayers should be able to vote in local elections, or alternatively a people tax should be implemented, or even better remove all local government and have a single form of government with government spending limited to necessary items.

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