[New Zealand] Focus should be on lifting the median wage

Although only 4.2 per cent of working New Zealanders earn the country’s minimum wage, its rate receives a lot of attention. New Zealand’s current hourly minimum wage stands at $18.90 but it is set to increase to $20 in 2021. A report from the NZIER and the Helen Clark Foundation called for a further raise so the minimum matches the living wage of $22.10 an hour. The report claimed such an increase would lead to better worker productivity.

In response, The New Zealand Initiative reportedly argued there was no evidence that better pay automatically meant more productive workers and insisted that the Government should look to roll back this year’s increase. There is plenty of debate on what the “right” minimum level is but a Stuff opinion piece suggests that the focus may be on the wrong issue and that the median wage deserves attention too.

The minimum wage is about three-quarters of the median wage. StatsNZ put the median - the point at which half of New Zealanders earn more and half earn less than that amount - at $27 an hour in June. Such a median income is relatively low by international standards while, relatively speaking, the minimum is not.

Significant increases in the minimum wage year-on-year bring it increasingly closer to the median. Those earning lower rates of pay are experiencing much faster wage increases than other workers. Rather than only focusing on pushing up up the minimum, the piece proposes that the focus should be on what is needed to bring the median up, too. Stuff looks at how this can be achieved.

Although only 4.2 per cent of working New Zealanders earn the country’s minimum wage, its rate receives a lot of attention. New Zealand’s current hourly minimum wage stands at $18.90 but it is set to increase to $20 in 2021. A report from the NZIER and the Helen Clark Foundation called for a further raise so the minimum matches the living wage of $22.10 an hour. The report claimed such an increase would lead to better worker productivity.

In response, The New Zealand Initiative reportedly argued there was no evidence that better pay automatically meant more productive workers and insisted that the Government should look to roll back this year’s increase. There is plenty of debate on what the “right” minimum level is but a Stuff opinion piece suggests that the focus may be on the wrong issue and that the median wage deserves attention too.

The minimum wage is about three-quarters of the median wage. StatsNZ put the median - the point at which half of New Zealanders earn more and half earn less than that amount - at $27 an hour in June. Such a median income is relatively low by international standards while, relatively speaking, the minimum is not.

Significant increases in the minimum wage year-on-year bring it increasingly closer to the median. Those earning lower rates of pay are experiencing much faster wage increases than other workers. Rather than only focusing on pushing up up the minimum, the piece proposes that the focus should be on what is needed to bring the median up, too. Stuff looks at how this can be achieved.