Call for $25 minimum wage

A high-profile poverty advocate has called for the minimum wage to go up to $25, saying there's no evidence it'll result in job losses.

But ACT's David Seymour says "basic economics" suggests that's not the case. 

The minimum wage is set to rise to $18.90 in April, up from $17.70. It's the second $1.20 increase in a row.

But Ministry of Business, Innovation and Employment advice provided to the Government suggests the increased costs on business will result in approximately 6500 fewer jobs being created in 2020. 

While Seymour says it would be "churlish and cruel" not to be happy for those getting a pay increase come April 1, it's "not so great for the most vulnerable people who need a start, who need a leg-up".

Those people, employers will say 'look - we would give you a chance... we can't do it'," he told Magic Talk on Monday. "That's the real human tragedy - this policy hurts the exact people that most need the help."

Supporters of the increase - such as Finance Minister Grant Robertson - believe the added income for those at the bottom gets spent on essentials, stimulating the economy and providing growth, which results in more jobs. 

Mangere Budgeting Services CEO Darryl Evans agrees, saying when you pay people more, productivity goes up.

"I have no issue with it," he told Magic Talk. "Over 240,000 people will be better off. Surely all Kiwis want a fairer New Zealand where everybody has the ability to keep a roof over their children's heads, enough income to keep the power turned on - especially over the winter months - gas in the car to get to work and take the kids to school."

He said research by the Salvation Army suggests after paying the bills, a family of four on the minimum wage is left with about $39 a week to buy food. 

"You and I both know you can't raise a family, especially in the cities like Wellington, Auckland, Christchurch, on $17.20 an hour. You'll still be struggling on $18."

David Seymour.
David Seymour. Photo credit: Newshub Nation

Evans said while it won't happen "anytime soon", he's pushing for a minimum wage of $25 - that's well above the $21.15 Living Wage Movement Aotearoa says is necessary to live a dignified life.

The MBIE analysis said a $21.15 minimum wage would result in 30,000 fewer jobs, but Evans said there was no actual evidence to suggest that's true.

"I've never seen large-scale job losses. I run a not-for-profit charitable trust and of course, I have to pay minimum wage and I'll have to find the money for the increase in the minimum wage. If I can do it as a very small charity based in Mangere, then big businesses - or even small businesses - should be able to do it."

Under Sir John Key and Bill English, the National-led Government - which ACT supported - raised the minimum wage every year, averaging 3.4 percent over its nine years. In that same time the median household income rose an average 3.9 percent a year, according to Statistics NZ figures. 

Since 2017, the minimum wage has risen an average 6.6 percent a year, ahead of wage growth. 

Unemployment is at 4.2 percent - slightly up on last year's 3.9 percent - a decade-low - but still well down on the post-global financial crisis peak of almost 7 percent.

Contact Newshub with your story tips:
news@newshub.co.nz