Category: living wage

I don’t fully know how to feel so here’s some graphs

The day after the election I said “I’d be extremely surprised if it doesn’t turn out to be National-NZ First.” Well, I have the pleasure (I think?) of being able to say again: I was wrong.

I’m not entirely sure how I feel yet.
(I guess I’m happy? We’ll have to wait and see the content of the agreement and what the govt actually does. I hope the Greens demanded a lot and got it (this looks promising but we don’t have details or confirmation yet), and that Winston emphasised the 1/3 of him that’s like Sanders rather than the 2/3 of him that’s like Trump. There is real hope of climate action, more paid parental leave, faster minimum wage increases, reversal of the step-backwards pay equity law, adequate funding for health especially mental health, more support for students and some free education, repeal of national standards and charter schools, more affordable housing even if limited crackdown on speculation, adequately funding a full superannuation system in the future with the taxes future retirees are paying now, less poverty in families where adults are in paid work, and maybe even some benefit rises/humanisation.)

So instead of reactions or analysis I thought I’d do what I do best and make a couple of graphs.

Here’s the first one. It compares the votes received by the parties that ended up making up the government with the votes received by other parties who (a) managed to make it into Government and (b) plausibly might have banded together to form a government.1

votes for govt bloc vs alternative blocs

The takeaway from this is:

  • The 2017 government represents a majority of votes as well as a majority of seats. Under FPP, the government hadn’t represented the majority of votes since 1951. And even under MMP, governments don’t represent a majority of party votes every time (five times out of eight so far).
  • The alternative bloc (National & NZ First) would have been an even bigger majority: it got 1.29% more party votes than the bloc that formed the government. But this isn’t new. In 1996, the alternative bloc (Labour & NZ First & Alliance) got 4.42% more party votes than the bloc that formed the government. Both times NZ First chose what they thought was the best government bloc, not the biggest government bloc.
  • As I argued in my last blog, MMP creates monarch-maker situations more often than FPP because it more accurately reflects how people vote. As Winston pointed out in his reveal speech, neither National nor the Labour-Green MOU succeeded in winning a majority and king/queenmaking themselves. This left NZF able to make up a majority with either side. A lot of people don’t like kingmakers—especially when they’re people we don’t like, and especially when they don’t choose how we’d like. And I get it. But First Past the Post was worse. It artificially advantaged major parties and leads to disproportionate situations like 1978, 1981, 1984, and 1993 where the opposition bloc won more votes (often substantially more votes) than the government bloc but didn’t get the all-important majority of seats.

Here’s the second graph:

govt gender makeup

The takeaway from this one is pretty obvious.

Footnotes

  1. This means I’ve excluded other parties who might have liked to be part of a government bloc but they didn’t make it into Parliament (TOP, Conservatives, Christian Coalition, Legalise Cannabis, Values, sometimes Social Credit, sometimes NZ First, etc.). I’ve also excluded parties where it’s not plausible that they might have worked together: e.g. ACT with National and NZ First this time (they wouldn’t have been needed or wanted). I dunno if it’s plausible that Social Credit might have gone with Labour in 1978 and 1981 and National in 1984 because I don’t really know anything about Social Credit, but I’ve erred on the side of “who knows—maybe”. If we removed Social Credit from the numbers, the opposition blocs would be reduced. But still, in ’78 and ’81, Labour won the popular vote but National won a majority of seats. 
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The “teal deal” is not going to happen, and it’s not the Greens’ fault

“National and the Greens should work together” sentiment seems to have reached an all-time high. This is not because the two parties have moved closer together in policy or philosophy. It’s because after the election, this is the only way—short of a Nat-Lab grand coalition—to lock Winston Peters out of any role in government.1

I can’t be bothered to list examples because I’m sure you’ve all seen or heard people calling for a blue-green government arrangement (or “teal deal” if you will). Perhaps you’ve even suggested it yourself.2

What I want to talk about is the suggestion that usually comes after “National and the Greens should work together”. This is how former National PM Jim Bolger puts it:

“the Greens might be quietly reflecting on whether they, unique in the world of Green parties, should only link themselves to left-wing politics, whereas the environment is neither left wing or right wing, frankly. The environment is the environment; it’s Mother Earth we’re talking about.”

The idea is that the Greens would be more effective in pushing environmental policy if they stuck to that, and got rid of their insistence on left-wing socio-economic policy. This way, it is suggested, they would have a better chance of being able to find room for compromise and cooperation with National. Other Green parties in countries like Germany have been willing to form coalition governments with right-wing parties.

The Greens’ usual response is to give reasons why environmental justice and socio-economic justice (or environmental sustainability and socio-economic sustainability) are inextricably linked. Ever since they were the Values Party they’ve pushed both, and they don’t intend to stop now.

Another response could be to say that New Zealand is not Germany. Germany has a democratic socialist party called The Left which pushes left-wing policy even if the centre-left parties (the Greens and the SDP) don’t—even if they form grand coalitions with the centre-right. In New Zealand, the Alliance and Mana have disappeared as left voices in Parliament. Moreover, Labour kickstarted neo-liberalism and haven’t really repented from it. Until Labour make a significant change from Clark/Blair-esque compromise to Corbyn-esque social democracy, the Greens are the only party significantly trying to push New Zealand in a leftward direction.

However, both of these responses to the challenge accept the terms of the challenge (like Labour accepted the terms of National’s “dead cat” “fiscal hole” challenge). These responses accept the assumption that it’s the Greens’ left-wing socio-economic stance that blocks them from working with National, and that they’d be able to find common ground on the environment.

However, I don’t think this is correct. Certainly the Greens’ socio-economic stances—making welfare more of a livable UBI and less of a punitive control mechanism; raising tax on the rich and introducing it for property investors; returning the minimum wage to 2/3 of the average wage; reducing imprisonment—are all basically the opposite of what the Key-English government have done. However, I think Bill English is actually more likely to accept these policies than to accept Greens’ environmental policies. If Bill could be convinced these socio-economic policies are good “social investment”, he could get behind them. Of course, he won’t. (This is largely because National’s vision of “social investment” is so limited by a pathologically individualist mindset, and so tantamount to Minority Report in its instinct to control the risk factors rather than healing the determinants.) But it’s not outside the realms of possibility.

The Greens’ environmental policies, on the other hand, would require National to actually seriously challenge farm owners, drilling/mining companies, and other capitalists. Currently the costs of these capitalists’ activities are largely falling on the environment, and therefore on the present and future public. The Greens want to stop these business activities destroying our shared home by preventing and internalising these external costs. They’ll ban some unjustifiably polluting business activities, such as drilling or mining or exploring for more fossil fuels at a time when even burning the fossil fuels already dug up will make the Paris target impossible. They’ll tax other business activities for their pollution—making those who produce the costs pay the costs, instead of externalising them. And they’ll use the tax revenue to clean up the damage and to subsidise farmers and other businesses moving to more sustainable ways of doing business.

Do you really see National doing that? The party whose base is farm owners and other capitalists? The party that think climate change is only an issue for “elites”, and that it’s not a “pressing concern”, and that we should adapt to climate change rather than mitigating it? The party who scaremongered on a small water tax for some big farms that are currently destroying the quality of Aotearoa’s awa and wai?3

So how should the Greens respond to this “helpful suggestion” to the Greens—and this implicit congratulation of National for their supposed hypothetical willingness to “green up”?

Well, I wonder if they should make an offer to National this election: If you let us have our way with the environment, we’ll give you confidence and supply to do everything else you want to do as the Government for the next three years. We’d pass a zero carbon act and introduce the Greens’ policies for actually getting to zero carbon. We’d follow the Greens’ ideas to clean up our rivers instead of pretending National and the “hard-working farmers4 already have the issue under control. We’d build sustainable transport instead of roads, roads, and more roads.

And maybe we’d have to tax the rich at least a little more to pay for some of this—and/or take slightly longer to repay the Key-era debt. Bill’s choice.

National would refuse this offer. And then maybe people would stop trying to make the teal deal happen. Or at least realise it’s not Green stubbornness stopping it happening. It’s National’s near-total lack of concern for the environment.

Footnotes

  1. Special votes are extremely unlikely to change the basic possibilities. 
  2. Someone who can always be bothered finding, listing and summarising examples is my hero Bryce Edwards who has subsequently done one of his legendary political round-ups on the teal deal. 
  3. These points I’m making are not new—here‘s basically the same point made three years ago on the No Right Turn blog. 
  4. It was shrewd of National to portray criticism of National’s record on rivers as criticism of farmers who are working hard to clean up rivers, because it’s deeply ingrained in the NZ psyche to pretend we’re really farmers at heart. We all lie about being the rural type. 

I am so sick of this obvious lie, pt 2

Unemployment under Lab and NatAnother obvious lie too many National supporters believe is that Labour are bad for employment (because they raise the minimum wage too fast), and National have “solved unemployment” (because they’ve made it harder to maintain benefits):

National supposedly solved unemploymentkey labour anti jobs party

Now, it is true that Labour raise the minimum wage much faster, and that National cut welfare (in a recession!). But the unemployment rates have been more like the other way around,* and anyone suggesting National are better than Labour at keeping unemployment down is either believing or promoting a lie.

Actually, it’s a couple of lies… but they’re both obviously bollocks to anyone who’s spent five minutes looking into them:

LIE 1:

“Raisng the minimum wage reduces jobs”

TRUTH 1:

Sydney Morning Herald

new york times

Business Insider

CEPR 1

CEPR 2

DOL 1

DOL 2

treasury

As usual, Gordon Campbell says it best:

If, as Key claims, Treasury has done research that shows major job losses would result from gradual increases in the minimum wage, then this amazing information would be world news – because the vast weight of academic research around the world ever since the groundbreaking David Card/Alan Krueger work in the US fast food industry 20 years ago, is that it would do no such thing.

LIE 2:

“National have solved unemployment by making it harder to get the benefit”

TRUTH 2:

I’ve covered this before, and so have many others. Basically, kicking people off the dole (or DPB/invalid’s/sickness benefit) doesn’t magically put them into jobs; it just increases the number of people lacking either work or welfare (which has hit a record 110,000 since National’s bennie-bashing “reforms”). Creating a desperate unemployed person doesn’t create a job for them to go into.

This confusion arises from a basic failure to understand the difference between individual problems/solutions and socio-economic problems/solutions, as sociologist C. Wright Mills pointed out 55 years ago:

Mills quote

* It started to get bad under the Lange (& Douglas) Labour government, which was actually more like a Bolger/Key National government than a Labour one. Of course, just like with debt, things are more complicated than one graph could show.

PS: Graph and truncated y-axis from tradingeconomics.com; annotations mine.

The parties and the facts on minimum wage

put-the-politicians-on-minimum-wage-and-watch-how-fast-things-change

I’m a huge fan of minimum wage laws, which were introduced in NZ before any other nation-state, in 1894. Along with a good welfare safety net (remember when we had one of those? I don’t), they ensure employers can’t take advantage of prospective workers’ desperation to exploit their labour while paying them barely enough to survive, like upper classes have done for most of history and most of the world. They also put more money in the pockets of lower-income earners, which means more money circulating in the local economy, rather than the ‘trickle-down’ approach that directs more money to Swiss banks and Hawaiian holiday homes. All this is good for all workers, and good for society. As a Christian, I can’t help but agree that minimum wage laws as a necessary (though not sufficient) response to James 5:4-5, and enactment of Luke 6:20-21.

Employers and right-wingers often respond to the minimum wage (or proposed increases to it) in the same way they did to the abolition of slavery: countering that minimum wage laws end up hurting the people they mean to help, by making jobs unaffordable for employers, and therefore increasing unemployment. However, as the Sydney Morning Herald reports, most economists now agree that reasonable increases in the minimum wage don’t increase unemployment, and may even decrease it. They’ve found room in their theories to explain this, by observing that reality is more complex than their older models.

The SMH also offers plenty of real-life examples of minimum wage increases not increasing unemployment. New Zealand’s history, Treasury and Department of Labour corroborate this, as does recent US experiencevarious other research and this very rich man. The Living Wage movement adds evidence of employers actually getting more value for each wage dollar by paying employees better, as their staff are healthier, less likely to need long hours or second jobs, more loyal to their workplaces, better-motivated and often more productive. New Zealand has notoriously low productivity, so higher wages may help improve this.

If the old, baseless myths of minimum wages harming workers and employers are cast aside, there remains no economic or ethical justification for a minimum wage below a living wage, “the income necessary to provide workers and their families with the basic necessities of life” and “enable workers to live with dignity and to participate as active citizens in society.” The living wage is currently calculated at $18.80 per hour.

I thought it would be useful to survey the various political parties’ policies and past records on the minimum wage and/or Living Wage, to see what each of them may do if in power after September the 20th.

There’s some quite significant differences, which I’ve roughly quantified in scores out of ten for the sake of TL;DR readers who probably haven’t read this far anyway.

The parties on minimum wage

Alongside the below, please note that Bryan Bruce recently asked all parties “whether they would or would not support in principle the introduction of a living wage rather than a minimum wage.”  “The Green Party, Labour, Mana, Maori Party. Alliance and Internet Party said Yes they would. ACT, United Future, Conservative Party, Democrats For Social Credit said No. NZ First gave no answer, while Bill English for National refused to answer saying the question was hypothetical.”

National 2/10: No policy; presumably status quo

Policy: National typically don’t campaign on policy, and they have barely have any policy on their website compared to every other party – including nothing on the minimum wage. We can assume current trends will continue.

Past record: The 1990s National-led government was famously committed to lowering, not raising wages, due to similar beliefs to the minimum wage myths discussed above. They let it stagnate except when NZ First forced them to increase it in 1997 (nice graph here), and left it in 1999 at about 40% of the average wage. The current National-led government have done better; they’ve maintained it basically where Labour left it in 2008 – around 50% of average wage. They’ve increased it gradually, though much slower than the last Labour-led government – 18.75% in six years (just above inflation) compared to 71.43% in nine years (considerably above inflation; they also introduced Working for Families – see below). Their latest increase has been the highest – 50c to $14.25. They promote this a lot in their media releases. If their ‘status quo’ policy continues, it will further increase inequality, because it’s well out of step with economic growth.

National also re-introduced lower minimum wages for young and new employees, because of the minimum wage myth that it would increase youth employment. This bill passed with the support of ACT and United Future, with all other parties opposing.

Labour 8/10: $15 then $16.25; target of 2/3 of average wage; Living wage ($18.80) for public jobs 

Policy: Labour have a clear policy to “Increase the minimum wage by $2 an hour in our first year,to $15 an hour in our first hundred days in government, and increased [sic] again to $16.25 an hour in early 2015.” They will also “Set a target of returning the minimum wage to two-thirds of the average wage by the end of our second term, as economic conditions allow,” noting that the minimum wage “averaged around two-thirds of the average wage in the post-War period until the policies of Muldoon, followed by the neoliberal period, slashed it to just 40% of the average wage by 1999. The sixth Labour government brought it up to half of the average wage, but it has flat-lined since then.”

They also intend to reform employment law to be more in the interests of workers, and support the Living Wage movement in a number of ways: they’ll “Ensure that all core public service workers are paid at least the Living Wage, and extend this as fiscal conditions permit,” favour private sector firms who pay living wages, and “progressively address inequities in the pay of the publicly-funded aged care and disability care workforce and non-teaching staff in … schools.” The latter would be great for our huge numbers of hard-working, poorly-paid aged-care workers. Anecdotally, I’ve heard that government subsidies are currently not enough for rest homes to pay their staff a living wage.

Past record: While the fourth Labour government kick-started “the neoliberal period” they mention in their policy, the last (Clark) Labour-led government raised the minimum wage much faster than inflation, and much faster than the current National-led government, as mentioned. They also introduced Working for Families to top up sub-living wages with government subsidies – John Key called this “communism by stealth” at the time but now supports maintaining it rather than making employers pay more. They also passed a diluted version of Sue Bradford’s bill for youth to receive the same minimum wage as older adults, which National have essentially reversed (see above).

Green    9/10: 2/3 of average wage ($17-$20)

Policy: The Greens’ policy is to “increase the minimum wage and ensure it cannot fall below 66% of the average wage.” 66% of the average would translate to $17.16 as of a year ago, but as a friend pointed out, raising the minimum wage would also raise the average, so the final figure would be higher than that – it would take a smarter statistical mind than mine to give you a firm figure. The advantage of a relative measure is it deals with the material, absolute effects of inequality, as well as the material effects of poverty. Superannuation is indexed to average wages, and I think it’s a good idea for the minimum wage to be also. The Greens also say they are “committed to full employment with dignity and a living income, and reject[] the idea that economic stability requires either a significant level of unemployment or a low level of protection for those in the paid workforce.”

Past record: Former Green MP Sue Bradford led the charge for youth to receive the same minimum wage as adults, and the Labour-led government passed a version of this. Contrary to what right-wing bloggers and politicians say, it didn’t cause any adverse affect to youth employment; in fact it decreased youth inactivity.

NZF    6.5/10: $16 at first; hinting at possible further increases

Policy: Their policy is to raise the minimum wage to $16 “in the first instance.” It’s not clear what would happen next; Winston Peters has previously said that after an initial raise they will “then add margins for skill and good service,” which isn’t particularly clear either. This lack of clarity means I’ve given them a score below Labour’s, despite their increase being higher until April 2015. They’ll also make employment law better for workers, and reverse National’s policy of lower minimum wages for young workers, preferring a more constructive policy of “subsidizing wages for employers who take on young, unemployed people for trade training and skills programmes.”

Past record: In their confidence and supply agreement with Labour in 2005, NZ First asked Labour to “continue the practice of annually increasing the minimum wage, with a view to it being set at $12.00 per hour by the end of 2008,” which happened. Also, the only significant increase to the minimum wage in the 1990s National-led government was prompted by NZ First. All their media releases on the minimum wage advocate for raising it (or oppose reintroducing the youth rate), and in a speech to the Combined Trade Unions Peters boasts that “New Zealand First has supported every increase in the minimum wage.”

Maori    9/10: Raise minimum wage to living wage ($18.80)

Policy: The policy section of their website hasn’t been updated for this election, and suggests raising the minimum wage to $16 as of 2011. More recently, they announced a policy of raising the minimum wage to the calculated living wage of $18.80. The Living Wage movement’s figure, which is updated each year, is based mostly on absolute measures. The advantage of this is that it deals with the material necessities of living a full life in society, can’t be written off as “merely relative” – though of course this writing-off misses the point spectacularly.

Past record: They haven’t let their role in National-led government blunt their criticism of its slow increases in the minimum wage, saying “The Government should be ashamed of themselves” for raising it a mere 25c to $13.75 in 2013. In the same release, they described “the increase in income inequality over the last 25 years as a major threat to our economic well-being and social cohesion,” and said “The Government should focus on reducing wage inequality by targeting high wages of excessively high income earners” as well as increasing the minimum wage.

Mana     10/10: Living Wage ($18.80) and no lower than 66% of average wage ($17-20)

Policy: Mana’s policy is to “Increase the minimum wage to $18.80 per hour (a living wage) and index it at 66% of the average wage to ensure it remains a living wage.” This combines the advantages of the Māori party policy (combating material deprivation by adopting a living wage) and the Green Party policy (combating the material affects of inequality and relative poverty by ensuring the minimum wage never goes below 66% of the average wage). Their economic justice, livelihoods and social wellbeing policies also include many other ways to “Raise the incomes of low-income earners,” including better protection for workers, working towards full employment by creating community service jobs for the unemployed, reversing National’s lower minimum wages for youth, finally increasing welfare support from the poverty-level it’s been at since 1991, abolishing GST which disproportionately impacts on the poor, and working towards a Universal Basic Income, as recommended by Gareth Morgan.

Past record: Mana is only three years old as a party, so their main past record has been advocating for the last three years for a higher minimum wage, and opposing the reduction of the minimum wage for young and new workers.

ACT    0/10: Scrap the minimum wage

Policy: If ACT had their way, minimum wage laws would be “gone by lunchtime” (to quote their former leader on NZ’s nuclear-free stance). This is part of their welfare [or lack thereof] policy, which they note would be a continuation of the current government’s approach to welfare. It’s interesting that even though the minimum wage is not about benefits, but work, ACT lump it under welfare policy – presumably because it goes to poor people, not rich people.

Past record: All their releases on the minimum wage advocate for lowering it, oppose raising it, or oppose it altogether. They successfully lobbied National to have it lowered for young and new workers. They frequently repeat the minimum wage myths discussed above; that minimum wages are a “barrier to unemployment,” and that a “myth that minimum wages protect the poor.”

UF    2/10: Seems to support the status quo, whatever that might be

Policy: The policy section of their website is in progress, and mostly still lists 2011 policy. I can’t find anything on their 2011 policy or even their media releases on minimum wage, except for saying they’d require “foreign charter vessels … compl[y] with New Zealand minimum wage laws and labour conditions,” which is a good and much-needed policy.

Past record: United Future have been confidence and supply partners of both the last National government and the last Labour government, and from what I can tell, they’ve supported what both their big sisters have done, despite the contradictions. This news report clarifies what I couldn’t find in their 2011 policy: they didn’t support a higher minimum wage last election (not sure about since). Last year, Peter Dunne’s one vote allowed National’s lower minimum wage for young and new workers to pass.

Internet    ?/10: No policy so far

Policy: Their policies are still in progress, and I can find barely anything even being discussed on their policy forum and/or policy incubator – I found a few comments here, which aren’t too encouraging. Ironically, their media releases lack the basic internet feature of a search function, so I’m finding it hard to see if they’ve even mentioned the minimum wage anywhere (except for this release from Hone Harawira on behalf of Internet Mana). Perhaps the most solid statements they’ve made are one-off responses to questions: their affirmative response to Bryan Bruce’s Living Wage question above, Bruce’s other questions and #3-ranked candidate (#6 in Internet Mana) Miriam Pierard’s strong response to bFM on inequality.

Past record: Since they don’t even have policy yet, they certainly don’t have a past record. I suppose Kim Dotcom’s past record is worth mentioning; though here’s another perspective on it. In any case, while Dotcom does have a largely undefined “oversight” role, there are plenty of others involved in shaping policy: candidates, members and even to some extent the Mana party.

Conservative    4/10: $20,000 tax-free threshold instead of raising minimum wage

Policy: I only found one thing about the minimum wage on their website; it’s an undated response from Colin Craig to a reader’s question about the living wage and unions. Craig’s answer shows he believes in minimum wage myths as much as “tough on crime” myths, but it also clarifies his policy, which is to “increase the [non-existent] tax free threshold to $25,000” [now $20,000, and with an undefined flat tax after that] instead of raising the minimum wage.

A tax-free threshold would be great for low-income earners (and is one of the few policies the Conservatives have in common with Mana), but isn’t really a substitute for fairer wages. Quick calculations show if there was flat tax of 20% above $20,000, a minimum wage worker would end up with the equivalent of about $15.50 per hour on current tax rates (though presumably less public services). If it was 30% flat tax, they’d end up with the equivalent of $15/hr on current tax rates. If it was 40% (unlikely, given their low tax rhetoric), they’d end up with basically the same net wages as now.

Past record: I can’t find anything apart from the above.

Scores/10 according to me:

Mana: 10
Māori: 9
Green: 9
Labour: 7.5
NZ First: 6.5
Conservative: 4
National: 2
United Future: 2
ACT: 0
Internet: ?

EDIT (August 2015)

I’ve made a table showing how quickly the last three governments have raised the minimum wage.

Minimum wage increases

This is why we need a living wage

we_told_them_the_wealth_would_trickle_down

More free healthcare for kids and extended parental leave are both great ideas in the Budgetstolen from Labour of course but I’m still glad they’re doing them.

Nonetheless, this can’t seriously be called a “family focussed” budget while they’re still doing next to nothing about the housing affordability crisis, the jobs crisis, child poverty and inequality.

Perhaps (though only perhaps) it’s more fair to say that they’re not ignoring these issues; they just have faith in the magical power of the market to solve them all.

But their own numbers show that’s working about as well as Brownlee’s “let the market sort it out” worked for the Christchurch housing crisis. Yes, the economy is growing again, but that growth isn’t making its way into the pockets of ordinary workers. From 2014-2018, they’re forecasting 14.2% GDP growth, but only 4% wage growth.

In fact, this supports Thomas Piketty’s inequality thesis quite nicely: the natural and inevitable movement of capitalism is for wealth to accrue to the already-wealthy. In other words, you can’t solve inequality and poverty just by growing the economy. You need more radical interventions, as Piketty suggests. Mana’s tax policy – shifting the tax burden from poor and middle-income earners to the unproductive, untaxed income of the 1% – is a good start. Another much-needed policy is a minimum wage that allows people to live with dignity in society – the calculated Living Wage. This would mitigate against inequality across the board and end working poverty.

We can no longer use tough economic times as an excuse. We can afford these measures; we just need to decide to prioritise them, instead of letting our economic growth accrue to the unproductive parasite 1%.