Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search


Greens will put tens of thousands out of work

Greens will put tens of thousands out of work with their $18 minimum wage

"The $18 minimum wage championed by the Greens will throw tens of thousands of low skilled New Zealanders out of a job and condemn them to a life on the benefit. At no point do the Greens discuss the employment consequences of their massive minimum wage rise", said Dr Whyte.

"What is deeply suspicious is the Greens did not ask BERL or Infometrics to QA their policy. Dr Norman was officious to the point of prissiness about the use of independent consultants to QA his economic policy releases”, said Dr Whyte.

“Obviously, the Greens didn't like the inconvenient truths they were going to be told if they subjected their employment policy to an independent audit. Once they have opened that door, the Greens cannot pick and choose when they have their policies subject to independent audits", said Dr Whyte.

"The economic effects of minimum wage increases could not be plainer. Professor Gail Pacheco’s research repeatedly finds that the increases in the minimum wage over the last 10 to 15 years in New Zealand reduced employment, increased unemployment, and reduced enrolment in education and training among teenagers:

1. Maloney and Pacheco (2012) found that the real minimum wages increased by nearly 33% for adults and 123% for teenagers in New Zealand between 1999 and 2008. Where fewer than 2% of workers were being paid a minimum wage in 1999, more than 8% of adult workers and 60% of teenage workers are receiving hourly earnings close to the minimum wage. They estimated that a 10% increase in minimum wages, even without any offsetting reduction in earnings due to a loss in employment or hours of work, would lower the relative poverty rate by less than one-tenth of a percentage point!

2. Pacheco (2011) reviewed the impact of rising minimum wages on employment in New Zealand over 1986–2004 and found significant negative employment effects of a higher minimum wage.

3. Pacheco and Cruickshank (2007) found the youth minimum wage increases resulted in some age groups undergoing a 91% rise in their real minimum wage over the last 10 years. They found that for 16–19 year olds, minimum wage rises have a statistically significant negative effect on educational enrolment levels”, said Dr Whyte.

“Minimum wage advocates fail to take seriously that the low paid workers who lose their jobs because of minimum wage increases are real, living people. They suffer when their interests are traded off for the greater good of their fellow low-paid workers who are lucky enough to retain their jobs at a slightly higher pay, many of whom come from much wealthier households than them.” said Dr Whyte.

“The case for the minimum wage increase championed by the Greens gets no better if you think of it as offsetting alleged market power of employers to keep wages down. A small minimum wage increase, and the literature in this area only ever supported small minimum wage rises, must jump the following hurdles:

1. The minimum wage must be chosen correctly – the optimum minimum wage can be set only if the demand and supply of labour are known over a considerable range;

2. The optimum minimum wage varies with occupation (and, within an occupation, with the quality of worker);

3. The optimum minimum wage varies among firms (and plants); and

4. The optimum minimum wage varies, often rapidly, through time;

A uniform national minimum wage, infrequently changed, is wholly unsuited to these diverse local labour market and individual business conditions," said Dr Whyte.

“The notion that every employer in New Zealand will be willing to start an ordinary 16-year-old school leaver on $18 an hour defies belief. School and university students working part time in supermarkets and cafes can kiss their jobs good-bye" said Dr Whyte.

“If the minimum wage can be set at the click of a political finger in an election campaign, what's stopping the Greens from putting the minimum wage up even higher, to the average wage? When will the minimum wage be too high under a Greens dominated government? ” said Dr Whyte

“The Greens should listen to the impeccably left-wing New York Times from 1987, when it still remembered some basic economics:

‘Raising the minimum wage by a substantial amount would price working poor people out of the job market. A far better way to help them would be to subsidize their wages or – better yet – help them acquire the skills needed to earn more on their own…

Raise the legal minimum price of labour above the productivity of the least skilled workers and fewer will be hired. If a higher minimum means fewer jobs, why does it remain on the agenda of some liberals?

A higher minimum would undoubtedly raise the living standard of the majority of low-wage workers who could keep their jobs.

That gain, it is argued, would justify the sacrifice of the minority who became unemployable.

The argument isn’t convincing. Those at greatest risk from a higher minimum wage would be young, poor workers, who already face formidable barriers to getting and keeping jobs.’

The title of that editorial was The Right Minimum Wage: $0.00” said Dr Whyte.

“The only way to lift the rate of wages growth for the low paid is faster economic growth. Only ACT’s policies of a top tax rate of 24% and a company tax rate of 12.5% by 2020 will increase the economic growth rate by at least one-third” said Dr Whyte.


© Scoop Media

Parliament Headlines | Politics Headlines | Regional Headlines



Labour: Little Announces New Shadow Cabinet

“Labour had an impressive intake of fresh faces after last year’s election and newest MPs have now had a year to show what they’re made of. This reshuffle rewards hard work and continues my drive to renew our Caucus line up." More>>


Because Reasons: Someone Reckons David Seymour Is Politician Of The Year

Trans Tasman's 11th annual Roll Call has thrown a curve ball this year, ignoring the likes of John Key, Bill English, and Winston Peters to pick its politician of the year from the ranks of the new generation. More>>


Whaling: NZ Deeply Disappointed By Japan's Decision

“New Zealand is strongly opposed to whaling in the Southern Ocean. We call on Japan to take heed of the 2014 International Court of Justice decision and international scientific advice concerning their whaling activities.” More>>


Relevant Consents Gained: Government Unveils RMA Reform Package

The government has formally hauled down the flag on its attempts to alter the balance of environmental and economic priorities in the Resource Management Act, unveiling a 180-page Resource Legislation Amendment Bill containing reforms that have been largely endorsed by most political parties. More>>


Closing Schools And Such: Interim Redcliffs Decision Announced

“While the school’s board has argued that circumstances that could give rise to potential disruption are extremely unlikely, advice from technical experts has shown these concerns cannot be ruled out." More>>


Jane Kelsey: High Court Can’t Make Groser Provide TPPA Information Faster

‘This week we went back to court to challenge Trade Minister Groser’s stalling tactics over the release of information on the Trans-Pacific Partnership Agreement negotiations, following a High Court order that he reconsider the Official Information Act request I made last January’, said University of Auckland law professor Jane Kelsey, first applicant in the case. More>>

Werewolf 58: No Climate For Change

The last time the global community tried to take collective action on climate change the world’s leaders finally came to agree that every not-too-onerous effort should be made to hold global warming to 2°C above the pre-industrial average. At Paris, all 150 participant countries nations will have put forward their pledges... On the information available, New Zealand's is the second weakest contribution of any nation in the developed world. More>>


Lambton Quay Shutdown: Object Was Made To Look Like Bomb

Police cordoned off part of Lambton Quay Wednesday afternoon, saying that a suspicious package had been found. Buildings were evacuated and buses were detoured. The army’s explosive ordnance disposal unit was brought to the Quay. More>>


Public Sector Still Shrinking: Record Low Number Of 'Backroom Bureaucrats'

Ongoing restraint in the public sector and a focus on better frontline services has seen a further reduction in the number of core Government employees, State Services Minister Paula Bennett says. More>>


Get More From Scoop



Search Scoop  
Powered by Vodafone
NZ independent news