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April 8, 2013 | by  | in Opinion | [ssba]

Minimum Rage

Kia ora koutou,

Those exchanging their time, skills and effort with employers at the government-mandated minimum price for labour may be forgiven for thinking Minister of Labour Simon Bridges was having a laugh on April Fools’ Day, when the minimum wage officially rose by a measly 25 cents an hour, up from $13.50 to $13.75.

The Australian equivalent is NZ$19.80. Yeah, happy Easter to you too, Mr Bridges.

The economic concept of an imposed price-floor on the dollar amount employers are permitted to pay their workers is one of the most hotly contested political footballs in the sport of politics. Some economists say it’s too high. Others say it’s too low. The public doesn’t bother for economists who can look at the same data and draw totally different conclusions from them and finds it suspicious that nobody seems to ever say the level is just right. Most people’s opinions are formed on the basis of a gut moral feeling.

The political reality is that a minimum exists in New Zealand, and it rises from time to time by modest amounts. Most people are prepared to accept that increasing the price of a good or service will decrease the quantity of that good or service demanded. Put in common terms, if it costs me more to employ more workers, I will employ fewer of them. Common sense. However, the decrease in job opportunities when wages rise seems to be an acceptable and fair sacrifice in order for workers to be paid a decent and dignified wage, as governments can assist those who miss out on work until they are able to find a job at the higher wage.

The centre-right National party is stuck between a rock and a hard place. On the one hand, they accept the above reality and implement increases to the minimum wage. This allows them to look like a centre party. But on the other, they reject the argument for minimum wage rises and have passed the Minimum Wage (Starting-out Wage) Amendment Bill, which will decrease the wage for 16- and 17-year olds to $11 an hour, 80 per cent of the adult minimum. This is so they look like a right-wing party. But Simon Bridges can’t have his cake and eat it too: either raising the minimum wage is a good thing, or it is a bad thing. Doing both just makes you look like a tool.

“Oh no,” he implores, “having a starting-out wage will mean that employers will now be more able to employ young people and thus create more jobs for the youth of today.” Yes, maybe he’s right that more 16-and 17-year olds will get jobs, but he’s failing to look at the group most affected by this policy: older, low-skilled workers. If an employer can hire a 16-year old to do the same job as me but pay the little punk 20 per cent less, I’m as good as fired. A starting-out wage discriminates against one of the most vulnerable groups in society by preventing unskilled older workers from being able to offer their skills at a price which can compete with under-18s. Who would we rather out of a job? a young 17-year-old still living at home with mum, or a 35-year-old mum with 3 kids to feed?

The minimum wage in an economy speaks volumes about a nation’s attitude to the dignity of its people. National insults that dignity by offering measly increases for some and huge decreases for others. In the end, the only people laughing are those smart enough to move to Australia.



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