Sunday, May 27, 2012

Subsidising a low wage economy

The Living Wage campaign has been getting a few headlines, which equates to it copping some flak from right-wing bloggers.  DPF's take on it is that it's unfair for the media to assist the Living Wage campaign by highlighting how tough some families have it, because those families are supported by the social welfare system as well as by their wages.  The argument is that these people aren't suffering deprivation due to NZ's low wages, because the taxpayer comes to their assistance via the family tax credit, state housing etc.

Which is severely fucked up when you think about it:

1. The fact that people on low wages only have enough to live on courtesy of the social welfare system highlights our low-wage status far better than the exodus to Australia ever could.

2. Support for people on low wages via the social welfare system constitutes a taxpayer subsidy to low-wage employers like cleaning companies.  The reason taxpayers are topping up workers' wages is basically so that they won't find unemployment benefit more attractive than the shit pay they're getting and stop working.

3. That subsidy helps reduce upward pressure on wages, ie it has the adverse economic effects subsidies tend to have.  I know right-wingers tend to look on low wages for the working class as a Good Thing, but if you don't see the benefit of upwards pressure on wages over the last 150 years you want your head read.

Support the Living Wage campaign and help us reach the point where we can end these damaging subsidies. 


Redbaiter said...

The reason there are poor people in NZ is because there are too many who think like you Milt.

That many of NZ's citizens suffer from an ignorance of reality coupled with a blind devotion to the destructive tenets of socialism is a fatal disease that is dragging us all down down down.

Big Bruv said...

Milt. I clicked on that link, the first pic that shows up is of a family with seven kids.

Seven bloody kids!...why the hell should employers be forced to fund the lifestyle of people who have more kids than they an afford.

The living wage campaign is simply another example of lazy bastards wanting more money for doing stuff all.

Lindsay Mitchell said...

The party who reaps the benefit from labour is the employer, so he should be paying the worker - not the taxpayer. But we can't go back to the state setting wage rates. That was a recipe for constant dissatisfaction and strikes. Employers have to voluntarily lift wages and I am sure a good many could, especially with some tax relief. Then we can get rid of distortionary subsidies like WFF, accommodation supplement, etc.

Tinman said...

I agree Milt, ALL wage subsidies (WFF etc.) should be scrapped immediately.

Workers can then demand the wages they are worth and simply not work the low paying jobs if they deserve more.

... or is that not what you meant?

Psycho Milt said...

Redbaiter: thanks for clearing that up.

Big Bruv: they could just as easily have shown a family with two kids. The question is whether the principle of the campaign is a good one, not whether they're running the campaign in a politically savvy way.

Lindsay: employers voluntarily raise wage to about the same extent workers voluntarily accept worse conditions - ie, only under exceptional circumstances or due to pressure exerted through employment contract bargaining. The minimum wage is the only thing holding wages at the crappy level they are now.

Tinman: no, social Darwinism isn't what I meant, although I know it's what right-wingers such as yourself would love to see.

Looking at it in strictly objective terms, what you're suggesting could work, but only if we actively prevented employers bringing in Third Worlders to compete wages downwards. In reality though, how it would work is that cancelling those subsidies would result in those affected electing a govt willing to guarantee them a full time job will pay enough to live on, which is hardly in right-wingers' interests and pretty much why National isn't doing it.