Monday, August 22, 2011

The Income Divide Between "Bosses" and "Workers"

In this Saturday's The Dominion Post newspaper there was a front page article and a full-page inside article highlighting the fact that the "boss" of Telecom New Zealand receives 50 times the salary of a Telecom "worker" (as if chief executives aren't workers).

Usually I don't read The Dominion Post, despite it being the major daily newspaper for my city, Wellington. This is because over the years it has developed an overwhelmingly left-wing, statist editorial stance that permeates almost every article in it. If I want politically neutral reporting on important news and issues, I have to go elsewhere. But I made an exception this weekend and, as usual, was appalled by the lack of journalist integrity and, frankly, the stupidity of these articles on the income divide.

Firstly, the articles relied on a few superficial examples of chief executive pay packets rather than including any detailed analysis of relative income changes across the employment market over time.

Secondly, they didn't include any comparative international analysis of New Zealand incomes. On an international basis, our chief executives are comparatively lowly paid whereas our "workers" are comparatively well paid for the same jobs. It is the latter comparison that is most salient because New Zealanders compete in the international market for their jobs and incomes.

The purpose of The Dominion Post's campaign (and it is obvious it was a political campaign) was to support the calls from the Council of Trade Unions and others for further increases in the minimum wage. But such a call isn't justified by comparing "workers" incomes with chief executives. It is only justified if we can show that New Zealand workers are more productive (i.e. add greater value to the products and services they are producing) than competing international workers. Pushing up New Zealand workers incomes without a corresponding increase in value produced will only push jobs offshore.

The lack of a more intelligent analysis of this issue highlights the poor standard of journalism at The Domnion Post but is, unfortunately, par for the course for the New Zealand media.

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