Friday, November 01, 2013

Living wage calculation exposed

Back in March I wrote in a Truth column,

The ‘living wage’  idea poses more questions than it answers.
Apparently the proposed non-compulsory hourly wage of $18.40 is based on the needs of a family with two children, with one full-time and one part-time worker.
But someone with dependent children who is earning less than the living wage will almost certainly be receiving  Working For Families assistance.
As well, someone without children might be receiving an accommodation supplement which helps with rent, board or a mortgage.
Because these are income-tested payments, they reduce as the employee’s salary or wage increases.
Under the living wage scenario then, an employer would pay more, but in many cases the worker’s income would remain the same as he progressively loses other government assistance, especially the accommodation supplement.  Who has gained? Neither of them. The gaining party would be the government.

Kiwiblog has just reported on Treasury analysis of the living wage in a post coincidentally titled:

 Living Wage proposal would mainly help the Government, not low income families

 The data fatally undermines the policies being pushed by Labour and Greens. Only 6% of those who earn below the living wage are in the type of family the calculation is based on. Who would you set wages for 94% based on a situation which doesn’t apply to them?

1 comment:

Brendan said...

The Living Wage is about politics rather than reality.

People who are young and with low skills recieve low wages, but they don't 'camp there' they mature, they develop they move on to better things.

New Zealand remains one of the few countries in the world where you can succeed materially regardless of your political or family connections. We should be celebrating that fact rather than focusing upon low wages for those who have no or low skills.

Rather than simply advocating for the low paid, how about advocating for enrepenership, risk and reward as a mechanism for wealth creation and prosperity for all regardless of economic background, advantaged or disadvantaged?

There are plenty of us who have started with nothing, but have found ways to serve others and be rewarded in the process. Let's make that our aspirational goal, rather than mandated equality though government fiat.

Or has Churchill put it, equal poverty for everyone. (paraphrase)