Elizabeth Davies looks at the 50c an hour increase to the minimum wage and wonders what it means for our 'rock star' economy

students are rich???

big debt professionals were often students

As far as I can recall, no-one cared about singles earning $18 in the late 1960s. Prehaps someone who was an adult then can confirm it was the minimum adult wage, not the minimum married adult wage.

"employer (beit local business or large Corporations) paying a little extra."



And you call yourself an educated teacher!!! Gods save us all.



Why should employers take a pay cut?  If other peoples' wages are going up why would employers, or more importantly business owners, expect their pay packets to go down??



Your "paying a little extra" stops when? the first rise in min wage? The next? perhaps you think employers should be paying not receiving paychecks?   BEause where do you think employers, business owners, are getting their money from?  Money trees?  Springs running flush with coinage springing out of caves in their back section?

 Perhaps you have employers confused with the government, who can just take what ever taxes they want to give to government paid employees.



How aware are you that many small business owners make less than minimum wage?  Some of those, who don't rent their houses, often make UNDER HALF minimum wage.  Often buying on credit, backed by hoped capital growth, or even life insurance policies.



And the wait staff at least sell to the public and if they do a crap job, then that business goes broke, all their customers are there by choice, spending at their discretion. They should be getting MORE than government employees such as teachers in _public_ schools.  You want school teachers to be paid more, then get those who use your services, the schoolchildren, and their owners, to pay for those services!!  If the market segment you are catering to doesn't or can't afford to pay the price you demand, then that is a problem that any _educated_ person with economic sense should realise.   At least with wait staff, they don't expect 3rd parties to subsidise them

 

I'm glad my somewhat incendiary comment solicited a reply...so while I have you here perhaps you can define the magic number for us rather than imply that the proposed minimum is too low and $20 is too high.

Unfortuntely, there is no magic number that results in zero job losses. Logically, every increase in the minimum wage will result in a roughly proportionate number of job losses.

So I'm all ears to hear what this so-called balance might be? (and don't go quoting the so-called living wage either, that is just a made up number advanced by unions who rely on the associated publicity to keep the funds from their members rolling in...)

so the correct rate should be $7  (that's seven) dollars an hour.



A plantain and fennel sandwich is cheap when you make your own bread.  Or homemade onion scones for lunch.

The levy is being reduced due to 

1) increased investement returns

2) Reduced estimates of future liabilities arising from current claimants. (some argue this is basically cuts.  ACC doing a better job at minimising payments to claimants, or not givining them the same level of help they are used to)

It could just as easily go up next year if we ACC have a bad year investing in the market, though they have a very good track record.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=111…

Come on Jandel. Robust debate is fine but suggesting "Elizabeth is happy for others to lose their jobs just so long as she can buy another subway sandwich for lunch each week" is clearly not true.

Cheers.

Best way for wages to go up is to have low numbers of unemployed.

Supply and Demand works everywhere and employment is no exception.

When you hear about employee poaching, pay increases which assists in retaining current staff, employers having to recruit off-shore, people changing their employer,  etc then you know that there will be a natural increase in wages. The natural state of the market has to be left to its devices and everyone is better off.

If people work in a low paid job is that not their choice?

If people live beyond their means is that not also their choice?

Governments setting a minimum wage is just another economic distortion which is legally allowed and covers the rear ends of people who refuse to make personal changes and choices.

All Politicians use the business community like their own private managed fund and this is not working in lifting people in the poor, low earnings area out of the hole they are in.

"Consider that with more money in the "poorer" ppls pockets they have more to spend, surely that will create jobs?"



No it doesn't create jobs, because even though they have "more" to spend, that "more" comes from business who have to put up prices to pay it.  Because of the overheads involved, the "more" is _less_ than what goes on the sales tag.      



the only way to reduce the overheads to keep the price low is _less_ jobs, which really cuts back the sales levels...



 It takes moment but work out how much production and turnover is required if margin is reduced by 5%, if the net margin is originally 15%, to keep net profit stable.  Now redo, with a 3% increase in wages, including a lift of 3% in retained earnings (ie to keep the business income matched to wage growth.)  - use 15% tax on wages, 30% tax company.

Because of the ratchetting effect of Keynesian efforts, tax cuts are seldomly big enough to create significant positive change - especially when any spending in line with a tax cut (which is not uncommon as the small amount of discretionary spending goes nicely with a prolonged increase in debt servicing)   ... the result is a brief nudge in credit buying, but the economic benefits are rapidly lost to increases in interest and OCR style inflation control.     And if the interest is reduced instead of increased we start to see buying sprees like we did just before GFC.   (eg once you've got a slight downhill run, it desn't take much acceleration to really shoot up the velocity effects (especially if you're not got your foot on the brake))

In a company I can do without a casual or cleaner or low-skilled worker a _LOT_ easier than I can do without a specialist or manager.



A low skilled workload I can reshuffle onto others, or sometimes just drop that whole task load.

Can't do that with higher paid workers....that's WHY they're higher paid, because they can justify and demand it.  (although some of the sods, especially in government, that get the Higher Salaries commision to set the pay rate should be removed entirely)

I occasional comment on people, mostly wage earners, about "peasant thinking".  It's endemic through NZ, which I attribute to the poor standard of financial awareness and teaching, probably from our teachers being on such an insane payment system, and not having to earn their own sales.



If I hire a maintenance man, a school leaver to do odd jobs.  Spray weeds, clean troughs, pickup fallen branches, crush boxes burn rubbish.... it's all simple jobs and worth little to the product buying consumer.  The employee has little responsibility, if he makes a mistake, it's inconvenient, and I have to have much higher skilled staff service all his equipment, check and process his wage and holiday book, and set up job lists for him (with instructions and checked safety equipment).  With NZ employment law and everything falling on the employer, it's a huge responsibility and risk.  One which the consumer isn't going to want to pay more for.



I have a specialised relief milker.  Everything has to safe and available and in working order, but they know how to check and troubleshoot problems.  What's more they have responsibillity for hundreds of thousands dollars assets, and the entire millions of invested shareholder funds relies on them to be able to handle their job effectively.  The job itself is narrowly defined, their responsibility clearly delineated (get cows, roll up fence, move cows slowly and professional, milk cows, check refrigeration and health standards, clean professionally, ensure cows safely stored and safe and healthy, all in reasonable timeframe.   They don't set the schedules or rules, they aren't responsible in any way for budgeting or strategic planning.  Like the casual staff, they are not expect to contribute financially or materially.   The consumer again, does not care about their performance beyond that it is done to minimum standard and is not willing to pay extra for them to work...but might avoid the product if things are done poorly.  The value of this persons work is not in the hours they work, but in their ability to capture and deliver quality cheaply.





And the other end of the sacle we have a head of Fonterra.  He doesn't work on farm, he doesn't touch the product in the slightest.  He protects Billions or trillions of dollars worth of investment.  A wrong slip from him can result in hundreds of farms worth of work being paid in fines or reparations.  A poor call can result in customers completely avoiding entire lines of finished product.  It is not the hours, but the choices he makes that are important.



As the business owner, I have to supply money and loans and security. I have to push the primary strategies of the business. I get to build the plant and work it. I have to read the laws and contracts, and provide labour.  My choices shape whether or not product is saleable and thus whether or not sales will be higher enough to pay employees.  If something breaks, I am where the buck stops for making everything better.  All the other problems and legal responsibilities of the other employees rest on me.  Where other employees must do their jobs, I am required to see the things that haven't happened yet, so I can put together their plans...and when they get enthusiastic, respond appropriately to make them happy but also to keep the company doing well.  The consumer doesn't want to pay me at all...yet without me there are no jobs, there is no product to purchase, no interest for the investors, no dividends for the shareholders.  How much do you think I should have to pay per hour for this privilege??

" As I mentioned above the minimum wage increasing dosn't cost jobs or lead to inflation."



Yes you mentioned it but you were wrong.



The reason that the $100/hr doesn't happen is because it immediately shows the flaws in that choice.  Prices would jump immediately, business don't have big enough reserves to wait for prices to come up, like cooking the live food slowly so it doesn't notice.



By going up slowly the flow on effects are not so noticable and can be mitigated short term.  The company might have margin and reserves to meet 40c rise, which on hits them in their principal repayments, and the shareholders will get 2c less per share so won't scream.



Do it a few times and the prices go up almost at random as one business finds it can no longer absorb the cost, and the rest of the market segment mark to them for relief.  Across the board some jobs get grandfathered away and tasks reassigned but everyone just assumes the dark shape moving up on them ha always been there, it's not a wolf slowly moving up on them.  And business fail, a few here and there, but that always happens doesn't it.......



And people check their statistics.  why last years numbers were that much different to the year before.  perhaps it's no so bad...because given enough time, population growth and technology and events (eg GFC, dotcrash) are far bigger disturbers than the constant movement that's occuring.

It's a global market place for talent, if there are artificial restrictions on pay for top performers they will simply go elsewhere and their talent with them.  I'm not against the idea of paying people more but it's important that it's done using a system that doesn't encourage unintended consequences. 

The relevance is that the article was suggesting the american minium was $7 + tips, so you'd need to inflate the figure with tips before comparing.  When in fact  $7 is for jobs that don't attract tips, and so is a relevant comparison.

So, Boatman - until we see severely malnourished children with bloated stomachs and sticks for limbs on Campbell live, we can all rest easy?

lowering the minimum wage means a lot of miscellaneous bits and pieces can be afforded.



 With a high minimum wage menial work is just too expensive, everything has to be linked to some overpaid earner (who in NZ is probably just pouring their money into real estate), or to a end-consumer.



And it's not waste energy and materials, it's called life.  That's how energy and materials find human purpose.

Yes I'm sure about the tax recoveries...  you see the 30k in taxes I paid this year?  Where do you think that money came from?   Also businesses have to pay GST on wages paid, so that gets added to the customers bill.



Every capital upgrade (eg to increase productivity) carries a 30% directly penalty in tax burden...where do you think the money comes from.  It must be added to the customers bill.





That's the problem with increased taxation, it creates an inflation effect so customers are less able to pay for sales.  So there's less money to pay the wages, and therefore less wages to make sales...

" if people are arguing putting up the minimum wage will increase unemployment over the econonmy generally, then there should be some evidence that in the past putting up the minimum wage has actually increased unemployment "



I laid off two casual staff.

How much proof do you need?



Remember the offical figures get massaged, to keep down unemployment numbers people (like me) were "encouraged" to take temporary courses, do temp jobs, part time jobs, or go on different benefits which don't show up as unemployment.  Or also speaking from personal experience) just get told I don't qualify as I was offical made redundant, not made unemployed, thus won't be counted for at least 6 months, and my assets (except primary abode) are under $7k