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Thursday, May 26, 2011

Business NZ lie about raising minimum wage causing unemployment

Lifting minimum wage 'would cost 6000 jobs'
Employers and the Government have hit back at Labour's plan to raise the minimum wage to $15, claiming it would cost 6000 jobs.

With the Greens and Labour wanting to lift the minimum wage to $15 (Mana wants to lift it to the Australian minimum wage of $18.40), the bosses have told the corporate mainstream media to protect their interests and go on the attack, and on the attack the corporate mainstream media have gone with claims that any change would result in thousands made unemployed.


As the CTU points out, raising the minimum wage DOES NOT lead to an increase in unemployment...

Minimum Wage and Jobs – CTU Releases Research Summary
Bill Rosenberg said “a major study by Dean Hyslop and Steve Stillman looking at the effect of increases of between 41 percent and 69 percent in the youth minimum wage in New Zealand was done in 2007. It found ‘no robust evidence of adverse effects on youth employment or hours worked’ and in fact, showed there was an increase in hours worked for 16 and 17 year old workers.”

“Before those increases came into effect Business NZ warned that for every 10 percent increase in the minimum wage, there could be up to 4 percent fall in employment. But this was shown to be completely wrong.”

Bill Rosenberg said “employment growth appears to be much more strongly related to overall economic conditions than to a particular issue such as the minimum wage. This is what the evidence shows and it would help this debate if the Government and business lobbyists acknowledged that.”

...according to the bossman, raising the minimum wage so that the poorest workers in NZ can meet the basic costs of living would see the four horsemen of the apocalypse destroy NZ.


That money would directly help over quarter of a million NZers in real terms while injecting a large economic boom in their direct communities because minimum wage money is shared much further and has many more demands on it.

Putting money into the hands of people who are most burnt by the economic meltdown makes economic sense by spending at the coalface of poverty and it will be something we will demand as Unemployment doubles as each minimum wage dollar will have to carry so many other unemployed members in the household. Bernard Hickey makes more sense.

Freeze public-sector wages and lift the minimum wage
People on the minimum wage are struggling and spend a higher proportion of their disposable incomes than those on higher wages. If the logic of encouraging consumers to spend to defeat the “Paradox of Thrift” is correct, then increasing the wages of the poorest makes sense. For those looking to rectify the imbalance between the rich and the poor then this is one way to do it, although to be fair, an inflation-sized increase will do little to redress the imbalance, but it may stop it widening much. It also has the benefit of not increasing the budget deficit.

Raising our minimum wage would also take us a step closer to our little brother holy grail of catching up with Australia, the difference isn’t tax, the difference is that they pay people more and we will never match that and attract people here if we don’t move in that direction. How come we only ever try and match the Australian tax rate and not the pay rate? Employers have predictably declared we can’t afford a minimum wage increase, I respond that we can’t afford not to.



At 26/5/11 9:39 am, Blogger Tim said...

interesting Bomber. Someone quoted this to me the other day so it is great to have a logical dissection of the arguments. It would be great to see the evidence from Australia on when they raised their minimum wage. That's a huge difference between theirs and ours.

At 26/5/11 5:33 pm, Blogger peteremcc said...

I'm glad that with one data point, in a strong economic time, you're happy to make generalised assumptions that raising the minimum wage never costs jobs.

Cool story bro.


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