• The Living Wage

    An American friend once shared with me the answer she had given to her family back home who wanted to know why she had decided to settle in New Zealand.  “Because,” she had said, “in New Zealand, there is enough for everyone.”

    Little wonder, then, that many New Zealanders are increasingly puzzled about the extent of poverty in our country, particularly as it affects children.  If asked as to what causes poverty, most would reply that unemployment, illness, and the cost of housing are the principal causes.

    Those are certainly major factors, but they fail to take account of another important issue – and that issue is low wages.  Many people may be unaware that “the working poor” are an important aspect of poverty in our society.

    A family whose principal or only wage-earner is paid at the minimum wage level will almost certainly be struggling to keep their heads above water.  The fact that a minimum wage is necessary is in itself a recognition that the market – left to itself – will not automatically deliver to a hard-working and full-time worker an income that will support a family at a decent level.

    Our new government has taken an important step by lifting the minimum wage to its current level of $16.50 per hour; that increase will certainly help to ease the problems faced by many families, particularly those with small children.  But even that increased minimum wage is not enough to lift a family out of poverty; accordingly, the government’s stated goal is to lift the minimum wage in due course to the level of the “living wage”.

    The “living wage”, currently set at $20.55 per hour, represents a level of income that would alleviate poverty in most families.  No employer is compelled to pay the living wage, but employers, in both the private and public sectors, are increasingly volunteering to pay their employees the living wage as a minimum.

    It might be thought that paying an hourly wage that would allow a full-time worker to earn enough to provide his or her family with the necessities of life should come easily and naturally to most employers, particularly in the public sector where the claims of private owners and shareholders to maximise profits might be less pressing – and it is indeed the case that some public sector employers have already undertaken to pay the living wage.

    Wellington City Council, for example, have taken this step and have been willing to face down some of the obvious objections, particularly to the effect that they were being irresponsibly generous with funds provided by their ratepayers.

    It is also objected that paying a living wage to those currently paid less than that is only part of the story, because the need to maintain relativities would mean that other rates would also have to be raised.  It is of course true that some flattening of relativities is implicit if bottom rates are raised but that is surely a small price to pay for reducing avoidable poverty.

    Tauranga City Council is now being urged by the city’s excellent campaign organisation, Closing the Gap, to follow Wellington’s example.  If councillors agree, they will have to be ready to justify such a decision to their electors.  It might be hoped that they will have the moral fortitude to explain that paying a living wage is not an act of generosity or imprudence, but a proper recognition of an employer’s responsibilities and a significant contribution to our health as a society.

    And it might be further hoped that Tauranga ratepayers would support our councillors in choosing not to have essential services subsidised off the back of, and at a cost to, wage-earners who – despite their working a full 40-hour week – are paid so little that they cannot manage to keep their families above the bread line.

    Those who are genuinely concerned about children growing up in poverty, and the damage it does to the individual life prospects of those children, and to the health and integrity of our society, should make their views known.  A council elected to reflect the values we hold should surely be confident that those values require that those working for us (and their children) have enough to live on.

    Bryan Gould

    21 June 2018


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