What is the Living Wage and what did it increase to today?
Your handy Emily Writes Weekly explainer!
It’s time! We are back with another post in the ‘Explainer’ series. Previously we’ve looked at issues like ‘how rent freezes work’ and ummm ‘what exactly Three Waters is’.
Damn, shit is cooked since then huh?
OK well, let’s do our best to not fumble this particular ball. And it’s a big one - The Living Wage.
I had a chat to Nathaniel Herz Jardine, a community organiser with Living Wage Aotearoa, and asked him all the things I thought you would want to know!
It’s a crucial time to talk about the living wage because it’s being increased and it’s at risk for a lot of families who are currently surviving on it. So please read this explainer, ask questions, and share it around as much as you can! Let’s have the conversation - it’s too important not to.
What is the living wage? It’s my understanding that the minimum wage is the least amount of money you can get away with paying someone, and the living wage is what you need to live a basic no-frills life? Am I kind of correct?
Yes! Basically, a Living Wage lets you raise kids without sinking into poverty. If you budget and you work hard, 60 hours a week between you and your partner, you can afford everything you need to raise two kids. You can save for the dentist, fork out for school camps, keep your house warm. It’s just enough for a life with dignity, and to get out and be part of your community.
But to be clear, the Living Wage isn’t just for families. Living Wage Employers pay all workers 16 and over a Living Wage.
What’s the take home pay of a minimum wage family and the take home pay of a living wage family?
It’s tricky because of all the entitlements and things. If you’re on minimum wage, the government knows your family can’t survive, so they top you up with tax breaks and stuff. But they don’t top you up all the way to the Living Wage - just to this weird gray zone between poverty and dignity. So after all the tax stuff, a family is $200+ per fortnight better off on the Living Wage.
How do you work out how to set it?
We don’t! We don’t want people to think it’s political, so we commission independent researchers. They started off by asking families what a simple, dignified life looks like, and they turned that into a shopping list of everything you’d need to buy or save for each week. Every five years they do a big market study into the cost of that shopping list in New Zealand. We do this big study every five years. In between, the Living Wage goes up based on average wage increases. Today, it went up to $27.80.
So who’s going to get that new pay rate?
Anyone who works for an Accredited Living Wage Employer when September rolls around. But actually, there’s one group of workers that have no idea whether they’re gonna get it - cleaners and security guards working in government buildings.
They’ve been getting Living Wage for the last few years, but we don’t know if the new government is going to scrap that and start contracting out for minimum wage again. NZ First promised us publicly last year that they would retain Living Wage Protections. But will they follow through? We don’t know.
Who is involved in Living Wage Aotearoa? I take it it’s not an Atlas Network type situation is it? We’re talking churches and nice people huh?
You bet. We’re just local people from our member organisations like faith groups, unions, community groups…On one of our campaign teams here in Christchurch we’ve got a social work student washing dishes on Living Wage, a school counsellor, a member of the local Presbyterian Church, a waitress on Living Wage… It’s just people who care and want to make change. Anyone can get involved!
I’m guessing it increases every year given how the cost of living is just soaring right?
Yep, it’s crazy and we’re always trying to keep up. We announce the rate every April 2 and it comes into effect in September. That gives employers time to budget properly. The key thing is that workers know that they’ll get a pay rise every year to help them stay afloat.
I think a criticism I always hear is from business owners saying they can’t afford to pay people anything more than the minimum. Or that they themselves don’t earn a living wage. What are your thoughts on this?
Most business owners I know really want enrich their community— but if your workers can’t afford to raise a family, then you’re actually harming your community. You’re hollowing it out. And we know from our Employer Programme that all kinds of businesses can make it work. We’ve got accredited banks, cafes, arborists, breweries. You can do it, if you prioritise your workers and their families.
On that ‘I run a business and I don’t even earn a Living Wage’ thing: I get that. If you’re passionate and you’re investing your time, you might be doing it tough for the first few years. But hey, what about the woman cleaning your shop? Is she passionate about your business, or is she passionate about raising her family? If you don’t pay her a Living Wage now, when is she ever going to get a Living Wage? In the end you just have to do it and make it work, just like you do with all the other fixed costs of running a business.
What is that, getting ‘accredited?’
It’s basically a stamp that says ‘yes, this employer is definitely paying everyone they need to a Living Wage’. We work with you to ensure that you’re meeting all the criteria. You pay a fee that varies depending on the size of your business, and that money pays for the accreditation programme and also our market research.
I wanna say— it’s not enough just do the right thing. You need to be seen to do the right thing, and support others to. That’s how we make lasting change. That’s what accreditation is about.
Another thing I often hear that just doesn’t pass the sniff test is that ‘labour’ costs or the costs of hiring people and paying them enough to live will lead to fewer job opportunities? Is that a reality in Aotearoa?
Big nope! Businesses make money and that money has to go somewhere. So where should it go— into profits, lower prices, or wages? Economically, the best place for money to go is around in circles, staying in the community and creating a money-go-round of goods and services and wages.
So how do we do it? If money goes to profits, it will go into offshore investment accounts. If it goes into lower prices, some of that will get recirculated, but a lot of of it will go to wealthier people who spend more and again - into saving accounts. But if that money goes into the wages of low-income workers, we know that all of it will go back into the local economy because research shows that those workers spend 100% of their payslip. Actually, they spend 106% of their payslip, but that’s a whole other story. So the best way to stimulate the local economy is to put the money into raising the lowest wages. That means more money for more jobs. End of story.
Why should anyone care about the living wage anyway?
I’m sure it’s obvious to those on a Living Wage or less, but for everyone else - if you care about living in a warm dry house and sending your kids to school with full bellies and not having an excruciatingly painful cavity for months at a time— then you already care about Living Wage! Because that’s all it is. It’s making sure all working families have all those things. There will be people in your community who work hard and don’t have those things. Stand up for them.
What can we do to support the living wage movement?
If you have time, get in touch and get involved! Honestly, there’s loads to do. It could be something practical like setting up the chairs for an event, or getting your community on board, or even showing up as part of a delegation to your local council. We’d love to hear from you. (You can Email Nathaniel here - Emily).
If you have money, donate. How about donating one hour of the Living Wage each month? That money goes straight into our campaigns, and we’ve got a tight budget so it’s money well spent. At the moment we’re pushing the government to retain Living Wage protections for their cleaners and security guards. We’re also launching a campaign pushing Ministry of Education to pay a Living Wage to school cleaners and caretakers.
If you have a voice, then use it— at your school, at your local cafe, with that friend who works in HR. We need people raising this. We need employers getting accredited to support the movement and to be seen doing it. Our movement runs on community voices.
If you’re buying something, choose a Living Wage Employer. Find them here: Living Wage Employers in New Zealand
If you employ someone, get Accredited. That way your customers, job seekers, and everyone will know that you’re committed to the kaupapa. And then Emily will celebrate your amazing decision with everyone? Right, Emily?
I absolutely will! In fact - I will share the names of any businesses who become Living Wage employers here and on my socials, and I’ll encourage all of my readers to share too! Great publicity I reckon.
Thanks Nathaniel. And I’ll keep y’all in the loop around any action to protect those cleaners and caretakers in our schools and in Parliament buildings!
Thanks Emily that was an awesome read. Thanks for your support for working people!
Have my fingers & toes crossed I might reach the living wage this year!!