December labour market data: Yuck!

Yuck yuck yuck.

Given the lack of seasonal adjustment in this series the numbers don’t look as bad as they are – December is normally a very strong quarter for employment after all.

A unemployment rate over 5% in December is a possibility – if these numbers actually line up with the household labour force survey 😛 .  Businesses now believe that the recession will keep going – and they have to lay people off to keep going 🙁 (given that wage costs are “sticky”).

How do you feel about the tanking labour market?  What do you think this should mean about changes to the minimum wage? (ht guy that called me today about the minimum wage review)

  • goonix

    “Cabinet will discuss in coming weeks whether or not to raise the minimum wage.”

    Why aren’t they considering lowering it?!

  • moz

    I’d be happy to see the minimum wage lowered, provided I had some assurance that it would go up again for the same reasons as it’s going down. It would in some ways be nice to have the minimum wage track average company profits or average share dividends, for instance. But the system we have at the moment assures that the average wage rises more slowly than inflation, resulting in a net cut most years. So to say “why can’t we cut the minimum wage” is to misunderstand the situation.

    The most amusing thing would be to set the minimum wage at a fixed ratio to the CEO salaries of the top 100. Then I think we might see a gawd-awful bout of dung-flinging between CEO’s who want their personal salary to rise while every other CEO’s salary falls…

  • Kimble

    The minimum wage cannot come down, it is a political impossibility. Just another feather in Labour’s “screw the nation so we get a few good headlines” cap.

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  • “Why aren’t they considering lowering it?!”

    It depends on our view of what the labour market looks like – and where we think the minimum wage is relative to it. If the minimum wage was “too low” then there could still be a case to increase it.

    http://www.tvhe.co.nz/2007/12/17/higher-minimum-wage-higher-employment/

    However, if it was “just right” then the reduction in labour demand would imply that the minimum wage is too high now – indicating that it is constraining employment and should be cut.

  • “But the system we have at the moment assures that the average wage rises more slowly than inflation, resulting in a net cut most years”

    Huh? That isn’t what the data says at all – the average wage has constantly been running far in excess of inflation as the labour market has been tight.

    “The minimum wage cannot come down, it is a political impossibility”

    We could just print heaps of money and cause inflation – that always knocks down the real value of things 😉