Wednesday, 23 May 2012

It’s the 1 percent who pay your wages, people

The Herald reports:

A campaign has been launched for a "living wage” in New Zealand, inspired by policies in United States cities and London.

In New Zealand, Labour Department research shows that 103,800 workers under 25, and 161,000 aged 25 to 64, earned less than $15 an hour in the year to last June.

The problem is, the campaigners are starting at the wrong end.

They want the effect (higher wages) without the cause (higher productivity).  So instead of wanting to increase productivity and empower business owners so they can pay workers more, they want politicians to throttle business owners and emasculate productivity .

Or to put it another way, instead of making life easier for the “one percent” they want to make it harder. And what they do not realise is that it is the highly productive and provident one percent who provides the standard of living of a largely ignorant and ungrateful ninety-nine percent.

What they also do not realise, as they rant about worker need and employer greed, is the complete and utter irrelevance of worker need and employer greed in determining wages.

(They might also wish to contemplate the connection between this post here about the ability to pay higher wages, and the post below about emasculating our production of energy.)

I say “they” do not realise any of these things, but of course but they do—and by “they” I do not mean the largely ignorant and ungrateful thirty-nine percent* whose futures are being hocked off by those organising this campaign, I mean the campaign’s strategists themselvesI believe they do know what they are doing: they do know that raising labour costs without increasing productivity decreases employment.  They do know that wage levels are not set by either need or greed but by competition among employers to acquire the necessary talents with which to drive their productivity profitably forward—or in other words by the competition of the buyers for the limited supply of  labour offered for sale.:

The rational self-interest of employers, like the rational self-interest of any other buyers, does not lead them to pay the lowest wage (price) they can imagine, but the lowest wage that is simultaneously too high for other potential employers of the same labour who are not able or willing to pay as much and who would otherwise be enabled to employ that labour in their place…
    The payment of higher wages [when they are affordable] is to the self-interest of employers because it is the necessary means of gaining and keeping the labour they want to employ.

The key phrase here being  “when they are affordable.”

I believe the campaign’s strategists are not totally ignorant of these points. It’s not that they don’t know and don't care. They just don’t care about those they claim to represent—or at least they don’t care about those that are thrown out of work or excluded from working because their wages have been forced above what they are able to produce. And they don’t care because as far as they’re cynically concerned this is a “wedge issue” on which they have traction, so for them it’s just full-speed ahead and damn the consequences for those hundreds of thousands of young folk and marginal workers priced out of the market!

Damn them.

Because if they were serious about raising wages they would realise that to raise wages at the margins we have to do more than wish for it or legislate for it. They would realise we actually have to raise productivity right across the board. And if they did realise that they would not be seeking more ways by which to get government onto the backs and into the pockets of the productive, but the opposite.

I look forward to that happening no time soon.

* * * * *

* Add together young folk and marginal workers already priced out of the market because of the minimum wage to the even greater number who would be further priced out because of this so-called “living wage”—to which you can add those hundreds of thousands on other welfare because of the culture of malaise created—and imagine how many more could be employed if the productivity of this half-million sized cohort were producing rather than sponging, then you are talking about a sizeable number of New Zealanders whose lives would be squandered by this nonsense.


  1. Yes, raising the minimum wage is raising wages across the board.

  2. I'll thank my lawyer next time for paying my wages. He pays me right? He is part of the 1% after all...

    P.S. You're forgetting a significant number of people who employ a significant number of people by asking people to thank the 1%.

    If you take it back to fundamentals, effectively the only people in the world who actually could claim to be enabling the lifestyle of the 'ignorant' and that includes you are oil companies and their employees. 90% of what we call the economy is dependent on these people.

  3. I couldn't agree more with everything that you have written here, PC. Spot on!

    The key thing that you have pointed out is that we need to start PRODUCING MORE all across the country, and until we do that, any moves to make employers give workers more money will only stuff up our economy more and make a living wage for almost everybody an impossibility in the near future.

    Actually, when one considers productivity over the economy as a whole, its most likely that our high wages (relative to, say. China) are one of the reasons that our productivity has declined.

    Companies simply cannot pay at the same rate (let alone more) unless they start making and selling more overseas. Businesses are failing, declining and stagnating. Where the fuck do these people think the money comes from?

    Dave Mann


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