Number of People On Benefits Over Time
This post is by PaulL, a regular commentor and occasional contributor. It is tangentially related to the series on effective marginal tax rates and incentives to work. The index to all posts in the series can be found here.
I’ve had some question from commenters on how big the problem is. This post summarises how many people we’ve had on benefits over time in NZ.
MSD have good publications on this, and the material in this post is drawn from their latest fact sheet.
We can see a steady upward trend from the start of this Labour government, then a jump with COVID. Since COVID there has been a steady decrease, but we’re nowhere near the levels prevalent pre-COVID.
If we look at the previous government record, the trend was the opposite – a constant downward trend in numbers (from a higher base). The format isn’t quite as easily readable, but it looks to me that in Dec-2012 the benefit percentages were about the same as they were at the COVID peak. Whilst I think we can do better, the numbers on a benefit at present aren’t out of line with the previous recession (post the GFC).
However, at that time the unemployment rate in NZ was over 6%, not the 3.3% we have now. We should have fewer people on a benefit when we’re not in or just coming out of a recession.
Referring back to first set of numbers, 11.1% of the working age population in receipt of a main benefit is a lot. Particularly when the unemployment rate is so low and many employers cannot find staff. It’s interesting to break down who they are.
The supported living payment is for those who have a health condition, injury or disability, or are full time caring for someone with one of these conditions – it’s basically the old sickness benefit. 3.6% of the working age population are on this benefit which sounds like a lot of our population to be disabled. These people are unlikely to move into work, so aren’t the subject of the series I’ve been posting.
If we ignore those on supported living and sole parent support as being unlikely to move into work, we still have a substantial proportion of the population on a Job Seeker benefit.
The people in the “health condition or disability” category are interesting. This seems like another group of people who should be in the supported living category. Presumably they don’t meet the tests for long term supported living, but are still deemed unable to work. Which might raise some questions.
Even so, this leaves 98,000 people who, at least in theory, are ready to walk into a job tomorrow. Are these people who are just between jobs, and will have a job in the next few weeks? Why aren’t these people getting a job? Are they unemployable, are they not trying? Are employers too fussy? Do they have a criminal record? Are they gang members?