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Enhancing Food Security and Physical Activity for Māori, Pacific and Low-income PeoplesA person working at the minimum rate is therefore on a relatively low income, certainlywhen compared with the great majority of those in the work-force. A household livingsolely on the income of a person on the minimum wage-rate will often, depending onthe number of persons in the household, find its consumption choices severelylimited a . An increase in the household’s income from an increase in the minimum ratewould therefore enlarge its purchasing possibilities, including the possibility of extrapurchases of food, and so reduce food insecurity. Prima facie therefore, there wouldseem to be a good case for addressing food security by increasing the statutoryminimum wage-rate.The standard objection, in New Zealand and overseas, has been that lifting minimumwage-rates might increase the incomes of some, but leads to others losing their job, orfailing to get a job b . Employers decide that at the higher wage-rate they can no longerafford to employ, or take on, persons available at the new minimum rate.Theoretically, this effect of increasing minimum rates seems obvious. Empiricalresearch, however, suggests that reductions in employment are fairly minimal c .There are two objections to the proposed policy:• It is difficult to say how well targeted in terms of food security an increase inthe minimum rate would be. It would benefit, for example, a young unskilledperson, but that person might well be part of a household with other membersin employment and no problems with food insecurity. It would not address theincome and food insecurity problems of those with incomes only a little higherthan minimum rates, as for instance many in cleaning and caring work d .Unless, that is, increases in minimum rates were passed on as increases inrates above minimum. This would perhaps be unlikely, except at the verybottom of the wage-rate distribution. A general increase in low-end rates mightin itself be no bad thing, but more in terms of a more equitable incomedistribution, not a topic of this report, than of addressing food security.• An increase in the minimum rate would not help beneficiary households,probably the household category most likely to be suffering from foodinsecurity.It would seem then that an increase in the minimum wage-rate might reduce foodinsecurity in some households, but not others. Beneficiary families would not behelped, nor, probably, low-income families with income earners on low, but notminimum rates. Other policies and/or interventions would be needed to reach thesegroups.a This discussion does not take into account any tax concessions gained from the Working for Familiesscheme for those persons in employment and with families. The scheme is known to have, in recentyears, reduced considerably the number of households living ‘in poverty’, on various measures of‘poverty’. 1b “Until recently, it had been widely believed by economists that the imposition of a binding wage floor,e.g. minimum wage, would reduce the employment of younger and less-skilled workers.” (p1) 2c Ibid. Page 1. “Still, it seems safe to say that the consensus has been broken and that the empiricalevidence indicates, in certain situations, an increase in the minimum wage may not reduce employment.”d Though quite a proportion of these might in any case be on the minimum rate.37
Enhancing Food Security and Physical Activity for Māori, Pacific and Low-income PeoplesRecommendationA major cause of food insecurity is inadequate income. It is sensible therefore toconsider means of reducing income inadequacy as one approach to improving foodsecurity. There are a number of possible ways of doing this, of which raising theminimum wage is one. It is not evident from the discussion above, however, thatraising the minimum wage is an effective means of improving food security.Our problem, relevant also to other possible interventions discussed in this report, isthat we have less information about the work status and benefit situation of membersof food insecure households than we would wish to have in deciding which is the bestremedial intervention among choices such as subsidising food purchases for selectedhouseholds, increasing minimum wage rates, or increasing benefit levels in general.Detailed information is lacking also on the ethnic composition of those in food insecurehouseholds, although it is apparent that Māori and Pacific peoples are overrepresented.We therefore recommend that:Further work be undertaken to obtain better information on the work status, incomelevels, and benefit eligibility of food insecure households, and also on the ethniccomposition and other characteristics of such households, to assist in identifying themost effective remedial interventions.Potential sources of such information include Statistics New Zealand surveys such asthe Household Economic Survey and the Household Labour Force Survey, and pastand current national health and nutrition surveys, and longitudinal income studiessuch as SoFIE.References1. Perry B. Household incomes in New Zealand: trends in indicators of inequality andhardship 1982 to 2007. Wellington: Ministry of Social Development, June2008.2. Hyslop D, Stillman S. Youth Minimum Wage Reform and the Labour Market:Working Paper 04/03. Wellington: New Zealand Treasury, 2004.38
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