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What is a Living Wage?

The campaign for a living wage has once again come to the fore as a result of the on-going contest amongst David Cunliffe, Shane Jones, and Grant Robertson for leadership of the Labour Party, with both Cunliffe and Robertson throwing their support behind the idea for government workers and contractors. 

We in New Zealand first heard of a “living wage” last year, when a grass-roots campaign was begun by a coalition of unions, community groups, and faith-based organisations. Early this year, the group published their findings as to the wage rate that would be required in New Zealand for a family of four—with two working adults, one working 40 hours/week and one working 20 hours/week—to live decently and to participate actively in society: $18.40/hour, or $4.65/hour more than the current minimum wage.

Living wage campaigns are an international phenomenon, especially in Western, democratic societies. They seek to highlight the plight of the working poor—those earning the lowest wages, often for menial, low-skill work—and to encourage all of society—government, private employers, and communities—to take responsibility for ensuring that any person who is willing and able to work is paid a wage that allows them to live with dignity.

The campaigns both here and abroad have noble intentions and noble aims, and they do a great service in offering the public a vocabulary for discussing the important issue of how we all value each other’s labour contributions. However, we should not be hasty in accepting the goals of the campaign without thoroughly vetting the assumptions underlying it and determining whether the proffered solution is the one best able to meet the highlighted issue.

For instance, it is likely that many of those earning less than the suggested living wage may not be living in hardship or part of the working poor at all. They may be teenagers living in middle or high-income homes; single adults with no family responsibilities; or men or women living with a higher-earning spouse or partner. A recent study has shown that this is the case in Britain, and labour statistics for New Zealand indicate that it may well be the case here as well. Paying these people a living wage would mean more money in their pockets, but it wouldn’t do anything to help the working poor. In fact, it may hurt the working poor as employers trim their employment rolls to make up for the higher wages they would have to pay.

Now this doesn’t necessarily mean that a living wage is a bad idea, just that it is not a panacea for the ills and woes of those who do struggle to get by and to raise a family on low wages. We should be discussing whether or not some employers should be paying some of their employees higher wages for the work that they do. We should be thinking about how we as a society can ensure that those who work hard can have something to show for it. And we should be considering what wage rate it takes different people and different families to live decently and to participate actively in our society. We just shouldn’t expect for all of these discussions, thinking, and considering to come to one neat conclusion.

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