Minimum wage incomes

May 29th, 2014 at 3:00 pm by David Farrar

minwage

Just done some quick calculations on what someone on the would have in terms of real take home pay today, as opposed to six years ago.

The gross minimum wage has increased 19%.

However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

The ACC rate is slightly higher today than in 2008 (when ACC was near insolvent) so that has gone up. Hopefully next year will drop again.

The net income of a fulltime minimum wage earner is 27% higher than six years ago.

The key thing is how have costs risen during the period. And the good thing is that even with the GST increase the cost of living only increased 14% in six years, so a minimum wage earner has had an 11% increase in their real disposable income in that period.

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56 Responses to “Minimum wage incomes”

  1. contheneo (27 comments) says:

    What I first noticed is the fact that Net income is now more than Gross income was in 2008.

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  2. burt (7,428 comments) says:

    contheneo

    And during that time interest rates have been lower and inflation has been lower. But I guess the left won’t rest till everyone is on a benefit and voting for more benefits.

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  3. NoCash (262 comments) says:

    -Socialist hat on-

    This is not enough… I demand a living wage!!!

    -Socialist hat off-

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  4. Judith (8,534 comments) says:

    I think someone forgot to consider the rise in GST during the relevant period, which surely makes more a difference to those who spend their entire wage on living, compared to those who don’t.

    [DPF: No. The CPI includes the impact of the GST increase]

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  5. virtualmark (1,306 comments) says:

    My problem is this is the sort of analysis that should be being done by the mainstream media. Instead, in today’s brain-damaged media market, we have to rely on a blogger to crunch the numbers because the media are too busy re-printing press releases and hyperventilating about the latest celebrity dramas.

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  6. hemihua (31 comments) says:

    I don’t know about including GST. Tax on income is clearly defined. Things get murky when you start including GST – should you also include say the portion of tax on your good / service that goes towards company tax? As technically this is being passed on to the consumer too.

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  7. NoCash (262 comments) says:

    @ Judith – you need to read the last paragraph of DPF’s post again…

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  8. martinh (1,272 comments) says:

    If cost of living has only gone up 14% in six years incl the gst rise that means 8% over six years is what my costs have gone up by without the gst rise.
    Well in my case thats certainly not whats happened. My electricity is up heaps, same with rego, milk, lots of my groceries and the cost of housing has gone up a hell of a lot more which means peoples main cost is rising much more than 8% over 6 years. I just dont believe it.

    ID imagine that the basket of goods for CPi just dont accurately reflect my spend which is mostly on staples for me and my kids

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  9. Alan (1,087 comments) says:

    CPI is a crappy measurement for poor people, it includes lots of high ticket items that have fallen or been reduced due to the strong dollar.

    Not really reflective of costs for someone on minimum wage

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  10. gump (1,685 comments) says:

    @martinh

    Some living costs have come down significantly.

    I am paying a lot less for my mobile phone these days and that makes me very happy (the bill has gone from $150 per month to $43 per month during the last year).

    Edit – I changed networks, but still get the same services.

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  11. Judith (8,534 comments) says:

    @ NoCash (252 comments) says:
    May 29th, 2014 at 3:31 pm

    I did read it, and I know he took GST into account, but my point is that when you earn the minimum wage you need to spend everything you have to live – so percentage wise (of your total income) you pay more GST than those who for example, only have to spend 50% of their income to live.

    In short, you can play with the figures all you like, but those people who are struggling more to make ends meet now, than they were a few years back, will not be convinced – especially when they don’t have 11% of their income left over each week – like the ‘illusion’ claims they should have.

    The real test is, are people who are still purchasing the same things, living in the same houses, using the same transport, electricity and so on, left with 11% of their income each week – if they aren’t, then DPF has just wasted his entire afternoon, because his figures mean diddly squat in the big picture!

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  12. martinh (1,272 comments) says:

    Gump
    Yep me too on that, and broadband prices,
    Beer prices have gone beserk, thats the govt fault.
    Now parking is going up as Len trys to shunt us on to his overpriced steel track scheme.
    Whats the bet those over priced construction companies will be donating to him.
    Maybe the same bastards that ruined Mangawhai ratepayers by getting a state of the art system developed that wasnt needed

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  13. alloytoo (582 comments) says:

    Things are getting better, especially for the poor.

    Lets be happy, unless you have a vested interest in keeping people poor……

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  14. Judith (8,534 comments) says:

    I am paying a lot less for my mobile phone these days and that makes me very happy (the bill has gone from $150 per month to $43 per month in less than a year).

    Perfect example – your cell phone costs have come down – whilst milk has risen significantly – NOW which one do we need to live? (okay, yes you can live without milk – but I’m sure you’ll work out the point).

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  15. dime (10,215 comments) says:

    bloody national looking after their mates!

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  16. gump (1,685 comments) says:

    @martinh

    “Beer prices have gone beserk, thats the govt fault.”

    ——————–

    If you want to save a few dollars, look into making homebrew.

    A whole industry that has sprung up to supply equipment, expertise, and ingredients for home-brewers. The ingredients cost almost nothing and the end-product is surprisingly good.

    You can easily make beer at home for under a dollar per litre. I’m surprised that more people aren’t doing this.

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  17. All_on_Red (1,744 comments) says:

    Judith
    There is no GST on rent ( or mtge interest) which would comprise a major part of someone’s budget on a low income

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  18. Judith (8,534 comments) says:

    @ All_on_Red (1,155 comments) says:
    May 29th, 2014 at 3:55 pm

    Still makes no difference sweetie. When a person has to spend everything they have, to purchase/pay for the same things they had to pay for in 2008, and not have 11% of their income left over – then all the figures in the world ain’t going to win any votes.

    People know when they are being conned. And trying to convince them that they are 11% better off, than they were back then, is only going to work, if they actually can see that 11%.

    If I was the government, I actually wouldn’t try to make too bigger thing of that 11% because I think all it would do is make some people question why they can’t notice any difference.

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  19. dime (10,215 comments) says:

    @judith – maybe some of these people should ask themselves “how can i make more money?”

    as opposed to “whats the govt gonna do to get me more money”

    i dont care about people on the minimum wage. at all. most wont stay there and the few that do – fuck em. they are idiots.

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  20. Kimble (3,955 comments) says:

    Judith people wont see that they are 11% better off, because off all the people like you telling them they aren’t. Telling them they are so much worse off. Telling them that they can only get better off by having people take money from other people to give to them.

    And you simply refuse to believe that the people on minimum wage can EVER be better off. EVER.

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  21. Captain Pugwash (98 comments) says:

    Thats $482.10 in the hand per week & my mortgage is over $500 per week! BTW have just been informed by spoiled step daughters who claim I’m a tightass when it comes to pocket money, because like, you know, all other kids, get at least $1000 per month pocket money, some get almost $2000! I’m thinking they might be in for a shock when they start work.

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  22. All_on_Red (1,744 comments) says:

    Judith, we get it you don’t like National. Key or Collins especially, so keep trolling looking for the negative.

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  23. Judith (8,534 comments) says:

    @ Kimble (4,181 comments) says:
    May 29th, 2014 at 4:07 pm

    Excuse me? Who the hell do you think you are to tell me what I think or believe ? Have you ever met me? Have you ever asked me whether I believe the things you’ve suggested or not?

    How the hell do you know what kind of person I am and who I have conversations with and more so, what is said in any conversations – do you have some sort of crystal ball or are you just a fuckwit?

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  24. Judith (8,534 comments) says:

    @ All_on_Red (1,156 comments) says:
    May 29th, 2014 at 4:15 pm

    Yeah, and you keep looking for the positive in Cunliffe, Peters, and Norman, don’t you? Pot kettle and all that! :P

    I just love the way you try to hush any voice of opposition. Can’t stand people who don’t agree with your particular perspective – life must be pretty tough for you!

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  25. Bill Courtney (163 comments) says:

    DPF: “…so a minimum wage earner has had an 11% increase in their real disposable income in that period”.

    But it’s still nowhere near enough to live off! That’s the whole point about the “squeezed middle”. These people are not beneficiaries, they are putting in a full 40 hour working week but won’t feel that they have had an “11% increase” in their real disposable income.

    Try living in Auckland, paying off a mortgage on the average South Auckland house and then feeding your dependents. Do you think there’s going to be much left over from less than $500 per week?

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  26. All_on_Red (1,744 comments) says:

    Judith
    Don’t misquote me. I wrote ” keep trolling” – that’s hardly hushing you. Just sayin
    And actually life’s pretty good. I’m making a fortune at the moment!

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  27. Kimble (3,955 comments) says:

    Have you ever met me? Have you ever asked me whether I believe the things you’ve suggested or not?

    When faced with evidence of an improvement in the income of people on the minimum wage, you have contorted yourself to find some way to deny it, and then subsequently have dismissed every rebuttal of your pessimism.

    If you don’t want to be stereotyped, then stop acting the part.

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  28. Judith (8,534 comments) says:

    @ All_on_Red (1,157 comments) says:
    May 29th, 2014 at 4:24 pm

    So a troll is someone who doesn’t agree with you?

    As I said, life must be very hard for you ! ;-)

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  29. Tarquin North (400 comments) says:

    Those figures are a shade inconvenient for the hand wringing lefties. Not to worry, I’m sure Campbell Live will pimp up an an “average” family to make it look like they’re starving.

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  30. martinh (1,272 comments) says:

    Gump
    thanks will look into homebrew, im looking forward to the deflation!

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  31. Judith (8,534 comments) says:

    @ Kimble (4,182 comments) says:
    May 29th, 2014 at 4:25 pm

    Your statements weren’t worth answering when you peppered them with assumptions that you knew about the conversations I have and what I believe.

    It was hard to get past the ‘this guy is a fuckwit’ to even think about answering the rest of what you said. A stereo type of what – someone that doesn’t believe the same as you do? Interesting stereotype !

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  32. All_on_Red (1,744 comments) says:

    Judith
    “So a troll is someone who doesn’t agree with you?”
    No
    “As I said, life must be very hard for you ”
    Actually it’s very good.

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  33. goldnkiwi (1,616 comments) says:

    Judith (6,325 comments) says:

    May 29th, 2014 at 3:59 pm

    Surely it is big a thing not a bigger thing.

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  34. Kimble (3,955 comments) says:

    Try living in Auckland, paying off a mortgage on the average South Auckland house and then feeding your dependents. Do you think there’s going to be much left over from less than $500 per week?

    Apparently Auckland is the only place there are jobs and living there is only allowed if you are buying property.

    Let me paraphrase:

    Try choosing to live in one of the most expensive places on Earth and investing in one of the most over-priced property markets too boot, as well as feeding your kids which I have placed third for some reason!

    A mortgage isn’t the cost of housing. A mortgage is the cost of housing PLUS investment. Not feeding your kids because of your mortgage is the same as not feeding your kids because your hedge fund investments aren’t as liquid as cash.

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  35. All_on_Red (1,744 comments) says:

    Judith
    You say”Excuse me? Who the hell do you think you are to tell me what I think or believe ? Have you ever met me? Have you ever asked me whether I believe the things you’ve suggested or not”

    Yet you do this to the rest of us all the time. Your presumptions about me in the last few posts being a case in point!

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  36. Kimble (3,955 comments) says:

    A stereo type of what – someone that doesn’t believe the same as you do?

    Weren’t you the one just complaining that I presumed too much about YOUR thoughts?

    The difference is that I have your statements as evidence to support my supposition. All you have is your deep-seated desire to never ever consider you might be wrong.

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  37. Captain Pugwash (98 comments) says:

    I’ve just realized, about 26 years ago, when I completed my apprenticeship, the starting rate for a 19yo tradesman was $28,000 & that wasn’t that much back then.

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  38. Judith (8,534 comments) says:

    @ Kimble & All on Red

    Does one need to explain what a ? is to you?

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  39. Kimble (3,955 comments) says:

    Does one need to explain what a ? is to you?

    Let me quote you completely.

    A stereo type of what – someone that doesn’t believe the same as you do? Interesting stereotype !

    You asked the question, and then commented on the answer you assumed was obvious. That makes your question RHETORICAL.

    Bitch, don’t mess with the literate. You’ll get schooled every time.

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  40. All_on_Red (1,744 comments) says:

    Judith says”I just love the way you try to hush any voice of opposition. Can’t stand people who don’t agree with your particular perspective – life must be pretty tough for you!”

    Spot the question mark. Face it, you’re just a septic negative old troll.Keep doing it though. It’s amusing to see such constant hypocrisy.

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  41. Kimble (3,955 comments) says:

    To save a little time, here you go Judith:

    http://dictionary.reference.com/browse/rhetorical

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  42. Alan (1,087 comments) says:

    The point I take from this is we perhaps need to look at regional variations in benefits and minimum wage levels.

    Perhaps they are too high in the wop wops and too low in Auckland.

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  43. Psycho Milt (2,427 comments) says:

    However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

    They’re paying less income tax. The smartarses in government replaced the income tax with GST, so they could claim to have reduced income tax without having to endure the inconvenience of less money coming in. If you’re on minimum wage, the amount of tax you’re paying isn’t significantly less than it was in 2008.

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  44. Kimble (3,955 comments) says:

    And given that rent is a HUGE chunk of their expenditure, and rent is GST free, then the impact of the GST rise is about half of what you guys are thinking.

    So subtract about 1-ish percent. Big fucking whoop.

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  45. dad4justice (6,594 comments) says:

    I think all politicians and council managers should be on the minimum wage!

    Cut out the deadwood and reward the worker!! FFS!!

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  46. EAD (1,452 comments) says:

    DPF – if you believe the cost of living (I.e. how much the currency has been debased) has only increased by 14% in the last six years, I’ve got a bridge you might be interested in purchasing.

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  47. Kimble (3,955 comments) says:

    You dont know what the cost of living is, do you?

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  48. Martin Gibson (248 comments) says:

    Good start! Now shrink that bloated public sector (starting with the ministry of women’s affairs) and the resultant ridiculous tax rates. Restore waterways using excess labour currently paid to watch tv and commit crime. Get prisoners to grow trees and sort society’s waste so it can be reused or sold. Make sure all kids are numerate and literate after the thousands spent on their education. Stop taking money off productive people to give to the feckless women who breed fetal alcohol spectrum disorder babies with nameless sperm donors and things will keep getting better.

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  49. OneTrack (3,372 comments) says:

    ead – DPF has supplied the figures to back up his assertion. Which of those figures do you disagree with?

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  50. EAD (1,452 comments) says:

    @ Kimble – was that a question for me?

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  51. EAD (1,452 comments) says:

    @ Kimble – inflation is a very simple concept to understand: More money (currency debasement) = less value. It may seem contradictory but it’s a very straightforward concept.

    The CPI measure which DPF has used is an attempt to measure how much prices have risen as a result of the currency debasement. The Department of Stats use all sorts of statistical tricks to make their number appear low such as:
    hedonistic adjustment – a computer with twice as much power as a result of technological improvements means prices have come down even if they have risen
    substitution – you can substitute steak for dog food
    re-basketing of goods – if the price of one good has risen too much, then just take it out of the basket
    non-reflective weightings – because we can all eat colour TVs and mobile phones

    @ One Track – you ask for some figures. I’ve gone to the RBNZ site and pulled the figures from here http://www.rbnz.govt.nz/statistics/tables/c1/ and the M3 money figures have risen in the last 6 years from 163 billion to 237 billion which off the top of my head is about a 45% rise in 6 years but hey, don’t let the facts get in the way of a good pro National puff piece (NB: I used to be big National fan until I took the time to do some independent research and learn’t to ignore press releases).

    The universal truth as can be seen from above i that there are lies, damned lies and government statistics. This present social democrat National government inherited an addiction to fiddled and selective interpretation of inflation and growth figures, having found that the media is not interested or mentally capable of stripping down the raw numbers to arrive at the truth. The National Government has happily supplied and increasingly made up sets of numbers and shrouded them in phrases like “zero-budgets” to palm off onto pleb land. If you think government debt is large wait until it hits one hundred billion or even two.

    It’s a new version of the Soviet grain harvest/traktor production report has been created, and its mostly simply made up fantasy. At what point did government make the conscious decision to begin lying?

    What really pisses me off is that National are doing it on purpose, because it is politically easier that taking the tough decisions needed to get this country’s finances in order.

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  52. freemark (664 comments) says:

    Of course everyone seems to convincingly forget that anyone anywhere near the minimum wage is paying no income tax in the main, and will often be getting extra help via wff etc. And I agree that Judith is just a full of shit troll.

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  53. Kimble (3,955 comments) says:

    you can substitute steak for dog food

    No you cant. You are a liar.

    if the price of one good has risen too much, then just take it out of the basket

    So if petrol increased in price by a factor of 10 you think they would just remove it from the basket altogether?

    At most they might reduce its weight in the basket to reflect the inevitable reduction in consumption.

    CPI is supposed to measure the GENERAL increase in the price level. If something is an obvious outlier (chickens become more expensive than gold, but turkeys dont) then it is not reflective of the general price levels.

    because we can all eat colour TVs and mobile phones

    We do consume them. Whats the problem?

    All you have done is confirm you dont know what the CPI is and that you are in no fucking position to think you can lecture me about it.

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  54. Viking2 (11,680 comments) says:

    Psycho Milt (2,126 comments) says:
    May 29th, 2014 at 5:25 pm

    However tax has been reduced, so despite earning 19% more income, they are now paying 14% less tax.

    They’re paying less income tax. The smartarses in government replaced the income tax with GST, so they could claim to have reduced income tax without having to endure the inconvenience of less money coming in. If you’re on minimum wage, the amount of tax you’re paying isn’t significantly less than it was in 2008.
    ==========
    and add to this all the stealth taxes like ACC, road and petrol taxes, collections for this and that like the electricity Levy and so on. extra rates where rates have increased on less services and the measure above are just bullshit like most statistical lies.
    Oh and increased school fees car rego , the list is endless.
    and its all going to get worse once or start studded dollar starts to fall.

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  55. Kimble (3,955 comments) says:

    DPF addressed the ACC levy.

    Rates (if you mean council rates) are paid by the land owner, anything passed on in rent to renters are included in CPI. So are road and petrol taxes, school fees, rego, etc.

    What would the net income number have to increase to before you guys will admit it has increased?

    $35k? $45k?

    Just how high is the pessimist premium?

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  56. SPC (5,669 comments) says:

    For those on the MW the cost of living is based around the cost of rent, power, food and mobile phone/Internet (Sky would probably be unaffordable and some use PT rather than cars/petrol). For those on the MW and beneficiaries the official cost of living (an average including new cars and electronics and impacted by the dollar value) is not that relevant. We need a narrower necessities index to assess the change in cost circumstance of those on benefits and the MW.

    Rent change is the one with greatest impact. A GST rise would be secondary.

    Thus when major change in rents occur there needs to be a review of an areas Accommodation Supplement level – Christchurch should have already been increased to the Wellington rate – at least till the rebuild is completed.

    For those with families there is the WFF (major impact level of Accommodation Supplement access and the GST on the children’s clothes and food spending), but then many argue only the young are on MW.

    The governments position could be strengthened if they backed improvements being required for rental housing and the AS change in Christichurch.

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