John Key is being a Spurious George again. In explaining why he’d love to cut taxes for (mostly) the rich, but just can’t afford to yet…
Key pointedly said that when National took office the average wage was $47,000 a year but had risen to around $55,000 today, and was expected to climb to $62,000 by 2017. This was creeping towards the top tax bracket, where salary earners pay 33c in the dollar for earnings over $70,000.
“I don’t think it was anyone’s intention that someone on the average wage would be paying the highest marginal tax rate in New Zealand,” he said, echoing arguments National has been making in private for months.
Well, Mr. Key, it also wasn’t anyone’s intention for the incomes of the rich to rise so much faster than those of the poor, pushing up the average (mean) income to a level less than 30% of people reach. (Actually it was some people’s intention: right-wingers who think inequality is a good thing)
Key is trying to give the impression that the average (mean) income is the income earned by the person in the middle. But mean doesn’t measure the middle of the people, but the middle of the money; and of course the money is weighted towards wealthy outliers at Mr. Key’s end of the spectrum, who push the average up with their exponentially higher incomes.
A far more useful statistic is the median income: the amount that half the people earn more than, and the other half earn less than. This truly represents the average Kiwi. The median individual income is almost exactly $30,000 p.a. – just under the middle of the third-to-top tax rate band.
It’s actually getting more and more misleading to portray average income as a reflection of middle-income earners: As inequality worsens, the “middle of the money” (average income) is moving further and further from the “middle of the people” (median income). My eye makes it less than 10% difference in 1980, up to about 25% now:
It’s also worth noting that the increased average income Key mentions has accrued almost entirely to above-median earners:
Another problem with mean income figures is they hide inequalities like these and portray a boon for the rich as a boon for everyone.
I do agree in principle with indexing tax-rate thresholds (in fact, all thresholds… *cough*student loan repayments*cough*) for inflation, but Key’s trying to use that principle as a smokescreen for more tax cuts to the rich, spinning this as a release for the average NZer from crippling over-taxation, which is not true on any level whatsoever. Taxpayers between the median and mean incomes actually pay the lowest proportional tax:
And in the context of a supposedly progressive tax system it’s the rich who are really best off:
“At very low incomes, New Zealand’s taxes are a little above the OECD average … But for high incomes, our overall “tax wedge” … is the lowest in the developed world.
Our tax system asks too much of those with little, and too little of those with much.”
This would only get worse under National’s proposed 2017 tax cuts.
In any case, if Key is really worried about too many NZers in the top tax bracket, there’s an obvious solution: Implement a new top tax rate(s) for the super-rich, like most similar countries have:
Soooooooooo: whatever people’s intention about who should be on the top tax rate, it’s clear John Key’s intention in referring to the mean income, rather than the median, is to mislead (or perhaps he simplify misunderstood statistics in a conveniently misleading way, as with child poverty at the last debate). Sadly he’ll probably largely achieve that intention.
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 experience, various 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.”
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.
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).
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.
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.”
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.
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.
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.”
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.
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.
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:
NZ First: 6.5
United Future: 2
EDIT (August 2015)
I’ve made a table showing how quickly the last three governments have raised the minimum wage.
Fabian Mika’s lawyer is appealing Mika’s manslaughter sentence, suggesting his cultural background and upbringing should have be taken into account as a mitigating factor in sentencing.
It looks like this is being met with the predictable outrage when anyone notes there’s still ethnic inequality in NZ, coupled with the usual panic whenever someone suggests people’s lives are more complicated than just personal choice.
The judges are no doubt right to point out the logistical difficulties of the lawyer’s idea. Nonetheless, the lawyer’s argument touches on a serious problem with punishment/the ‘justice’ system in general: it only responds to individuals for their individual choices. But no individual choice happens in a vacuum.
The justice system doesn’t deal with the wider social determinants of individual choices. In many ways, it can’t: it falls outside of the justice system’s purview to deal with (for example) economic inequality, the chief cause of high violent crime rates.
But the ‘justice’ system should at least acknowledge that these social determinants are very much unequal from one person or group to another.
You can accurately predict from someone’s class, ethnicity, or family situation that they’re a lot more likely to end up in jail than I am. (Or more likely to have a partner or parent in prison). That’s not fair, and it’s not chosen.
Yes, convicted criminals have made choices, I’m not denying that. But the social determinants of crime and punishment are true too, and too often we deny that.
One of the first lessons you learn studying criminology is that if you’re disadvantaged in society in general, you’re also disadvantaged at every stage of the crime and punishment process:
– examples of crime vs. other examples
– opportunities for crime vs. other opportunities
– likelihood of being in extreme need
– laws and definitions of crimes
– types of crimes you’re likely to commit
– likelihood of being suspected/pursued by police
– likelihood of being caught
– access to good legal help
– likelihood of being convicted
– harshness of sentencing for your crime
– your specific sentencing
– how you’re treated by society after your punishment
So I definitely think someone’s experiences and social position should be considered among the mitigating/aggravating factors in sentencing. But that only deals with the tip of the iceberg of the problem: socio-economic inequality leading to manifold inequalities in crime and punishment.
Grant writes off Max Rashbooke’s book, and indeed all concern about inequality, as “the zero-sum fallacy; the idea that there is a set amount of cash in the economy.”
This is one of the worst straw man attacks I’ve seen in a while.
In fact, Rashbrooke et al understand better than our government that money is a relative measure, only meaningful insofar as it represents access to wealth/resources. It doesn’t matter how much total cash there is in the economy… what matters is:
a) how much resources/wealth there are in the economy, because that’s what determines how big the pie is.
b) how much cash you have in relation to others, because that’s what determines how big or small your slice of the pie is.
Total cash doesn’t affect the pie at all (if it did, Zimbabwe would be the richest country in the world).
Total cash and total resources are not ‘zero-sum’ phenomena. But percentage of access to cash and resources is (that’s the whole point of a percentage – it always sums to 100).
Rashbrooke (and, like, actual evidence and stuff) are concerned with inequality because when one person’s percentage of cash goes up, someone else’s ability to access available resources necessarily decreases. And when that’s too unequal (even when the pie’s huge) it causes numerous health and social problems across the whole society.
Grant is the one guilty of a fallacy: the idea that money is an absolute, not just a relative measure; so if there’s more total money in an economy, that automatically means there’s more wealth/resources available to people. This is more than just a fallacy, it’s a properly religious phenomenon – idolisation of money.
Post-script – extra responses to a few of Grant’s stupidest comments
“There’s no evidence that rising social and health problems are a result of income disparities.”
I’m actually astonished to see this much wilful blindness, even in corporate media. Huge amounts of research – very widely available – offer compelling evidence that inequality causes many social/health problems – from murder to community breakdown to high teen pregnancy rates. A journalist doing their job would acknowledge this evidence even if they disagree with its analysis. Grant doesn’t indicate whether he disagrees, whether he’s ignoring it, or whether he doesn’t know it exists … he simply says there’s “no evidence.”
The fact that the next sentence peddles an evidence-free stereotype (“Poor people get diabetes because they eat junk food, not because Sir Peter Jackson is rich.”) is the icing on the bullshit cake.
“Key to the inequality fantasy is that New Zealand is a neo-liberal rich-man’s paradise but the facts do not support this. Bill English said… [bla bla bla] Half the population are net beneficiaries.”
He goes on to uncritically parrot Bill English’s dishonest press release that I addressed a couple of blogs ago. If Grant was doing his job as a journalist and applying some critical thinking, he’d realise English’s figures show the opposite of what he claims.
Grant thinks workers should be grateful for being “net beneficiaries” of state assistance… grateful for a situation where their subhuman wages mean they don’t contribute much to the tax coffers, let alone to their own families, and Working for Families subsidises their employers to keep paying these sub-human wages. How much more grateful should the rich be for being “net beneficiaries” of a system that facilitates and supports such grossly unequal wealth?
“Economic growth is driven by innovative entrepreneurs adding to the total economy. They sometimes become rich by retaining some of the extra wealth they created.”
I don’t even know where to start with this statement, except to note that it’s pure ideology. He equates economic growth with ‘wealth,’ ignoring the fact that economic (GDP) growth doesn’t just include productive, wealth-producing activities, but destructive ones like crime, pollution and credit card debt. And he simplistically suggests ‘wealth’ is created by “innovative entrepreneurs,” rather than by the contributions of all workers; those who’re given the opportunity to utilise their creative/innovative skills, and those who aren’t.
The next sentence, where he uses a doctor as his archetypical example of a rich wealth-creating entrepreneur, reveals his ideological assumption that the rich become rich by doing good for the world. A better example of the very highest income earners would be a currency trader who makes much more than a doctor by producing nothing, just manipulating pieces of paper and numbers on computer screens.
Later in the article he again waxes lyrical about how much wealth the rich create, and how grateful we should be for their work. He also mentions how hard-working they are – predictably failing to provide any statistics linking hard work to high income. In fact, income and wealth distributions are way out of proportion to how hard people work… (unless the richest 1% percent work 10-16 times as hard as the average NZer).
“Poverty has many causes, welfare dependency amongst them, but blaming the hard-working for the failings of the indigent is not a solution.”
Grant is doing even worse – blaming the hard-working poor (like people working two jobs cleaning toilets on minimum wage to feed their families) for their own poverty. Despicable.
Men haven’t been very good to women in NZ lately.
The list of men who have used and abused Bevan Chuang in the course of the Brown-Chuang-Wewege-Cook-Slater-Palino affair is long and getting longer. Some were apparently motivated by mid-life crises and delusions of grandeur, others by attempts at pharisaical political smear campaigns… but they’ve all used a person’s life for their own ends (and apparently they’ve all lied about it). I don’t think I trust any of these men with high political office or media profile. Chuang herself doesn’t seem to have acted particularly well, but nobody deserves what she’s been through.
Meanwhile, Labour’s decision to phase in a rule ensuring 50% female MPs was met with the predictable panic that men are losing some of their privilege. This was typified by Patrick Gower, TV3’s gutter-journalist political editor who feigned alarm about demotions of male MPs (note this excellent critique he pretty much ignored). His numbers actually only show that IF Labour’s party vote is as low in 2017 as it was in 2008, and IF no male MPs other than Ross Robertson retire before then, TWO male MPs may have to leave Parliament so Labour can achieve gender equality (if any male MPs would object to that, good riddance).
Worse than Gower’s shoddy maths is his implication that political parties are male-dominated because of ‘merit’ rather than structural injustice. And his suggestion that 50% women in Labour is a problem but 75% men in National presumably isn’t. And his leaping to the defence of poor, persecuted privileged male MPs instead of highlighting the systemic gender inequity Labour’s quotas are designed to address.
But the worst, of course, is the Roast Busters rape club.
The existence of such a group is abhorrent. As is their ability to publicly boast about it.
As is police traumatising, blaming and ultimately ignoring complainants. As is their inaction after 2 years, 4 complaints, and ample opportunities for evidence. (Compare this to their shoot-first-sort-out-legality-later approach to shutting down people criticising them). As is the way they lied and blamed their inaction on victims not being “brave enough” to lodge proper complaints. As is the fact that their only accountability is an “independent” group of ex-cops who inevitably understand and sympathise with police. As is the fact that we’ve known for years the police have a rape problem and they’ve repeatedly failed to address it.
As is their school’s inaction.
Worst of all is our ubiquitous rape culture that allows all this to happen. It’s part of the same patriarchy that leads to Len Brown and Cameron Slater et al using Bevan Chuang, and Patrick Gower complaining that men are losing their privilege. We can’t just blame the direct protagonists. All of us, especially middle-class educated white Western heterosexual cisgender Christian men like me, have to accept responsibility for the ways we’ve contributed to a kyriarchal culture that dominates, discriminates, dehumanises and, ultimately, rapes.
The only positive to come out of all of this is are the small signs of hope that rape culture may be starting to change. This could be a vital tipping point in awareness that we have a problem. But the work of addressing it is just beginning.