How has the average worker done under Labour?

If one believed some of the more hysterical commenters, the 1990s was a time of slavery and child labour and the average worker did far worse than under Labour.  Sadly for their little fantasy world, the facts say something else.

Let’s look at our friend, the Quarterly Employment Survey from Stats NZ.  And let’s look at the nine years from June 1990 to June 1999 under National and the eight years from June 1999 to June 2007 under Labour.   The average ordinary-time weekly earnings were:

Gross average ordinary-time weekly earnings
1990: $502.95
1999: $639.96
2007: $846.19

So the average weekly earnings went up $137.01 under National and $194.74 under Labour.  So wow maybe Labour is much better for the average worker.  What was the increase as a percentage?  National 27.2% vs Labour 32.2%.  Still Labour ahead, and in one fewer year.

But is there something missing??  Yes, there is.  A couple of things.  We forgot to look at income tax.  How much pay does the average worker get after tax is deducted.  A quick check at the then tax tables and we have:

Net average ordinary-time weekly earnings
1990: $385.81
1999: $516.50
2007: $665.33

So the net average weekly earnings went up $130.69 under National and $139.76 under Labour.  Hmmn not much of a difference. So what was the increase as a percentage?  National 33.9% vs Labour 28.8%.  An average of 3.76% per year vs 3.60% – almost no difference.  So perhaps there is no difference.

But wait there’s still one further factor to take into account.  One could buy a lot more in 1990 than you could in 2007 for the same wage.  We need to inflation adjust.  Now the CPI was 716 in 1990, 832 in 1999 and 1020 in 2007.  So let’s look at real net average ordinary-time workings in June 2007 dollars.

Real net average ordinary-time weekly earnings
1990: $549.62
1999: $633.21
2007: $665.33

So the net average weekly earnings went up $83.59 under National and $33.90 under Labour. Yep the average worker in the nasty 90s ended up with an extra $84 a week while under caring kind Labour they are only $34 better off – an increase in weekly real take home pay of really just $4 every year.

And what was the increase as a percentage?  National 15.2% vs Labour 5.1%. Yes the average worker’s take home pay went up 15% under National and a miserly 5% under Labour.  Just 5% after eight years.

Now apologists will claim it has all gone into Working for Families etc.  Well that only affects 20% of families.  And regardless that is a separate comparison about welfare support.   There were significant boosts in the 1990s to family support also.

This is what happens when you never ever reduce tax rates and you let inflation get away on you.  It eats up all the extra income the average family gets.

So the next time someone drones on about how bad the 1990s were for the average worker.  Just remember they were three times better than the last eight years.