The flipside of minimum wage increases

Sent in by a reader. It makes a very valid point, the higher you force up wages for certain jobs, the more likely it is that they will be replaced by technology. That may actually be good for the economy eventually, but very rough on those who find themselves without a job.

Talking of the minimum wage, some useful analysis on Stats Chat:

From April 2008 to April 2013, the minimum wage increased 14.6%. Inflation (2008Q1 to 2013Q1) was 11%. So, the minimum wage increased faster than inflation, and the proposed change will keep it increasing faster than inflation.

From whole-year 2008 to whole-year 2013, per-capita GDP increased 9.7%.  Mean weekly income increased 21%. Median weekly income increased 18.8%. Average household consumption expenditure increased 7.8%.

Increasing the 2008 minimum wage by 18.8%, following median incomes, would give $14.26, so the proposed minimum wage is at least close to keeping up with median income, as well as keeping ahead of economic growth.

As I said yesterday, I think it would be sensible to link it to the median wage.

As a final footnote: the story also mentions the Prime Minister’s salary. There really isn’t an objective way to compare changes in this to changes in the minimum wage. The PM’s salary has increased by a smaller percentage than the minimum wage since 2008, but the absolute increase is more than ten times that of a full-time minimum wage job.

Of course a higher wage will always have an absolute higher increase. That is why percentage comparisons are done. I didn’t realise however that the relative movement in the PM’s salary has been less than the movement in the minimum wage.