Minimum Wage

The Herald reports:

Sixty-one per cent of people want the minimum wage lifted to $15 an hour, a Herald Summer Survey has found, weeks before the Government is to set the wage for this year.

The minimum wage is now $12.50 an hour, and the Cabinet is expected to decide within a fortnight whether to increase it.

61% probably support a minimum wage of $20 an hour is you asked them.

Trevor Mallard also blogs his support:

Kate Wilkinson would have got a report in October with options for a November Cabinet paper on lifting the minimum wage. In government Labour just about always made a decision before Christmas and there was always an increase effective from 1 April.

Each increase pushed up a relatively small but increasing group directly but a much bigger group indirectly.

I think it is time for the government to commit to $15 an hour from either 1 April this year, or 1 April next year at the latest.

There are a big stack of equity arguements in favour of the change. And it could be a good boost to the increasingly fragile recovery.

Business NZ  would squeal. But most employers know that lifting wage rates encourages investement in capital equipment and training to make their labour force more productive. It is all part of the movement to a high skill, high wage economy.

I am an employer. Trevor is not. In fact as far as I can tell, Trevor’s only jobs have been a teacher, an MP and a unionist. So when Trevor elects himself to speak on behalf of employers, this should be treated with the same degree of credibility as me speaking on behalf of Olympic atheletes.

You do not get to a high skill high wage economy by bankrupting companies that are not high skill and high wage.

At a time of rising unemployment, it would be stupid to have a massive 20% increase in the minimum wage. It would be particular devastating for youth employment. Already we have seen the abolition of the youth minimum wage which has had a devastating impact on youth employment levels.

The simple fact of the matter is that a 15 year old working at a department store (my first significant job) does not produce $15 an hour worth of value. And hell most 15 year olds don’t expect to be earning an hourly wage worth $30,000 a year fulltime. They are living at home, and want to just earn some spending money, and gain some work experience.

A move to $15 an hour would be inflationary also, which would mean higher interest rates, and again fewer jobs and reduced economic growth.

I’m interested in data on how many people actually earn the minimum wage, and how long they stay on the minimum wage for. I suspect most people on the minimum wage do not stay earning at that level for their working life. They gain experience and skills and become more valuable. That is my preferred way to get people off the minimum wage.

Does anyone know of any data about frequency and duration of people earning the minimum wage in NZ?

UPDATE: The survey cited by the Herald is seriously flawed, I can reveal. Not because it was an Internet based survey (even though that by itself makes it fairly self selecting), but because they gave respondents only three options – that the minimum wage should be reduced from $12.50, that it should stay at $12.50 and that it should increase to $15.00.

That is an appalling list of options, as it doesn’t allow people who support a smaller increase (say of 50c to keep pace with inflation) to say so. The Herald has done a disservice to readers by not making clear what the options were, when they report 61% back a rise to $15. That was the only option people were given for a rise.