Point of Order: Buzz from the Beehive - 17/12/24

Simply subtract ACC from ABEGAL and add an x for the Christmas miracle of a surplus (but not for a few more years)

Finance Minister Nicola Willis put a brave face on things – aided and abetted by the deft application of accounting cosmetics – after the publication of the Half Year Economic and Fiscal Update this afternoon.

David Farrar: The worst Employment Court decision ever

The Court of Appeal has overturned a decision of the Employment Court which was arguably the stupidest judicial decision in recent times.

Basically the Employment Court had decided that the minimum wage laws set a fortnightly minimum wage, not an hourly minimum wage and that part-time staff had to be paid a minimum wage of 80 hours a fortnight, even if they only worked one day a fortnight.

Heather du Plessis-Allan: We've got high minimum wage and low productivity

Brad Olsen was on the show late in the Business Hour yesterday arguing the Government had to hike the minimum wage by a full $1.50 yesterday.

Because it had to be in line with the annual inflation rate.

If you look at the minimum wage in the isolation of one year, yes that’s an easy trap to fall into.

But you have to look at the minimum wage over the duration of the last six years of this Government. 

It has gone from $15.75 to $22.70.

That’s a $7 increase in six years. That’s 44 percent. 

Hands up, who else got a 44 percent pay rise in the last six years?

Jon Miltimore: The Costs of NYC’s $15 Minimum Wage Are Already Visible

New York City’s minimum wage jumped more than 15 percent overnight on January 1, and employers are already cutting workers’ hours as a result.

CBS has the story.

Hans Bader: How a Minimum Wage Hike Wiped Out 40% of Venezuela's Stores

A large minimum wage increase in Venezuela has dealt a “fatal blow to 40% of Venezuelan stores,” reports the Miami Herald. The increase has closed many stores and left employees jobless. Venezuela’s government ignored the most basic law of economics in raising the minimum wage: the law of supply and demand. But laws don’t go away just because you ignore them.

The job losses will rise in the coming weeks because even “some of the stores that did [remain] open are simply liquidating their merchandise and plan to close definitively when that’s done.”

Richard Epstein: The Way Forward in Bangladesh

Its hard-working people have suffered far too long under the weight of its bankrupt public institutions.

The death toll from the recent collapse of Rana Plaza, a garment factory in a suburb of Bangladesh’s capital, Dhaka, is still climbing. The Rana Plaza catastrophe comes on the heels of a smaller Bangladesh tragedy at Tazreen Fashions that claimed the lives of 112 people in 2012.

Reuben Chapple: Poverty Pimps

The usual bunch of economically illiterate poverty pimps recently hit the headlines demanding an $18 - $20 per hour “living wage” based on what they claim people “ought” to be paid. They do not say how this is to be accomplished, but above-market wages can only be achieved by government intervention: either legislating a higher minimum wage, or by raising taxes on those who have earned their money, in order to transfer it to those who have not.

Richard Epstein: Curing the Unemployment Blues

One of the enduring faiths of modern progressive thought is that omniscient policy makers can cancel out the errors of one form of economic intervention by implementing a second. That lesson was brought home to me when I was a third year student at Yale Law School, whenever discussion turned to the perennial debate over the minimum wage.

The charge against the minimum wage was that it had to introduce some measure of unemployment into labor markets by raising wages above the market-clearing price. “Not to worry,” came the confident reply. The way to handle that imperfection is to raise the level of welfare benefits in order to remove the dislocations created by the minimum wage. If one government program had its rough edges, a second government program could ride to the rescue. Implicit in this argument was the tantalizing, but fatal, assumption of economic abundance: The government has the power to tax, and with that power, has access to a cornucopia of public funds that never runs empty—at least until it does.

Roger Kerr: Are Warnings About Minimum Wages Dickensian?

Responding to a recent article of mine on minimum wages, a correspondent to the ODT wrote, “Reading Roger Kerr’s position on the minimum wage I am left wondering if he is a real person or a character from a Dickens novel.”

My article warned of the dangers of legislating for minimum wages above market rates, and discussed the devastating effects of the abolition of youth rates. I decided to regard the feedback as a challenge: how does one get across the potentially harmful effects of minimum wages to those who see them as self-evidently beneficial?

Roger Kerr: Minimum Wage Claims Make Minimum Sense

The Labour Party is promising to increase the statutory minimum wage to $15/hour (from its present level of $13/hour, an increase of over 15%) if it forms the next government. The announcement gave rise to the usual range of claims and counter-claims. Prime Minister John Key said that “if anyone thinks we can just magically increase the minimum wage with no implications for the labour market or costs to employers, they don’t understand basic economics.”

Labour leader Phil Goff argued that unemployment went down, not up, when the last Labour-led government hiked minimum wages, and that the increased spending power of workers would grow the economy. 

Some simple tests help us to evaluate these claims.

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?