There's a morbid part of me that wishes the thing would be implemented as a minimum wage - the resulting substantial increase in unemployment would do a good job of settling certain empirical debates about the effects of minimum wages. I don't really want it implemented: some data points are just too expensive to acquire.
But wait, there's more!
Other key points in the Treasury information release:
But wait, there's more!
Other key points in the Treasury information release:
- The group that produced the $18.40 figure based it on what would be needed to sustain a family of two adults and two children. Treasury notes that families with two adults and two children make up only 6% of families currently earning below the $18.40 living wage. Three-quarters of families earning below the living wage have no kids; sixty-three percent are single adults with no dependents. Twenty-nine percent of low-earners are in families with family income greater than $60,000.
- After taking into account abatement of income-tested benefits for those with kids, the living wage would do far more to subsidise those without children. The biggest benefit would go to families with two low-earners with no children, conditional on both of them keeping their jobs.
- The proposed living wage is just shy of the median wage. Employment effects are then likely to be large: MBIE reckoned 25,000 job losses. We would also expect reductions in staff benefits and reduced hours.
- If the goal is to improve outcomes for low-earning families with young children, it is better to consider some mix of:
- Shifting WFF towards parents with younger children
- Targeting ECE subsidies more strongly (I agree entirely; see here)
- Fix benefit abatement rates to encourage 3-5 days of work;
- "Making our system of service interventions for children aged 0-5 years more focused and integrated."
- The policy would further hinder manufacturing.
- Minimum wage increases have substantially outpaced CPI but have not helped increase average wages; we shouldn't expect this hike to do better.
- We'd reduce the incentive to acquire skills because the policy would attenuate the returns to upskilling.
I love it when Treasury makes it very clear that some proposed policy is a very bad idea.
Previously:
