Tagged: living wage

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%.

Hone and Johnny

Harawira and Key

John Campbell has started a series of interviews with party leaders and their partners in their homes. The first two were with John and Bronagh Key and Hone Harawira and Hilda Halkyard-Harawira.

Both couples feed John a meal and talk about their lives and their political involvements – that’s about where the similarities end. Hone has photos on his wall from the Springbok tour protests. John famously can’t remember his stance on that issue, but he vividly remembers when he first wanted to be Prime Minister a few years earlier.

This is a good illustration of the main difference between Key’s and Harawira’s interviews, and indeed their overall political personas: Harawira’s interview is far more about politics and real issues, while Key’s is far more about superficiality, personality and content-free generalities like “making a difference” and “economic management” (Ha!).

Key does talk about “vulnerable people” and kids in poverty after Campbell observes the extreme wealth of their context. But for him these “vulnerable people” are an abstraction – they’re completely absent from his life.

Harawira’s concern for the marginalised is far more real. His biggest achievements are sacrifices he’s made for real live vulnerable people – be it Māori, the poor, South Africans suffering under apartheid, or his grumpy father-in-law. Mana’s policies are primarily motivated by real justice for those who most need it.

Moreover, Key’s claimed concern for kids growing up on welfare belies the fact that his government has kept benefit rates at 1991 levels. 1991, you may recall, was the year National deliberately set benefits to only cover 80% of minimum nutritional needs. This was an attempt to incentivise people into accepting the new low-wage jobs – or at least, those lucky enough to find jobs. They also encouraged a certain level of unemployment to drive wages down and again incentivise these poverty-wage jobs. This shows individual incentivisation may fill low-wage jobs, but it can’t cure unemployment: that requires broader socio-economic changes. These policies were and are sacrifices of the poor to support rich poverty-wage employers.

Two things have changed since then: One, poverty dropped slightly among working families (see p.47 here) since the last Labour government’s third-way policy, Working for Families. Key called WFF “communism by stealth” at the time, but he’s kept it, and praises it in the video for how it subsidises low wages. Two, National’s rhetoric is all anti-unemployment these days.

But three things still speak volumes: One, Key’s more willing to use taxpayer money to subsidise poverty-wage employers than make them pay living wages. Two, he sees no problem with WFF’s exclusion of beneficiary children from assistance, even though he notes they’re the majority of kids in poverty. Three, Key looks no further than individual solutions to the societal issue of unemployment.

Meanwhile, the real-life vulnerable people who miss out on the limited number of subsidised jobs offered by this “economic management” suffer now more than ever. Key thinks leftover Labour policies and welfare scapegoating is enough to help them. Harawira does not. I know which one I’d rather vote for.

Wheat, chaff, sheep, goats (resources, votes)

.
Though political scientist Bryce Edwards suggests maybe we shouldn’t vote in this year’s local body elections, I’ve never missed an opportunity to vote in any local or national election (anarchist sympathies notwithstanding).

This year’s elections in Chch are more important than most… we get to vote for a new mayor, mostly-new city councillors, community board representatives, district health board representatives and Environment Canterbury councillors.

Here’s how I’m voting this time, and – more likely to be useful for you – the resources I used to make my decisions.

I won’t fill out my form and post it until the last minute (Wednesday), so I’m open to changing my mind, and I’m keen to hear about any other useful resources you know about.
 

Resources

My votes

Mayor (pick one or none)
Lianne Dalziel

Councillors – Fendalton-Waimari ward (pick up to 2)
Raf Manji
Faimeh Burke

Community Board members – Fendalton-Waimari ward (pick up to 5)
Faimeh Burke
Sally Buck
Ahi Allen

Canterbury District Health Board members (rank as many/few as you like, up to 26) (Updated 9/10/2013)
7 are elected but your votes are almost guaranteed to be transferred further down your list, so it’s worth ranking at least 12 if you can bring yourself to do so. I’ve ranked 25 to give my votes the maximum chance of contributing to anyone but Keown (see below).

  1. Paul McMahon (preventive health, mentions health inequalities, highlights wider causes of (un)health, community development/youth health experience, supports living wage for all, supports free public dental care in theory, part of the Anabaptist network, People’s Choice)
  2. Heather Symes (health practitioner, focus on vulnerable people, sympathetic to public dental care, supports living wage for all health workers and lower CEO salaries, signed Nurses Organisation pledge, People’s Choice)
  3. Oscar Alpers (focus on vulnerable people, public health not health insurance, People’s Choice)
  4. Adrian Te Patu (health practitioner, community/public health experience)
  5. George Abraham (health scientist, campaigning on free public dental care, wants to look after ‘less privileged’)
  6. Jo Kane
  7. David Morrell
  8. Anna Crighton
  9. Chris Mene
  10. Sally Buck
  11. Steve Wakefield
  12. Alison Franklin
  13. Drucilla Kingi-Patterson
  14. Andrew McCombie
  15. Wendy Gilchrist
  16. Tim Howe
  17. John Noordanus
  18. Margaret McGowan
  19. Andrew Dickerson
  20. Beth Kempen
  21. Murray Clarke
  22. Keith Nelson
  23. David Rowland
  24. Robin Kilworth
  25. Tubby Hansen

Unranked: Aaron Keown (Only attended one two full Health Board meetings in 2012 but still picked up a cool $26,000 for his troubles. Tries to go where the populist wind blows, but occasionally reveals his true colours as an ACT member and Marryattophile who called quake victims whiners.)

~~~

Disclaimer: Fine, I admit it. I linked to the Bryce Edwards post 78% for ego reasons. He mentions me!