The Living Wage Is A Joke

Richard Meadows has a very good look at the living wage.

We can safely conclude that the Living Wage is a bad idea, and that universal tax cuts are a poor way of targeting support.

The grey area is where that targeted support should go: Only to poor families? To middle-class families? What about the childless poor?

If we choose families, we’re essentially paying to have more children running around the place, as well as (hopefully) a better quality of life.

Crampton says he simply can’t say whether it’s better to take money from childless people – both rich and poor – and hand it over to low to middle income parents.

Economists can talk about the trade-offs involved and the likely effects of the policy, but moving beyond that becomes a value judgement, he says.

Matt Nolan over at TVHE and Eric Crampton of the University of Canterbury contributed some economic analysis to his reporting, and in an unusual step for a Fairfax paper actually linked to stuff instead of not using hyperlinks in 2014.

Treasury’s analysis of the issue last year was good. Stephen Franks drolly points out some interesting issues around the living wage.

My take is that the living wage is a joke. In their own report the boosters of this idea say they aren’t talking about raising the minimum wage – they say the living wage is a “market wage” which makes me think they have no idea what they are talking about.

Some misunderstanding has developed about the notion of a living wage as the New Zealand
public has engaged with it more over the last year.
While most people are familiar with perspective
in the definition that basically refers to families
living modestly but comfortably, there are others
who reduce it to having only the basic necessities.
This latter view tends towards a notion of the
deserving poor who may qualify for basic necessities, but not live with dignity and participate as
active citizens in society. Unfortunately the New Zealand Treasury (Galt and Palmer 2013) and
others (Scott 2013, Young 2014) fell into this trap
.

What are they trying to say here? That anyone who earns less than their made up number per hour can’t live with dignity and participate as an active citizen in society? Do they realise how insulting that is? Do they realise they’re basically raising the middle finger to a significant proportion of New Zealand workers?

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