One of the more prominent issues during the 2020 election season in the U.S. was income inequality and whether it was time to raise the minimum wage. Proponents of a hike in America’s federal minimum wage hope to see it rise to $15 per hour from the current $7.25, a level it has remained at since 2009 according to the U.S. Department of Labor .
However, despite the enormous popularity among voters of all stripes — a 2019 Pew Research Center poll found that two-thirds of Americans supported a $15 federal minimum wage — legislation to actually get it done hasn’t passed Congress.
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As Americans continue to wait and see what will happen with their minimum wages, they can look far to the south to see New Zealand going ahead and raising its minimum wage.
Workers in New Zealand will be taking home more pay as the nation’s minimum wage increases on April 1.
A raise of $1.14 per hour will bring the total up to $20/hour NZD (about $14/hour USD), which the government expects to impact up to 175,000 workers and increase wages by $216 million across the economy, The Guardian reported.
That number isn’t quite what proponents had hoped for, as unions in the nation sought a $22.10 minimum wage to bring it level with the living wage. Nevertheless, Prime Minister Jacinda Ardern called the new measures “real and long-overdue improvements to the support we provide our most vulnerable.”
At the same time, New Zealand is also hiking taxes on its richest citizens.
A new top tax rate of 39% will hit anyone earning more than $180,000 a year, which will affect the nation’s top 2% of earners, according to The Guardian , and which should increase government revenues by up to $550 million in 2021.
Opponents of the minimum wage increase argued that the timing would put extra strain on businesses already struggling due to the pandemic.
Although New Zealand has weathered the pandemic well, the nation still faces considerable uncertainty, closed borders, and increased import/export costs, all of which prompted the Ministry of Business, Innovation and Employment to propose delaying the increase until October, according to Stuff .
Brett O’Reilly, CEO of the Employers and Manufacturers Association, told TVNZ that businesses would have a tough time swallowing increased labor costs.
“Anything that has a material impact on a businesses bottom line and their cost structure, it is something that’s not welcome, even taking into account that we would all aspire for New Zealanders to earn more money,” he said.
However, proponents of the minimum wage hike argued that businesses will benefit from the increase regardless.
“I don’t think I can remember a time when employers haven’t griped about a minimum wage increase. This is just another fresh excuse for them to whinge about the minimum wage increase,” Tony Stevens of the Young Workers’ Resource Centre told TVNZ.
“Our view is that if you can’t pay a living wage, not just a minimum wage but a living wage, you’re not actually operating a sustainable business model. Paying wages should never be a race to the bottom…What we do know is that higher minimum wages stimulate the economy. We know that the lowest paid workers, we know they spend every dollar they earn because they have to.”
The government also argued that the pandemic only made workers more deserving of a minimum wage hike.
“There are many Kiwis who earn the minimum wage who have gone above and beyond in our fight against Covid,” Workplace Relations and Safety Minister Michael Wood told TVNZ. ” I think everyone agrees those who served us so well during lockdown – including supermarket workers, cleaners, and security guards – deserve a pay rise.”
It’s also in keeping with Prime Minister Ardern’s agenda, as her government has gradually raised the minimum wage by $4.25 an hour since 2017. And, according to OECD data , New Zealand already had one of the best minimum wages in the world.
h/t: The Guardian , TVNZ
