Wednesday, March 09, 2005



Trying to make reality fit the theory

Having argued that the generous income top-ups available under the Working for Families package meant that workers would have little incentive to improve their pay, the National Party is now trying to argue that those same generous top-ups mean that workers should not bother pushing for a wage-rise. Talk about trying to make reality fit the theory...

As usual their example - a teacher on $50,000 a year with two kids - is carefully chosen for maximum effect. But this is fairly high up the payscale. The average wage is only around $35,000, and the median wage - the point at which half of all wage and salary earners earn more, and half earn less - is lower than this. While workers on lower incomes still have their top-ups abated as their income rises, the effect is significantly less. And of course not every wage-earner has children.

But underneath this is a principle which the unions seem to grasp and which National doesn't: that generally speaking, in a market economy, employers should be paying for people to live. Yes, people may not be as well off from an increase as they think due to the abatement regime. But they'll be earning that money rather than getting it from the government. Isn't that something the National Party, with its constant harping on about personal responsibilitiy, "middle-class welfare", and government expenditure, should support?

7 comments:

"in a market economy, employers should be paying for people to live"

Could you explain why they should?

I thought the purpose of employing someone was to pay that person to work. If they are not being paid enough, in a buyoant ecomony the person has the option to ask for a pay raise or move onto a job that pays more. Good employers don't want to loose good staff, so if they can afford to, it will be far more economical for the employer to pay more to keep the person.

Paying for someone to live is not the employers responsibility. It is up to the employee to get a job that pays them enough to live, which of course is different for each person depending on their circumstances.

looke

Posted by Anonymous : 3/09/2005 01:25:00 PM

someome in the media shuold do a calculation of the marginal tax rate from a 2 -child family on the average wage who gets a 5% wage increase with say $200 accommodation costs. What would hte maginal tax rate on a 5% increas be here?

Posted by Anonymous : 3/09/2005 05:23:00 PM

hmmm... it is a bit irelevant - unions want pay rises no mater how small each step is one step in the right direction to them...

Posted by Genius : 3/09/2005 09:56:00 PM

Looke: I was more referring to the idea that in our society, we expect people to earn their living through paid employment rather than government handouts. This doesn't mean we shouldn't have the latter, but its a little strange for a supposedly "fiscally conservative" and anti-welfare party to oppose people taking steps for themselves to reduce their dependence on the government.

But to address your wider point: we do demand that employers pay enough for their workers to (sort of) live on. That is why we have a minimum wage. The alternative is Victorian London: workers unable to afford accomodation, and slowly working themselves to death. And that is precisely what people came to New Zealand to escape.

Posted by Idiot/Savant : 3/10/2005 08:29:00 AM

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Posted by Anonymous : 3/13/2005 12:52:00 AM

Just curious, do you know what the median wage is? I would like to know.

Posted by Anonymous : 3/15/2005 12:56:00 AM

According to the latest New Zealand Income Survey, the median hourly wage is $15.34 / hour. The average is $18.24 / hour. For annual figures, people tend to use annual individual or household income (from all sources) instead.

Posted by Idiot/Savant : 3/15/2005 04:49:00 PM