On the last day of Parliament, I asked the Minister of Labour a couple of questions about wages. Minister Tony Ryall answered on her behalf and as a True Believer in the one market way he spouted the old trickle down theory.
“This is one of the reasons why the Government is focusing on growing and building a strong, growing economy, because a strong, growing economy will give all New Zealanders the opportunity to benefit in higher wages. “
Say what?
The truth is that working families and other middle income kiwis are finding it harder by the week to get by because the cost of living is rising and incomes aren’t keeping pace.
Over the last 3 years, median household income rose 1.4% while consumer prices rose 9%. The gap between high income earners and low income earners is growing, and the gap between New Zealand incomes and Australian incomes continues to get wider
Isn’t this the government that promised that it would stop our workers leaving for Australia by closing the wage gap? And hasn’t it blown out to 38% in the last three years?
New Zealand workers aren’t paid enough. We still believe in the old maxim “a fair days pay for a fair days work” but our rules don’t deliver that.
Labour will be changing the rules. We need some new ideas. Watch our for our policy announcement this coming Tuesday.
“Trickle down” is a left invention…it is not,nor ever has been a part of classic economics.But its undeniable that a flourishing and expanding economy has flow on benefits …for those who want them and are willing to make the effort at least.
“The truth is that working families and other middle income kiwis are finding it harder by the week to get by because the cost of living is rising and incomes aren’t keeping pace.”
“New Zealand workers aren’t paid enough.”
Perhaps, but at least it looks as though working families have got no worse off over the last 3 years. Ave hourly earnings Jun/2008 to Jun/2011 went up 9.1%, CPI 9.0% (and this doesn’t take account of reduced income taxes increasing disposable incomes).
The real issue for household incomes and inequality has been the increase in unemployment over this period.
I hope Labour’s policy won’t further advanatge those working families that frankly look as though they are keeping up, to the disadvanatge of those looking for work.
As I’ve noted before the CGT will increase inequality by putting up rents while advantaging the better off who own homes. I hope we don’t see more of the same from Labour.
Ave hourly earnings Jun/2008 to Jun/2011 went up 9.1%, CPI 9.0% (and this doesn’t take account of reduced income taxes increasing disposable incomes).
I think you’ll find median household incomes took a hit. And that’s the most important stat when you’re gauging outcomes across a population.
Bill
The claim here is that working NZders are worse off. They probably aren’t.
The reason real median household incomes droped was because an additional 2.5% of the work force was unemployed. Policies that lift incomes of those in work will probably further damage the living standards of those that aren’t.
I thought both points were clear from my comment.
Unemployment, no matter how it is measured, is a huge problem which can’t be fixed by vague promises. And while there are perfectly capable, hard working people on the dole queue who are 100% employable, but suffer from each vacancy receiving ~200 applications from similarly qualified people, then government has failed its employees/masters.
The claim here is that working NZders are worse off. They probably aren’t.
http://thestandard.org.nz/key-tries-bad-stats-to-mask-pathetic-record/
Bill
Can I take you through this very slowly?
The NZ Income survey that you persist in quoting deals with the whole population of households. It includes a lot of non-working households. If the unemploment rate goes up there is an increase in the number of households on low incomes. Average and median household incomes are likely to decline (although I note that on the Standard’s analysis the avergae is up in real terms and the the median only down slightly).
However all of the above is irrelevant to this post which is about wages and the plight of working NZders. They are doing OK as far as one can tell, and the stats used in it are misleading.
My point other is, and remains, that pandering to the middle classes to get their votes (e.g. the CGT which favours the poperty owning classes) can lead to those in the most difficult circumstances being screwed.
Such nonsense. Don’t try to mischieviously redefine history mate.
“Trickle down” economics was an invention of the Republicans and the Reaganites.
Feed money to the wealthiest in society and maybe you will get a job cutting their lawns, cooking their meals and washing their cars.
Labour is putting an end to that nonsense. A larger share of GDP must go directly to workers.
Mmm. Thanks to a profitable, efficient because de-regulated agricultural sector many farmers have big 2012 provisional tax payments to worry about, and how to attract employees by paying, generally, very good wages in an area where there is a shortage of suitably skilled labour.
Outside the agricultural sector though, I’ve never had more queries along the lines of ‘do I take on a term loan to pay wages for six months in the hope work will turn around, as I don’t want to lose my good staff’. So, making this group of employers/business compulsorily pay higher wages, or wrapping them in more and more regulation, probably just puts many out of business altogether; certainly makes it much harder for them. Which I guess those of you camped down at the Stock Exchange wanting to dismantle business, in totality, would class as some type of idiot victory.
But I’m confused, tell me how you intend to pay for your Gulag of Good Intentions? Or more precisely, who do you intend on paying for it? I realise under your central planning premise I lose the last of my freedom from the State as it ruthlessly tries to meet the welfare created needs of total strangers, but just from a sheer mathematical point of view, I don’t get how you, in your own minds, think to pay for it all? (They certainly haven’t figured it out in Europe or the US, which are going down in a heap of government debt as the illusion of their welfare states crumble, and like in the old Soviet Union they find their free health systems, et al, have ended up costing them everything. So what makes Labour think they’ve figured out a way after they’re chopped the feet off wealth creating businesses?)
Um, regarding the capital gains tax on land, because you want to stop investment in housing, do you realise there is already a growing shortage in rental accommodation, plus in six to seven years there’s going to be a frightening shortage of housing, period? And why isn’t the construction industry, including all the related trades, sparkies, plumbers, interior decorating firms, etc … why aren’t all these, apparently, part of the productive economy?
Though you’re right to questions Ryall’s silly statement: the only way a government can ‘grow’ a healthy economy is to get out of the way.
Viper, you demand a higher proportion of GDP go to workers. Quite apart from that being nonsense in terms of sheer economic theory, but taking you on your implied meaning, given the State already makes up over 46% of spending in the economy (GDP), and the State only destroys wealth, doesn’t create it, where does the additional GDP come from to pay these workers? Isn’t government best to allow GDP to grow, if we must use consumable spending as a base (for anything – what does basing anything on GDP have to do with productive capacity in an economy?), anyway, allow the economy to grow – let’s stop using GDP as referring to production, it’s just confusing – by getting out of the way. Because the more it involves itself, the more harm it does to this ‘GDP’ you intend to divvy up to the workers?
Forget a fair day’s work for a fair day’s pay, time to practice the old maxim “a poor day’s work for a por day’s pay”
Hmm. I have a close mate who is a supervisor at a metal engineering business. They operate pretty much 24\7 at present. He offered an employee of the company overtime, since the man claimed he was struggling for money. The employee refused, since it would abate his WFF payment and why would he do that, when he could continue collecting the payment and NOT work?
@Colonial Viper. I would direct you to the socialist utopia of Greece. Didn’t they do well?
@IVV
Salient point re WFF but this will always happen in certain instances when a person is on the boundary of an income band. The same could well be said for taxation boundaries and the opportunity cost of breaching that threshold, particularly given that WFF could be considered a tax rebate.
Re Greece – their problem was more one of tax evasion being a national pastime and political opportunism/corruption/nepotism being the order of the day rather than specifically solialist in nature.
@Gregor. I think it happens more than most people think. This is not the first time I have heard of it.
Greece. To say their issues are related to tax evasion is perhaps, a bit of a broad brush. Try exports of $1878m and imports of $4439m. A population that have demanded and been given handouts to give a better standard of living. Handouts which the government have borrowed to pay.
And also, my understanding is, the tax evasion to which you allude, was in the main, perpetrated by government employees who were not chased down by the Greek version of the IRD.
@ IVV
I think we are agreeing but from slightly different angles re Greece.
What I meant to suggest is that Greece couldn’t sustainably support the lolly scamble without first collecting the taxation to distribute from a functioning economy. They failed to do that and as you state, were compelled to borrow.
We know the rest.
But this doesn’t make it an issue of ideology or socialism – it makes it an issue of competence and good goverance.
But this doesn’t make it an issue of ideology or socialism – it makes it an issue of competence and good governance.
Well lets tie it together, Gregor, by saying that socialism is economic incompetence and always bad governance because it relies on the coercive State enslaving the individuals in it.
@Gregor.
I understand what you are saying Gregor, but Socialism is about redistribution. I may be the one painting with a broad brush here, but essentially, the Pan Hellenic Socialist Movement gave to the so called “poor” (redistribution) and then ran out of other peoples money.