Kāpiti Council Living Wage will do more harm than good

Commenting on the introduction of the living wage for all employees and contractors at Kāpiti Coast District Council, Taxpayers’ Union Campaigns Manager, Connor Molloy, said:

“The problem with blanket living-wage policies is that they put ideology before evidence and actually lead to increased poverty. This is because when wage rates increase, lower-skilled employees are crowded out by more skilled employees enticed by higher wages. This reduces jobs available for those who are low-skilled and forces ratepayers to overpay for jobs that people would be happy to do for a lower rate, such as those seeking to gain experience in the labour force.

“For those current employees that do get a pay increase from a living wage, a significant portion of this will be clawed back by the government at the punishingly high 30% tax rate or through reductions in working for families tax credits. In some instances, it could even lead to job losses. When Wellington introduced a living wage, 17 low-skilled employees lost their jobs, harming the very people such a policy aimed to help.

“The evidence on artificially hiking up wages is clear, it harms the very people it aims to help leading to increased poverty overall. Our 2017 report, Best of Intentions, Worst of Results, outlined the case against implementing a living wage and provides a comprehensive analysis of the evidence demonstrating the disastrous outcomes of such a policy.”