Nadine Higgins: Paying people enough to get by will reduce inequality

How does any family survive on the minimum wage, Nadine Higgins asks.

Opinion

This pay equity case will no doubt have some private sector employers wringing their hands - worried about what it's going to cost them - and given settling this case is going to cost the Government $2 billion they'd be right to be concerned.

Plus, the new pay equity principles the Government has been working on with unions and employers will allow pay equity claims to be lodged outside the court system.

So yes, I can imagine they'd be a few accountants running frantic worst-case scenarios about what this might cost.

But if I could just put the pay equity aspect of this to one side for a moment - there was something I just couldn't get past in this debate.

And that is - how does any family survive on the minimum wage?

I heard story after story after story on the radio yesterday of rest home care workers who worked their hands to the bone .. and still didn't make enough money to survive.

The minimum wage at $15.75 gives you $28,000 a year after tax ... or just under $540 in the hand each week

If you're the breadwinner of the family ...maybe you've got a couple of kids you could easily work a full time job, 40 hours a week or even more as a dedicated employee, and not make enough money to pay the rent and the food bill and the power bill and transport and school fees ..and well you get the idea.

That's just wrong.

I know many employers will say they can't afford to pay workers more - but I'm sorry that's just not good enough. I've got a lot of respect for the business minded, the entrepreneurs, the go-getters who take risks, plough all their savings into their big idea and graft all hours to create a business .. but if you can't afford to pay your workers enough to live on, your business model is not as sound as you think it is.

The only reason those people on minimum wage CAN afford to survive .. is because of Working For Families tax credits - a system often derided as expensive government welfare. BUT if you think about it - it's actually corporate welfare.

The Government is effectively subsidising businesses who can't afford to pay their workers enough .. by topping up their pay packets and allowing those businesses to be more profitable than they otherwise would be if they paid their workers enough to live on.

The living wage -- defined as the wage required to buy the necessities and participate in society -- is almost 25 percent higher than the minimum wage at $20.20 an hour. That's a big gap.

There are plenty of businesses who have chosen to adopt the Living Wage, voluntarily, and guess what, they aren't even all councils and government departments! I've interviewed lots of them over the years, from the moving company who says they reduce temptation for workers moving wealthy people's stuff because their workers are not on the breadline, to the food company who says it reduces staff turnover because their staff feel valued and thus it saves them money. It can make sense.

Now... I'm not suggesting we up the minimum wage in one leap and I am aware of economic realities, I spent a long time as a business reporter - the country is not going to get richer by simply paying each other more. But paying people enough to get by will reduce inequality.

And while we have working families trying to make an honest living still living in garages and cars - reducing inequality has to become everyone's responsibility.