Saturday, July 30, 2022

Benefit incomes - why it's not worth working

MSD have released a report on benefit incomes. I have long held that beneficiary advocates base their poverty pleading on the basic benefit rate, but those numbers are well under total incomes once the additional top-ups are included. Here is a selection of the graphs from the report:

(Left click on image to enlarge)

In this calculation $450 is nominated for a single person's accommodation costs in a high rental area. This reflects a one-bedroom apartment in Auckland perhaps but even then, the sum is quite generous. All of the young people I know share flats and houses. And they have jobs. Most try and keep their accommodation costs below $200 per week. The example is very odd.

The next example shows a couple with two children. The nominated rent in this one seems reasonable:

Note that their total income is $1,348 per week or $70,096. This is though just an example. 

Below are actual average incomes by family type before and after housing costs:

Averages reflect a range of living costs around the country.

The couple with two children receives $59,644 annually net.

It is immediately obvious that one working parent - let's say the father earning around $60,000 - can only support his family as well as income from a benefit.

For example a father working in construction, education, and automotive on the median salary. 

If he worked in customer services, transport and logistics, or hospitality and tourism he'd be worse off.

And we wonder why there is a labour shortage.

I am out of time but go look at the report, especially the section on inflation. (Don't be tripped up by the 'equivalisation' process.)

Afterthought: It occurs to me that the government is going to start pushing this line hard - that they've looked after families with children on benefits but now single people are falling behind. The report nominates an unrealistically large rent in the single person example to leave a small after-housing costs income. Why?

Because they are gearing up to push the unemployment insurance scheme on New Zealand whether it is warranted or wanted.

Thursday, July 28, 2022

Graph of the Day


Heard any alarm bells ringing yet?