Full-time work on the minimum wage is enough to keep a NZ family out of poverty!

An OECD chart that shows New Zealand parents only need to work a little over 40 hours a week on the minimum wage to lift a family out of poverty in New Zealand.

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The figure above shows that a lone parent with two children needs to work about 25 hours a week stay out of poverty in 2013 in New Zealand Once taxes are taken into account as well as additional family benefits such as in-work tax credits. New Zealand is one of the easiest places in the world to get out of poverty by working part-time for a sole mother.

The figure above from the OECD shows that New Zealand couple with two children needs to work about 40 hours a week to stay out of poverty. Of course, what is poverty depends on the definition of the poverty line and in this case by the OECD, it is defined as 50% of the median wage after taxes and family benefits. Another common definition of poverty is earning less than 60% of the median wage

The minimum wage is $14.75 per hour in New Zealand while proposals for a living wage in New Zealand are now $19.25 an hour. The Labour Party wants to increase the minimum wage to $15 per hour.The Greens want to increase the minimum wage to the living wage.

Simon Chapple and Jonathan Boston pointed out in their excellent book last year on child poverty in New Zealand that full-time work by one parent and part-time work by the other in the same household is enough to lift families out of most  definitions of poverty:

Sustained full-time employment of sole parents and the fulltime and part-time employment of two parents, even at low wages, are sufficient to pull the majority of children above most poverty lines, given the various existing tax credits and family supports.

The best available analysis, the most credible analysis, the most independent analysis in New Zealand or anywhere else in the world that having a job and marrying the father of your child is the secret to the leaving poverty is recently by the Living Wage movement in New Zealand.

According to the calculations of the Living Wage movement, earning only $19.25 per hour with a second earner working only 20 hours affords their two children, including a teenager, Sky TV, pets, international travel, video games and 10 hours childcare. This analysis of the Living Wage movement shows that finishing school so your job pays something reasonable and marrying the father of your child affords a comfortable family life.

The OECD’s analysis also showed that incentives for New Zealanders to work more and earn more is better than in most countries in terms of what happens if they earn a wage increase.

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In New Zealand, when there is a 5% minimum wage increase, four percentage points  of that wage increase actually stays in the hands of the worker.

In some countries such as Australia, the USA  and UK, 60 to 80%of the minimum wage increase is gobbled up in reductions in benefits and taxes. At the same time, the minimum wage increase makes it less profitable for your employer to retain you so your job is more at risk.

The only explanation I have for why the Labour Party, NZ Greens and the living wage movement don’t highlight the success of the existing minimum wage in reducing family poverty in New Zealand is mass kidnappings.

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But for these abductions most fowl, I’m sure the Labour Party,  NZ  Greens and the living wage movement would be dancing in the street celebrating successes of capitalism and freedom in New Zealand in keeping families out of poverty through the minimum wage.

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