As we creep towards an election, we'll be hearing more from the left about the Living Wage. Those that promote this simplistic feel-good slogan will conveniently forget to mention that what is really needed to raise wages sustainably is an environment that encourages improved productivity and lower compliance costs.
Although they should understand the realities of running a business, the Tourism Industry Association (TIA) have naively flirted with promoting the Living Wage to its members and industry magazine, Tourism Business has devoted editorial space with shrill praise of the concept.
I see that Whaleoil has tag-teamed our post back in September 2011 about ex-Labour MP, Mark Peck's career change of running a small cafe business in Wellington.
As many motel owners can appreciate, Peck had a reality check when he experienced the many obstacles of running a small business:
"It's the little things that Mark Peck, businessman, finds most frustrating about the activities of his predecessor, Mark Peck, politician. The hours he now spends documenting compliance with health regulations, preparing tax returns and fulfilling his ACC obligations, the business lost through council roadworks and the impossibility of ferrying supplies from the loading zone across the road to his cafe in the five minutes he is permitted to park".Oh, and Peck has also found himself at odds with Labour's wacky pledge to remove GST off fresh fruit and vegetables:
"...Mr Peck shakes his head in disbelief. The idea is "silly" and impractical. The only people who benefit will be lawyers and accountants."And then there's that vexing issue of paying staff wages when you are operating in a tough low-margin industry.
"He pays above minimum wage to all his nine staff, although "not a lot in some cases". The critical issue is the level the wage is set, he says.Does this sound familiar?
"What I've learnt is that in an industry with low margins, wage costs are very significant. I just don't think people understand the effect a $15 minimum wage would have on businesses like this. Prices would have to go up."
And, if prices go up, customers already feeling the economic squeeze, change their spending habits. Instead of ordering off the menu, they buy cheaper pre-made food out of the cabinet. Or they eat out less. the result: less profit for the owners; less money to employ staff."
We had great hopes for Mark Peck after he stood on his own two-feet and experienced for himself the burden government can impose on small business owners.
Sadly it would appear that Peck remains conveniently addicted to the left and public funding as Whaleoil blogs:
"So, Mark Peck is standing for council in Wellington, he has Grant Robertson as his authorised person and is standing under a Labour banner all the while sharing an office that the taxpayer is funding. I just love how the left-wing rolls".And like Whaleoil, I wonder if Peck has had yet another about-face and is now paying his nine cafe employees a Living Wage of $19 per hour as per Labour Party policy?