Paypacket boost: How far will $44 a week go?
With the minimum wage rising to $20 today, Ethan Griffiths asks what it means for Whanganui.
Today’s increase of $1.10 in the minimum hourly rate to $20 is expected to boost the incomes of about 175,000 people and, for a full-time worker on the minimum wage, it means they will earn an extra $44 a week before tax.
However, there are concerns the boost won’t achieve anything, with the Whanganui Chamber of Commerce warning it will only increase prices.
Chairwoman Glenda Brown said while the group supported valuing employees, the cost of increased wages would need to be absorbed somewhere.
“From a business perspective, this change will inevitably cause price rises which will flow through to the consumer, particularly for those businesses who will not be able to absorb the extra costs.
“This rise also comes at a time where some businesses are still in recovery mode from 2020, in particular the hospitality and tourism sectors. We are concerned this will cause further pressure on cashflows.
“Businesses will need to be mindful of these rises and make adjustments in their next year’s budget.”
On the opposite side of the fence, the increase is expected to be a help for low income earners, but community organisations that deal with
Whanganui’s most vulnerable say it’s no silver bullet.
Sherron Sunnex, the manager of community organisation the Koha Shed, said about 30 per cent of those seeking help from the group are in employment, with almost all of those on the minimum wage.
Sunnex said a rise to $20 an hour was good but it was only catching up with the increase in fundamental expenses such as rent and petrol and wouldn’t make a big dent in disposable income.
“It’s good to see it go up, but things like rent and even the rise of petrol in the last few years are swallowing up most of that increase. It means the minimum wage is catching up, but as it rises, expenses rise, too.”
Sunnex believed there needed to be more incentive to work, with those unemployed often living in better circumstances with better support that can’t be accessed while employed.
“While people are in employment, the minimum wage is still tough, especially if you’ve got a family with kids. Sometimes a bit more support is needed there.”
It’s a sentiment shared by Whanganui Peoples Centre manager Sharon Semple.
Similar to the Koha Shed, Semple said the centre often dealt with the working poor, who were struggling with basic expenses.
“It’s rent that is the real kicker for low income earners. Rent has increased faster than the minimum wage, so this is just playing catch up.
“If someone is single renting a onebedroom apartment, that’s $300-320 a week. Factor in food, paying off a car and petrol, it’s tight.”
The boost is a step in the right direction, Semple says, but there is more work to do.
“Everything else has gone up, but the minimum wage has gone up $1.10 an hour. When you work that out on 40 hours, it’s only around $40 a week. It is moving, but it’s still not enough if there’s one wage coming into the family.
“It’s not a comfortable position to be in.”