Analysis Of The Proposed $18.40 Living Wage

Abstract

Over the last two years, a campaign has been running to pay employees a “living wage” of $18.40/hr (recently increased to $18.80/hr). Using cross-tabulations of data from the Household Economic Survey 2010/11, this work looks at who in New Zealand is currently receiving wages below this level, by age, family type, education level, industry, gender, and ethnicity. This group has proportionately higher numbers of people who are under 30, or who are single adults without dependents. It does not take into account labour supply and demand effects, nor does it consider wage relativity effects on those currently earning above the living wage. We also calculate the increase in disposable income for a variety of different family types if they were to increase their wages from the minimum wage to the living wage, and find that those that are currently receiving the most government assistance (usually families with dependent children) benefit the least from this increase due to the abatement of that assistance.