Minimum wage to go to $14.25 an hour

Simon Bridges has announced:

Labour Minister Simon Bridges today announced the adult minimum wage is to rise to $14.25 an hour.

The current adult minimum wage rate is $13.75 an hour.

The Starting-Out and training minimum wages will increase from $11 an hour to $11.40 an hour, which is 80 per cent of the adult minimum wage.

“Setting these wage rates represents a careful balance between protecting low paid workers and ensuring jobs are not lost,” says Mr Bridges.

“The increase announced today balances the needs of both businesses and workers and will have minimal impact on the wider labour market and inflationary pressures.

“This increase will keep the minimum wage at around 50 per cent of the average hourly rate, which is the highest rate in the OECD.

A lot of people do not realise how high our minimum wage is compared the average wage. And the linkage is important, because if the minimum wage gets too close to the average wage, then it can have huge distortionary effects on employment.

To use an example, a shift in the minimum wage from say 25% of the average wage to 35% may have little impact on employment. But a shift from 50% to 60% will definitely have an impact.

I actually think it would be sensible to formally link the minimum wage to the median wage, so the focus goes on lifting wages through productivity, which would them automatically assist those on the minimum wage.

The minimum wage will soon be $14.25 an hour, and if the same increase happened next year it would be $14.75 an hour. This means that Labour’s policy may be to simply hike it a further 25 cents. Sadly I guess this means they will now pluck another number out of the air, and say that this is the level the minimum wage must be at. They’re effectively saying all Government employees must get paid at least $22.89 an hour, so why not that for all employees!