Sunday, January 31, 2010

Frank Newman: The Minimum Wage

The government last week announced an increase in the minimum wage from $12.50 to $12.75. Of course the Greens condemned the increase as inadequate (they and their union comrades wanted it increased to $15).

One can understand why anti-business activists are calling for an increase. There is some (albeit minor) legitimacy in their argument in that there is a minimum amount a working person needs to earn to survive. But here’s the question: Why should the employer take the role of a welfare agency by paying a person more than they are worth to the business? If the government wants workers to have a minimum income level then they should provide it through the tax or welfare systems.

Or is it that the government does not trust employers to pay their staff a fair wage, and everyone regardless of their abilities or inabilities is worth $12.75 an hour?


Dianna said...

Exactly so Frank. If you want to be paid $15 an hour, then you must first earn $15 an hour. That is the part of the wage equation that all the socialists and communists never mention. Of course socialists and communists, especially the chardonnay variety we breed so well in NZ, have never actually learned where money comes from. If you asked them where money comes from they would in all probability reply, Mummy and Daddy when you are young and after that the Government.

Businesses in New Zealand are faced with so much stupid regulation that simply costs money without producing any value, forced to pay for Lawyers and Accountants who demand $150+ an hour and who are worth practically nothing ... their only use being to protect the business person from the plethora of convoluted legislation that creates a negative value, that has been promulgated by communists and socialists. Based on such foundations, it's a great wonder that New Zealand is still afloat as a "viable" entity at all. And I guess as we approach the endgame for our country both racially and financially, if we stay our present course, things look pretty bleak for ordinary New Zealanders.

I agree entirely that in the current environment it is impossible to live on $15 and hour. So here is the plan.

Remove all legislation that is on the books to protect the stupid from themselves. This would include stuff like swimming pool fences and everything associated with that legislation, most health and safety regulation and all the surrounding legislation, most of the resource management act, all of the Treaty of Waitangi industry, most of the inland revenue department, most of the traffic department, all of Womens affairs, all of Race Relations, most of Human Rights legislation, etc etc etc. That way we would cut at least half of our Government expenses and enable businesses to flourish and people to be paid what they are worth.

Of course we would need to knock back most of the salaries in the upper echelons of the Public Service. Chop them all in half at least and in some cases down to one quarter of what they are, and progressively trim the tree all the way down until we get to about 3 layers from the bottom. The reason being is that most public servants create no positive value. Ah so much to be done to get New Zealand back on track ... :)

Frank Newman said...

Thanks for that Dianne. You are right that many of those who promote socialist ideals have no appreciation, nor care, of business and how little most business owners make - in many cases the owner makes less than an employee. They also seem blind to the fact that in competitive industries the profit margins are very thin, and getting squeezed by politicians intend on having business people pay for the welfare of others (eg forcing employers to pay four weeks leave instead of three). The only businesses that are doing well are those "protected" from competition (eg lawyers).

James said...

Why do the socialists stop at $15 an hour, why not $25, or $50? Heck, if we just legislated a minimum wage of $100 an hour we would all be rich, wouldn't we?

I am not sure if the Labour/Green/Unions have never heard of the concept of productivity (i.e. genuinely stupid), or whether they are simply pretending it doesn't exist in order to attract the segment of the voting public who themselves have never heard of productivity (i.e. dishonest).

Dave Winefield said...

This whole issue raises the levels of support already being given by the Government to "chosen" areas of the workforce. The step taken by the Clark Socialist Government to provide a Family Wage contribution is already warping the wages paid to workers. If, by paying a worker say $40000 per year, this can become an effective payment of say $45000 because of the addition of the welfare scheme contribution for the Middle Classes, why would any employer disturb the arrangement to pay out more.

Interference by the Government, whether through the tax system, or through demands for a Minimum Wage only distort the whole system of wage and salary payments.

The best place for the Government in terms of wages is on the sideline. Encouraging where needed, but basically as a silent supporter of an active and responsive market forces economy.