Category: Treasury

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.

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Pathetic justifications for pathetic wages

slavery minimum wageWell, they’ve passed the youth rate bill… Certain workers aged under 20 can now be paid at 80% of the minimum wage; a pathetic $10.80 per hour before tax. This comes a month and a half after a living wage was calculated to be about $18.40 per hour.

One thing I’ve noticed from the Facebook arguments I get myself embroiled in… Every time a debate comes up about the minimum wage, somebody makes the same tired point: if you raise the minimum wage too high, employers won’t be able to afford to provide jobs any more, or people with no skills will be priced out of the market, or workers will be costing employers more than they’re earning them, etc.

That’s of course true, but all it shows is that that the minimum wage CAN be too high, it doesn’t show that (or when) it IS too high.

You can’t just point out that sometimes a minimum wage can be too high and conclude that NZ’s minimum wage in March 2013 is too high (or as high as possible).  That’s not an argument, that’s just pure ideology without anything linking the theory to the present real life situation, therefore it can have no bearing on the present real life situation.  An argument would need to demonstrate that this theoretical danger is likely to happen at current wage levels, here and now… using research and evidence from here and now.

In fact, the evidence shows quite the opposite.  In the terse words of Treasury: the fear about minimum wage increasing unemployment “has not been true in the past. The balance of probabilities is that a higher minimum wage does not cost jobs”.  Increases in the minimum wage have not increased unemployment in recent history (if anything the relationship is the opposite, though it’s not a causal one: minimum wage has been kept low and unemployment pushed up by poor economic conditions and neo-liberal economic policy).

If we accept that it is desirable to have a minimum wage, we accept that it should be high enough to provide a decent living, without being so high that it reduces jobs.  The only matter for debate is where the balance is.  The Living Wage research indicates that our minimum wage is currently failing to achieve that balance, but the problem is not that it’s too high for employers to pay, it’s that it’s too low for workers to live on (and, by the way, John Key agrees).