The Government says setting the minimum hourly pay at $18.40 - the level campaigners argue is a "living wage" - would cost 26,000 jobs.
Prime Minister John Key was asked about the new minimum wage of $13.75 and calls for a living wage of $18.40 during question time in Parliament yesterday.
Mr Key gave his Labour Minister, Simon Bridges, the task of responding on his behalf.
Mr Bridges would not say if the new minimum wage of $13.75 was enough for families to live on.
He said there was a range of packages available for people on low wages and the minimum wage was one of the highest in the developed world.
Labour's spokeswoman on labour issues, Darien Fenton, asked why, if $13.75 was sufficient, two out of five children living in poverty came from families in work.
Mr Bridges said having a job was better than not having one.
"We are very conscious, unlike the other party, which does not seem to understand economic fundamentals, that the higher we raise the minimum wage, the more people are put out of jobs - 7000 under your policy," Mr Bridges replied.
Mr Bridges on Tuesday announced a 25c increase to the minimum wage. Labour has called for $15 an hour and the Maori Party $16.
Mr Key had previously rejected a movement to introduce a voluntary living wage of $18.40 a hour. Yesterday, on his behalf, Mr Bridges said that would cost 26,000 jobs.
He said such an increase was simplistic for two reasons - "because the Family Centre's living wage of $18.40 an hour is calculated on the basis of a two-adult, two-child family, whereas a lot of low-income earners are in different circumstance.
"The second reason is that it assumes that paying much higher wages is costless, when it is not - it costs jobs."
Maori Party MP Te Ururoa Flavell said income inequality had widened in 30 years and increasing the minimum wage would be a significant step in reversing that trend.