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Why Not $50 An Hour?

“If minimum wages don’t reduce the number of jobs available, and we can legislate our way to greater prosperity, left-wing groups should be advocating for a much higher minimum wage than $22.10 an hour,” says ACT Leader David Seymour.

“Labour and the Helen Clark Foundation claim there’s no cost to raising the minimum wage and that we can boost productivity and grow the economy by passing new laws.

“If that’s the case, why not advocate for a minimum wage of $50 an hour?

“Basic economic theory and empirical evidence on higher minimum wages both point to fewer jobs being available.

MBIE’s advice to the Government is that a living wage would reduce the number of available jobs by 30,000.

The Treasury says a higher minimum wage won’t lift productivity, overall wage levels or job creation, and will harm international competitiveness:

  • '…the minimum wage is not likely to be the driver of a step-change in either productivity growth or wages…'
  • '…on rare occasions, the employment losses from lifting the minimum wage has been offset by employment gains from the increased consumer demand caused by minimum wage earners spending a high proportion of their earnings. However, for this to happen, the lift to consumer demand needs to be significant, the small number of people earning at or near the minimum wage makes this unlikely in New Zealand.'
  • '…the minimum wage is not an effective tool for lifting wage levels overall.'
  • '…an increase in the minimum wage that increased overall labour costs would reduce international competitiveness.'

“The reality that both Labour and the Helen Clark Foundation need to confront is that workers who can’t demand a higher minimum wage will no longer have jobs as businesses automate or downsize.

“The economy is still in recession and 37,000 people lost jobs in the last quarter.

“Labour raised the minimum wage earlier this year as the economy was heading into recession and businesses into lockdown.

“Raising the minimum wage again next year would be an act of economic vandalism.

“SMEs can’t keep up with the constant stream of costs and rules being imposed by Labour.

“ACT’s caucus has seven small business owners. We understand the struggles that employers are facing.

“We would cut GST to 10 percent for 12 months and pause new minimum wage increases to boost consumption and give business owners a breather.”

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