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.

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[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."

Matt McCarten's claims in HOS

In today's Herald on Sunday Matt McCarten refers to

"...130,000 unemployed Kiwis who now get no assistance."

FACTS

At the end of September 2013 there were 150,000 officially unemployed

At the end of September 2013 there were 126,470 people receiving Jobseeker Support

McCarten is quoting Mike Treen, Unite union director leader, who produced the graph below to make a claim that the unemployed are being denied benefits.

The purple line represents the number unemployed; the green line the number of people on the unemployment benefit.

But what does it look like if I add the line representing people receiving a sickness or invalid benefit?

There it is. The blueish line. (Apologies for the crude scan and manually added line but I don't want to spend any more time trying to make this point than I have to.)

The sickness and invalid benefits have increasingly become de facto unemployment benefits. The OECD refers to this phenomena as "medicalisation" of labour market problems. Being long-term unemployed can and does make people ill. It's a problem all developed countries are grappling with.
 

Treen however claims:

 There was also no significant increase in other working age benefits like sickness, invalid or sole parent benefits to account for the missing number of those receiving the unemployment benefit.

I'll leave you to draw your own conclusions as to why he would say that.

Getting back to the last three years, National's welfare reforms increasingly applied work-testing to the DPB and Sickness benefits starting with Future Focus which kicked in in September 2010. That means people who hadn't previously described themselves as unemployed for the purposes of the Household Labour Force Survey (the source of unemployment statistics) began to. This artificially boosts the number unemployed but is also beginning the very necessary correction to a true relationship between unemployment and welfare dependency.

Matt McCarten is dog-whistling. Most unemployed people - at least 85% - are still receiving state assistance. There are valid (though possibly unfair) reasons why some are not which I cover here. 

Finally, note the irony of McCarten objecting to "Labour's dishonourable record" in this matter.

On another day you can fully expect to find him applauding Labour's wonderful achievement of record low unemployment.