The minimum wage is better; benefits are not

New Zealand now has a minimum wage of $20 per hour.

That's better than it was, by quite some margin. When Labour took control of the treasury in 2017, the minimum wage was $15.75.

That's a 25% increase in 3 1/2 years. Strangely it was a major part of NZFirst's coalition agreement with Labour that has seen it go up so much in such a short period of time. So, thanks Winston?

If you worked 40 hours a week on the minimum wage, your pre-tax income is a tick under $50,000. Putting aside the fact that so many of those on minimum wage are shift workers who can't guarantee 40 hours a week, those who do earn a pretty good amount.

Back in late 1999, I got a job pumping petrol at BP for $4.75 an hour.

However while the minimum wage has gone up at a reasonable clip, the same cannot be said of the "jobseeker" benefit.

As of April 1 this year, that benefit went up so that if you're a single renter on the benefit, you'd get $355.49 per week after tax. That works out to be less than half what someone on the minimum wage earns.

Now if we think that the minimum wage is the absolute bottom that a worker should be earning so they can survive, then surely the benefit should be a lot closer to it than half. Otherwise, what are we saying about those people who aren't working. That they don't deserve to be able to live?

Economists and people that describe themselves as "taxpayers" will argue that there needs to be a gap between benefit and minimum wage, to encourage people to work, and that might be true (I'm not convinced though); but even so. Less than half?

I'm no fancy pants econometrician, but I'm told that increasing the minimum wage quickly also can drive inflation, which makes the benefit even worse, comparatively.

Nice welfare safety net you got there New Zealand.

All these decisions - to increase the minimum wage, to leave the benefit amount well below poverty levels - are conscious decisions being made by politicians. They are choosingto make people destitute.

Report after report in the media has painted a rosier picture than expected. Higher tax takes, lower expense etc. All these things that mean there is more to spend than expected (yes, I'm aware we're just in smaller deficits than expected), we often hear the refrain that we need money left over for a "rainy day", as though people living on the streets, or people not being able to buy enough food for themself is not a rainy day.

I absolutely agree that we need to create an environment where people can get work, it’s why I’m a fan of a Jobs Guarantee over a UBI (my reasons for not being super into a UBI are a post unto itself), but if we don’t do that, we need to at least make sure those who aren’t in work can live.

My guess is the fear of political fall-out is what stymies Labour from doing radical change to our benefits. That if we suddenly started paying people without work a reasonable amount to live then we’d see article after article, column after column, bemoan that New Zealand has become a country of “bludgers”.

And yet, who are the real bludgers?

Are they the people who get miniscule government handouts because they do not have much money? An amount that was designed to be less than what you could afford to live off. An amount that is completely returned into the economy through living hand-to-mouth. Or is it the people who don't seem to understand the transactional nature of society? Who hoard their money in overseas accounts, or spend money on foreign goods and holidays?

These are the people who hide their incomes away or exploit loopholes, so they pay less tax than they should. The corporations who do creative accounting and show that they made zero profit here in New Zealand so effectively pay zero tax.

This group will still quite happily take what the state has to offer, healthcare, infrastructure, roads - big Government bailouts if it comes to it - but to hell with the state when it comes to paying back. Even beneficiaries pay tax on their meagre incomes. Seems like we're calling the wrong people "bludgers". And also focusing advantages on the wrong people.