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Of minimum wages and living wages

I talked about minimum wages and living wages on the Sunday Morning panel at Radio New Zealand this weekend. The audio, and a summary, are here.

In short, the minimum wage is poorly targeted if the point is helping those in long term low-paying jobs: far too many minimum wage workers are in higher decile families. The burden of the minimum wage is borne not only by the employers of minimum wage workers but also by their customers, and by those minimum wage workers who lose their jobs or who get fewer hours when the minimum wage is hiked.

We have a policy targeted at low-income working households supporting children: Working for Families. The burden of that policy is primarily borne by high income households, and those without children. If voters want to support low income workers with families, Working for Families is the better way of doing things.

I provide all the wonkish background here.

About Eric Crampton (88 Articles)
I'm Head of Research with the New Zealand Initiative.

1 Comment on Of minimum wages and living wages

  1. Kia ora

    I listened to the panel and I am now reading up on more of your opinions to do with the living wage. As a low income earner who has been stuck in precarious work for over a decade, I think a living wage is something alot of low income earners would benefit from greatly both economically and personally. When you pay workers a decent wage we come to work happier, there is less staff turn over which saves money for the employer. I get a bit tired of academics speaking for the working classes without at least allowing us the space, to speak for ourselves?


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