Will @jacindaardern @nzlabour never lie about poverty and inequality trends?

Labour cannot claim that incomes of falling if since the end of the recession in the early 1990s, there has been rapid income growth including from Maori and Pacifika, at least 50%.

Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2016. Ministry of Social Development (2017).

Income equality has been stable for several decades and consumption inequality is declining. Another area where Labour is unable to lie from now on.

Child poverty has been fairly stable for 20 years so to say it is getting worse and worse is a lie.

Real wages started growing again after the passage of the Employment Contract Act in 1993 as documented by impeccable left sources. Another area where Labour must not lie.

Of course, the increase in real wages and real household incomes is larger than in the measured statistics because of their well-known bias measuring new goods and better quality goods.

Goes about saying that the OECD estimates New Zealand to have the smallest gender wage gap of any of its members.

2nd draft of NZ Herald op-ed was much better

The gender pay gap is about 18% at the big end of town. The gender pay gap for the top 10% has been stubbornly high for coming on 20 years (see graphic). For the bottom end of the labour market, the gender wage gap is barely 2%; it is 6% in the middle.

Source: OECD employment database from New Zealand Department of Labour estimates https://datawrapper.dwcdn.net/puwr7/1/

For those that blame the gender wage gap on an inherent inequality of bargaining power, that story does not add up when you consider that the workers with the most options, educated professionals and managers, experience the largest gender pay gap and a stubborn wage gap at that.

On the other hand, those workers at the bottom and in the middle of the labour market have gender pay gaps that could easily be explained by a small degree of trading off more agreeable hours of work for less pay. The gender gap always reduces considerably for workers that are 9-to-5, not in unpleasant, disagreeable or risky jobs, and a reasonable commuting distance.

But that does not explain the stubbornly huge pay gap for professionals. Part of it certainly could be explained by professional women making the most of their ability to trade off a comfortable income to have both a career and family.

There is more to the story. Quantifying the causes of the gender pay gap is never easy. Top American labour economist Claudia Goldin found that some careers severely penalise any time at all out of the workforce such as for motherhood or working less than punishingly long or rigid hours. Some of the best paid jobs simply offer little or no work-life balance.

But Goldin also found that the gender wage gap amongst the MBA professionals she studied disappears if hubby earns less! Female MBAs who have a partner who earn less than them earn as much as men do on an hourly basis but work fewer hours per week. She only discovered this vital result because Harvard MBA alumni filled out detailed surveys about themselves and their partners.

This is more important than you might think. Most couples have an age difference. Unless the researcher knows which is older and further up their career track, decisive information is missing on which is prioritising career or family. None of that information is available in New Zealand data.

Early work on the gender wage gap in the 1970s found that the number and spacing of children’s births was a major driver of the pay gap. But none of this is known to sexist employers so that they discriminate more against mothers with more children or who have children widely spaced apart. Key drivers of the gender pay gap are factors on the supply side relating to women’s choices.

Do not jump in too quick to say more maternity leave is a solution to the gender wage gap at the top end of town. I always remember Simon Chapple, New Zealand’s leading social economist, telling me that when maternity leave exceeds about 5 months or so, it starts increasing the gender wage gap. The career interruption is too great, key promotions are missed and education and skills depreciate.

Imagine if you were a 30-year-old male worker, about the average age professional women have children now, would it be a good career move to take a couple of years leave. You would come back reporting to the people you recruited and some of your skills would be rather out of date.

An example of this is that sexist hellhole which is Sweden. They have several years maternity leave, high tax rates and stubbornly high gender wage gaps. Their gender wage gaps at the bottom and the middle of the labour market are 3 to 4 times that of New Zealand. If your objective is a zero-gender wage gap, you should rethink your position about supporting more maternity leave.

If your position is equal opportunities for men and women, a zero-gender wage gap may not be your objective. Your objective is women should be free to choose. Maternity leave certainly expands women’s options, gives more choices, but it does not necessarily close the gender wage gap.

The pay equity settlement is unfair to fair employers

My objection to the $2 billion pay equity settlement is an employer can live a morally upright life, hiring on merit, paying the most he can while still staying in business, and still be successfully sued. Their good names are blackened forever.

The court case and the pay equity bill before Parliament are not about anything the retirement home employers did wrong. They paid the going rate. The case was about what was paid in other industries based on the contentious concept of comparable worth.

The notion that the same job should not pay different rates because of sex is a question on which all agree. Comparing pay in a job to jobs in other industries because more men work in them requires many leaps in reasoning that is less to do with justice and is more about ideology and economics.

The most obvious of which is the extent to which you accept the market setting wages. That is a different dispute to someone being paid a different pay in the same job because of their sex.

Employers hiring on merit is a basic practice of any business who wants to survive in competition. Not hiring the best regardless of sex and race sacrifices profit for bigotry.

Anyone suggesting that the immorality of the market is open and shut was watching the other channel when the Berlin Wall fell and extreme poverty dropped by two thirds in China, India and elsewhere since 1990. The market has at least an arguable case as an acceptable way to set wages.

Many tweet their moral contempt for the market on a smart phone that would have cost many millions of dollars to make when the Berlin Wall fell, and they would not give up the Internet for life in return for $1 million. Are we all millionaires just because of the digital economy?

Adam Smith wrote that matters of distributive justice can only be resolved if people distance themselves from the grubby particulars of their own positions in particular disputes. This evolved into John Rawls arguing that the justice of social institutions should be tested from behind a veil of ignorance where people don’t know their particular place in society or their individual talents.

Rawls argued that a society is fair if you would not mind turning up anywhere in it at random. Inequality is OK if the poor are looked after better than in a more equal society. It is better to be poor in a rich society than poor in a poor society. Rich societies can afford generous welfare states.

Behind Rawls’s veil of ignorance, most would easily agree on equal liberty, equal opportunity and all jobs to be filled on merit. Would agreement on having a market economy be just as quick?

Strong competitive markets do not favour one individual over another. They harness self-interest to generate massive wealth, widely distributed. The income of the poorest, along with the whole of society, benefit from competition in a market economy. Behind the veil of ignorance, not knowing where we will turn up at random in a society, rational people would support competitive markets.

The market delivered the Industrial Revolution. Yesterday, today and every day, 200,000 plus people escape extreme poverty in developing countries because of the spread of capitalism. Yes, this involved inequality and markets determining wages but living standards increased 30-fold since the dawn of the Industrial Revolution; life expectancy doubled since 1900.

OK, you do not have the luxurious life of billionaires, seven of the top eight were self-made I might add. Oddly enough, you probably enjoy a better life than John D. Rockefeller did 100 years ago. Rockefeller lived in a big draughty house with lots of servants. Cars were primitive as was medicine. No refrigerators, washing machines or other domestic appliances we take for granted. Running water, much less safe tap water were brand new inventions at best.

The living wage in New Zealand is set high enough to afford mobile phones, the Internet, overseas holidays and Sky TV too. All beyond the reach of Rockefeller despite his billions.

Would you step into a time machine to go back to the good old days of the 1970s before Rogernomics? You must leave everything from your iPhone to cheap international travel at the door, knock a few years off your life expectancy, and watch two TV channels with no VCR. How many remember what a VCR is? I would pack a few recently invented medicines to ever contemplate stepping back in time to the good old days before neoliberalism no matter how much money was waiting for me at the other end.

Even the biggest critics of neoliberal New Zealand only go so far as to claim that the good old days of the 1970s was an egalitarian paradise except if you were female, Maori or gay. That is two-thirds of the population! The good old days were a very boy’s own good old days.

The road to a more just society is still full of trade-offs. We should have a hard head as well as a soft heart. The case for the pay equity settlement and against the market setting wages is not open and shut.

If I was to spend $2 billion more in the health sector, distributive justice would mind me to spend it on Pharmac and hospital waiting lists. Mental health workers want a flow on of the pay equity settlement. I would spend that money on hiring more mental health workers, not paying the existing ones more.

.@XTOTL claim that women & Maori being screwed by neoliberalism since 1984

Toby Morris claimed in an inequality graphic on thewireless.com in 2015 that subsequent to the 1980s economic reforms, the rich got the income of the rich double while the incomes of the majority of New Zealanders was largely static. He then claimed that

in short, regular Kiwis were screwed, especially women, Maori and Pacific Island communities

Figure 1 shows that real household incomes increased pretty much evenly across all 10 income deciles between 1994 and 2013, ranging between 40 to 50%.

Figure 1: Real household incomes (BHC), changes for top of income deciles, 1994 to 2013

Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2013. Ministry of Social Development (July 2014).

The figure below shows that since the end of the recession in the early 1990s, there has been rapid income growth including from Maori and Pacifika, at least 50%, if not 70%.

Source: Bryan Perry, Household incomes in New Zealand: Trends in indicators of inequality and hardship 1982 to 2016. Ministry of Social Development (2017).

The massive improvements in Māori incomes since 1992 were based on rising Māori employment rates, fewer Māori on benefits, more Māori moving into higher paying jobs, and greater Māori educational attainment. Māori unemployment reached a 20-year low of 8 per cent from 2005 to 2008.

New Zealand has the smallest gender wage gap of any country; 60% of university graduates are now women.