Tuesday, February 04, 2014

Facts about the minimum wage

I notice this morning already much of the advocacy for increasing the minimum wage focusses on  being able to feed children. Yet most minimum wage earners are single and childless. When they do have children they are often part of a couple with the other earning considerably more.

Assuming Treasury deals in accurate statistics here are some about the minimum wage:




 "The minimum wage has grown much faster than average wages over the last decade...



 In 2011 our minimum wage was 60% of the median earnings for full-time workers. This was amongst the highest ratios in the OECD, and well above the level found in most countries which is typically around 45%.   For instance, the ratio was 45% in Australia, 38% in the United Kingdom, 40% in Canada, and 28% in the United States.[1] Increasing the rate still higher to 88% of the median wage would take the minimum wage well outside the normal range. This is likely to make employment for people with low skills difficult in an internationally focused economy.


[1]           2011 was the most recent date on which comparisons were available from the OECD.







... the minimum wage applies to a smaller proportion of the workforce (less than 4%) ...

63 percent of households earning below $18.40 are single adults without dependants.


The current objective of the minimum wage is to protect the real incomes of low wage earners, while minimising job losses. It is not an effective mechanism for reducing poverty on its own, nor is it intended to be. Instead, there are other measures, like income transfers, subsidised access to health and education services, and childcare assistance, to improve the wellbeing of families with low incomes.



 Raising the floor on wages will... always provide greatest benefit to younger people, and especially to those in the teens and early 20s."



1 comment:

Anonymous said...

All the more reason for ACT to have picked Jamie Whyte - a philosopher & economist who can speak with authority about how NZ's minimum wage laws are far too high (and indeed how all employment laws should be repealed0