Friday, January 03, 2014

Living wage critique

I posted earlier some opportunity cost examples Brian Scott provided in his critique of the living wage calculations. Kiwiblog has now linked to his full published report.

Brian Scott has published a critique of the so called Living Wage, and it should be compulsory reading for any politician that has treated the calculations done by Rev Waldegrave as a fit basis for public policy decisions. It is quite legitimate to have a view that wages should be higher, but to insist that the correct level is that calculated by Rev Waldegrave is a surrender to symbolism over substance.
The key findings by Scott are:
  1. Only 12% of low income households are two adults and two dependents, which the Waldegrave calculation is based on
  2. They assume you need 10 hours of childcare a week, even if the children are aged over 14
  3. They calculation of level of “basic necessities” is not based on any empirical measurement of the lowest cost of necessities, but merely a proportion of the average expenditure in deciles 1 to 5 (this one is key – it is a calculation based on the Browns should be spending as much as the Jones, and is not a caculation on how much income the Browns need)
  4. The calculation doesn’t account for some sources of household income such as trade-ins, sales, teenagers income (yet does include their costs) and school donation tax refunds
  5. The calculation double counts some expenditure such as childcare costs
  6. The calculation includes as a basic necessity costs such as Sky TV, pets, international travel and video games
  7. The calculation includes insurance for dwellings and mortgages, despite assuming they are renting


Anonymous said...

No all we need is a half-way competent economist to point out what every business-owner and every job-creator in NZ knows:

that wages are far too high in NZ, not too low!

OlderChas said...

So - will my NZ Superannuation be adjusted so that I can get Sky now?
Oh - and a trip to some exotic South Seas island once a year would be nice too!

ZenTiger said...

Irrespective of who pays, there would be a minimum level of income needed to pay the bills, although that minimum is hard to calculate as a general rule as every situation is different.

The sentiment is that you need to be able to earn enough to support your family.

There are left and right wing approaches to solving that problem, but it is a problem that does need to be solved.

Anonymous said...

There are left and right wing approaches to solving that problem, but it is a problem that does need to be solved.

No it is not a "problem that needs to be solved".
There are no "right wing approaches" to that non-problem!

The common-sense solution - no doubt you'd called it "right wing" - is simple: don't have children you cannot afford.

People who cannot afford children: cannot afford to feed, clothe, house, educate, defend in court, and provide all necessary medical care - without in any way relying on the "state" (really the 10% of Kiwis who are nett taxpayers, and who pay all the tax for everybody else) -
then you don't deserve to have children

It's as simple as that. Non-problem solved.