Sunday, January 31, 2010

Balanced policy for the minimum wage

On Wednesday the government announced the smallest increase in the minimum wage in ten years from $12.50 to $12.75 (yay 25 cents!). Minister of Labour, Kate Wilkinson, and Business NZ Chief Executive, Phil O'Reilly, claim this is in line with inflation and reasonable enough to not price unskilled workers out of the labour market. But, understandably, Labour and the unions are calling the increase "miserly" and want it raised to at least $15. Opponents of the minimum wage argue that would price unskilled workers of the labour market as employers would choose skilled workers at the same price. Increasing the minimum wage is something that has arguments for and against but I've got a policy that should satisfy everyone.

The minimum wage should be increased to $15 to keep up with the cost of living. But I also understand that this would make unskilled and inexperienced people who aren't worth that much unemployable. So I think businesses (or at least small businesses) should receive tax credits (or at least some other form of compensation) so they won't feel like they're taking too much of a risk in hiring people who aren't as skilled. There should be give and take from both sides. If businesses are going to be forced to pay more for hiring someone they should get something back to compensate. You can only get at least the minimum wage if you've got a job so, if you're competing for a minimum wage job with someone who's more skilled and got more experience, then the other person would probably get picked over you. Giving tax credits to offset the increase in the minimum wage should balance things out a bit. Workers should be paid enough to survive on and not be oppressed but this doesn't mean businesses should be punished. Not all rich people and businesses are huge mean corporations that oppress and stomp on workers just like not all poor people and beneficiaries are lazy dole bludgers that just want to stay on welfare. Small businesses don't have endless pits of money so they don't want costs increased for no reason. If they can't pay less than $15 an hour for someone then they wouldn't want to take a risk with someone who's not worth that much. It's all about balance!

Anyway, that's the main idea. So what do you guys think? I know I haven't figured out all the numbers and practical stuff yet but the main idea is about balance - if you're going to increase compliance costs in one area you should decrease compliance costs in another. Your feedback, comments and opinions below are always welcomed. Give me your suggestions as to how my policy can be implemented (if at all!).

1 comment:

  1. Hamish your writing strikes a cord in my heart! Let loose the fire of truth!

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