minimum wage

Why Shorten’s ‘Living Wage’ Will Hurt the Poor

With the Aussie federal election just around the corner, Labor’s front man Bill Shorten has declared the event a ‘referendum on wages’, promising voters his government would fight for a ‘living wage’.

Shorten and Labor workplace spokesman Brendan O’Connor have lodged a submission on the minimum wage to the Fair Work Commission, calling for a ‘responsible, real increase’ to the Aussie minimum wage. They argue that ‘no Australian working full-time should be living in poverty’.

But rather than improve the living standards of the poor, it seems this scheme is just another way to target the masses with an ‘unfairness’ call, fixing the issue with more regulation and redistribution rather than incentive and opportunity.

Related: Is this it for Australia’s unblemished, 27-year growth record? Download the free report now.

Who are minimum wage workers?

Shorten argues that the $18.93 per hour adult minimum wage is ‘not enough’ to live off when factoring in the costs of maintaining a household, raising children and trying to keep some rainy day money aside.

We can’t argue this point, seeing that the average cost of living in Australia for a family of four is a little over $5000 a month.

But what Shorten fails to acknowledge is that it’s rarely the breadwinner of these types of households who are working for minimum wage.

Often it’s the secondary income earner, or one of the kids with a part-time job pocketing the 18 bucks an hour. And they’re more likely to come from the richest 20% of households than the poorest 20%.

So this ‘living wage’ action would only give these well-catered to individuals a bit of extra pocket money every week.

Pricing people out of a job

Meanwhile, unskilled and marginalised workers would find it even more difficult to land a full-time job, because employers will be more selective as to who they’ll fork out their wage budget towards.

If you’re having to distribute an extra $43 a week — as some unions are demanding — on an employee, you’d be hard-pressed to find a business who would waste that on someone who isn’t even qualified for the position.

If it’s going to cost that much, businesses would be more likely to replace workers with labour-saving technology that won’t be priced beyond its capabilities.

More money, better economy…not true

That’s likely why Shorten has a second argument for the ‘living wage’ scheme…more money to spend.

When 60 per cent of the Australian economy is consumption, wage stagnation hurts economic growth and confidence,’ he said.

So his solution is to up the income of the everyday Australian, enticing them to waste it on frivolous goods to boost our economy

Very inspiring. Pity it won’t even work.

As noted by The Australian Financial Review, a sudden bump up in wages without a similar increase to productivity, would just ‘undermine the competitiveness of Australian business on global markets, hurting profits and costing jobs’.

Strike two, Shorten.

The real solution to Aussie poverty

You can increase wages all you like, but if no one’s hiring it’s all for nothing.

And frankly, the higher you price a worker, the less each business will be able to afford to employ.

Of course, it’s just as damaging the other way, with wages so low that people are struggling to afford to keep going to work.

It’s all about finding the right balance. And while we can’t tell you exactly where that balance lies, it certainly isn’t within Shorten’s ‘living wage’ dream.

By The Australian Tribune Editorial

 

PS: Phil Anderson reveals a virtually unknown, monarchy inspired income stream that he believes could financially benefit every tax paying Aussie citizen for the next 100 years. Read more about it here for free. 

 

The Australian Tribune Editorial

The Australian Tribune Editorial

The Australian Tribune is an unorthodox news service. Your Australian Tribune editorial team deliver the unfiltered stories that could impact your daily life — political and economic stories you’re unlikely to get anywhere else. And we’re not afraid to step on some toes to do it. We are honest, conservative and never dull. We are an independent service, meaning we don’t answer to shareholders or outside advertisers. This helps avoid conflicts of interest that inhibit mainstream sources, which keeps our voice independent. The Australian Tribune is owned and operated by Port Phillip Publishing.
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