New Zealand Prime Minister John Key admits he couldn't live on the minimum wage
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The Unite Union's campaign to raise the minimum wage to $15 per hour got an interesting new fact to use in the argument last week; Prime Minister John Key believes that he couldn't survive on the minimum wage, which is currently $12.50 an hour and increasing to $12.75 in April. Organiser Joe Carolan approached Key at the 'Big Gay Out' festival and asked if he could survive on $420, which is the amount a full time worker on the minimum wage takes home each week, after tax. Mr Key smiled, and as he walked away answered "Not easily. No. That's the answer."
Key also said his government would not raise the minimum wage to $15 because it would mean “9000 workers would lose their jobs” Recently Minister of Labour Kate Wilkinson supported the claim that the removal of youth rates has lead to an increase in youth unemployment. As an article posted on the Unite website points out “The only claim that is true in these recent statements is that John Key couldn’t live on the minimum wage – because no one can.” While the Department of Labour has estimated that between 5000 and 8000 people (a tiny fraction of the 2.1 million strong workforce) would become unemployed if the minimum wage were increased to $15 it concedes that these estimates are “based on a neo-classical model of firm decision-making, whereby firms operating in perfectly competitive markets adjust output and inputs, including labour, in response to relative prices.”
It would be better to base estimates on the economy the way it actually is, rather than a theoretical understanding of economics. As Unite has noted, between 1998 and 2008 the minimum wage went from $7 an hour to $12 – an increase of 71% and the youth rate went from $4.20 to $12 – an increase of 186%. When the current National government came to power in 2008, the youth unemployment rate was lower than it was in 1998, despite (or even because of) the 186% increase in the youth minimum wage. Similar trends occurred with the adult wage. Thankfully, with two out of three New Zealanders supporting a $15 minimum wage, most of us aren't believing the lies coming from the beehive.
