Wake up and smell the coffee

There is a delicious irony in the fact that Phil Twyford insists that the petrol tax increases will only amount to the “price of a cup of coffee a week”. As the tax increases are going to be phased in over the next three years, I suspect that it will end up costing a lot more than that. I guess Wellington coffee must be more expensive than coffee in Auckland.

But Stuff has an interesting article that demonstrates how the minimum wage hike, far from having no effect on the price of goods, is already going to increase the price of one of our politician’s favourite commodities: the humble cup of coffee!

Talk about killing two birds with one stone. Quote:

The first round of minimum wage increases is poised to hit some consumers where it hurts – their coffee cups.

Signs on the counters of the major coffee chain Mojo warn customers the cost of their coffee and food has gone up in the wake of a 75 cents increase to the minimum wage on April 1 to $16.50.

The coffee chain will put its prices up by 10c. A flat white was $4.40 and is now $4.50.  Large coffees have gone from $5.40 to $5.50.

Mojo has 31 cafes and its marketing manager Tay-Lann Mark said that the public had had a “mixed” reaction to the price hikes.

“When we found out about [the minimum wage increase] we had a meeting with all of our managers and it was a celebrated thing.

“Some of our customers have posted on social media that this is a great thing, and then some not so.”

Other coffee makers say the wage increase wouldn’t affect their prices. End of quote.

Well, of course, the increase in minimum wage will cause an increase in the price of a cup of coffee. Or a sandwich. Or whatever. It is a fact of life that, if a business cannot recover its costs, it either has to fold or increases prices. Economics 101. Quote:

Infometrics chief forecaster Gareth Kiernan said the minimum wage increase was as fast an increase as the Labour Government did between 2004 and 2008.

He said the labour market now was not as tight but it was expected to become tighter in the next couple of years.

Kiernan said it was fair for employees that have worked their way above the minimum wage to also want the wage hike to encompass their pay.

“If you’ve come in at minimum wage and earned an increase over the past six months and you’ve got a bit more skills, then I think it’s fair to want to be paid a bit above the minimum wage to reflect that.

“It’s important to preserve that relativity.” End of quote.

It is important to note that those who earn slightly above minimum wage are going to be looking for pay increases as well. After all, nobody wants to go backwards, and if a skill has been developed then it is only fair that they should be paid more. Right? Quote:

Kiernan said the policy could have a bigger impact on manufacturing than hospitality firms.

“It could accelerate the move away from labour towards automation and capital.”

Modelling from the Ministry of Business Innovation and Employment (MBIE) found the wage hike could lead to the loss of 3000 jobs. ​

Manufacturer’s Association spokesman Dieter Lund said most of the association’s members had few if any minimum wage jobs.

“Most of the low-value jobs in the sector have already moved overseas.” End of quote.

So, having decimated the manufacturing industry, now the hospitality industry is under siege. But, no problem. We will soon get used to robots in hotels and automatic coffee makers in cafes. I’ll bet the queues will be shorter too.

In another article, Stuff also show that the minimum wage hike is going to affect the number of teacher aides in schools. Quote:

Schools are faced with cutting teacher-aide hours in a dramatic move prompted by the recent rise in the minimum wage, which wasn’t matched with an increase in funding.

Some schools could even be left with no choice but to slash staff numbers.

Manawatu Principals’ Association President Wayne Jenkins said the increase highlighted the “gross” underfunding for special education support staff who work with vulnerable children.

“Teacher aide funding… we get $18.47 [an hour for special needs funding], but it includes GST. So net value is $16.06 to pay for teacher aides to work with some of our most priority learners.”

Central District Secondary Principals’ Association chairman and Freyberg High School principal Peter Brooks said experienced teacher aides were highly skilled and often doing a difficult job.

“Teacher aides perform an enormously valuable role in schools and get underpaid because of the funding… that’s really hard on them.”

Many stay in the job because they are devoted to the children they work with, he said. End of quote.

What was that about the price of a cup of coffee again, Phil? It seems like coffee is about to become very expensive indeed.


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Accountant. Boring. Loves tax. Needs to get out more. Loves the environment, but hates the Greens. Has been called a dinosaur. Wears it with pride.

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