Hyman on the Living Wage

Prue Hyman has an excellent piece in the Dom Post today about why it makes sense economically to pay the Living Wage:

Productivity gains, reduced absenteeism, and lower turnover costs are benefits found overseas when committed workers know they are valued.

One key argument against the Living Wage has been that it is not well targeted at low-income families, with single adults benefiting most. But Hyman points out:

More than half of sole parents working earn below the living wage, as does the principal earner in 25 per cent of households with two adults and dependants.

So many New Zealand families struggle, despite having one or two adults in paid work. Of the 270,000 children estimated to be living in poverty, two in five come from households where at least one person is in fulltime work or self-employed.

Further, families are formed from those single adults who could benefit if working for a living wage employer. Higher earnings could help them make modest savings towards buying a house and bringing up a family later, as well as reducing the incentive to jump the ditch to Australia to find better-paying work.

A typical two-parent two-child family could be $3276 a year better off under the Living Wage. That’s significant.

Some argue that the Living Wage would rebalance the role of the employer and the welfare system towards work being the primary mechanism for people to support themselves. But as Hyman argues:

Isn’t this a positive? It’s far too easy for the government and employers to regard adequate living standards as the responsibility of the other with neither group taking responsibility.