Richard Moore: Living wage may stop Kiwi exodus

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Hasn't the debate over a living wage for New Zealand workers touched a few nerves?

There are those who say it will send businesses bust if they had to pay more and productivity needs to be raised first - if it isn't, there will be massive job losses.

Then there are those who say it is iniquitous that people who work full time are still barely able to feed their families, let alone clothe and house them.

When we are on reasonable salaries and wages, we tend to forget the struggling times most of us have had in our lives. By we, I mean middle-class journos, business owners and lobbyists and, above all, politicians on their own little planet of self-importance.

I remember having to borrow £10 from a cousin when I was in London, otherwise I would not have been able to get to work for a few days before payday. Or trying to exist through a Melbourne summer in the mid-1980s without a fridge because my mid-grade reporter's income was not enough to pay rent, power, food and all that goes with a newborn baby, as well as a chiller.

You do manage for a short time, but you cannot sustain it for very long.

So what was the figure that a University of Otago put as being a living wage for a family of two adults and two kids? It was $18.40 an hour. The minimum wage at the moment is a paltry $13.50.

On $13.50 an hour you drag in $540 a week, less tax of about $84, or $28,080 a year. So you have a disposable income of $450-$460 a week. Take out rent of, say, $300 and you are left with $150 or so for power, food, running a car, clothing, school fees and uniforms.

On $18.40 you get $736 a week ($122.46 tax), or $38,272 each year. So after tax you have about $610 a week to do all of the above. Not easy, but much more manageable.

In America, studies have shown the two sides of the higher-wage debate at rival Warehouse-style operations. One paid its workers US$10 ($11.80) an hour, while the other gave its crew US$17.

You'd expect the lower-paying firm to be more profitable but, in fact, it was the other way around.

The company that paid its staff well had doubled the profit-per-employee ratio - $22,000 to $11,000.

It did so well because the people working there were dedicated, more productive and the staff turnover was way down.

The after-tax unemployment benefit is about $340 a week for a couple; that gets added to accommodation supplements of varying amounts from $85 to $160 a week. Not that much of a difference to a worker on a minimum wage who has the costs of either travelling to work or childcare.

Is $13.50 an hour an incentive to go to work?

It must be in Tauranga, because almost half of our residents have an annual income of $20,000 or less. That means half our city is in survival mode with no thought of spending any money in our already stricken retailing sector. And you can forget them heading out for a night in a restaurant.

Businesses must look medium to long term. If all workers on a minium wage get paid more, they will spend more - most likely in the local economy.

New Zealand, in my view, has two ways to go. It can bite the bullet, possibly with a government cash kickstart, and pay better wages. Or else it can wave goodbye to hopes of turning the future around as:

•More and more people sink into poverty and drag the economy down faster

•Fewer people buy or build houses, crippling another industry

•Employment rates in retailing fall through the floor

•The business sector collapses as people bargain down profit margins, buy online or cheap imports

•More and more productive young people flee to Australia or elsewhere, taking with them their future taxes while leaving the costs of their educations

My oldest boy, who is now 28, was walking with me up Devonport Rd the other week and as we stopped at lights, he said: "You know, I haven't seen anyone of my age here."

New Zealand is looking at a future where a generation, or two, is speaking with its feet.


***

Heading home from the movies, I went into the Durham St carpark about 9.15pm. The bottom floor was well lit but on the next two storeys, it was blacker than a moonless night in a coalmine.

Okay for me, but not for any unsuspecting woman who may be walking alone to her car at that hour or later.

I was told a council person had checked the lighting that evening and had said it would be all right.

Well didn't he certainly earn his pay ...


***

Man, weren't those powerboats an amazing spectacle on Tauranga Harbour at the weekend.

Racing along at huge speeds ... hope they didn't hit any black swans.

richard@richardmoore.com

- BAY OF PLENTY TIMES

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