Will Christchurch City Council join the stupidity?

The Presss reports:

The Christchurch City Council is under pressure to find extra money to ensure all its employees get paid at least $18.40 an hour but its finance chairman is warning it cannot afford it.

“We are going through a process of cutting costs, not adding to them,” Cr Raf Manji said yesterday as councillors met to consider a report on the implications of introducing a Living Wage.

By law, workers must be paid a minimum of $13.75 an hour, but $18.40 is what the Living Wage movement believes a family of two adults and two children, where one adult works fulltime and the other works part-time, needs to meet basic living costs.

That is the key point. It is a calculation for one specific family type. That type of family is only around 10% of families earning under $18.40 an hour. Claiming that a 16 year old boy living at home must be paid $18.40 an hour because that is the income needed to support a family with two kids is ridiculous.

A report prepared for the council’s chief executive and employment matters committee, which met publicly for the first time yesterday, estimated the cost of increasing their hourly rate to $18.40 an hour at $1.1 million, excluding KiwiSaver, overtime and penal pay.

It also warned that introducing a Living Wage was likely to have a knock-on effect for other staff as the council would need to maintain relativities in remuneration.

That could add another $1 million to the council’s wage bill.

So proponents want ratepayers to pay an extra $2 million a year. Are ratepayers in Christchurch not already struggling enough?

Also the Councils seem to ignore the very serious flaws in the calculation by Rev Waldegrave, which include:

1. Only 12% of low income households are two adults and two dependents, which the Waldegrave calculation is based on
2. They assume you need 10 hours of childcare a week, even if the children are aged over 14
3. They calculation of level of “basic necessities” is not based on any empirical measurement of the lowest cost of necessities, but merely a proportion of the average expenditure in deciles 1 to 5 (this one is key – it is a calculation based on the Browns should be spending as much as the Jones, and is not a calculation on how much income the Browns need)
4. The calculation doesn’t account for some sources of household income such as trade-ins, sales, teenagers income (yet does include their costs) and school donation tax refunds
5. The calculation double counts some expenditure such as childcare costs
6. The calculation includes as a basic necessity costs such as Sky TV, pets, international travel and video games
7. The calculation includes insurance for dwellings and mortgages, despite assuming they are renting

Any politician that advocates the living wage calculation as a serious way to do policy should not be trusted with finances.