Setting the New Zealand living wage: complexities and practicalities

This article describes the approach taken to determine the New Zealand living wage rate when it was first calculated in 2013. A two-part approach was adopted, involving estimating the weekly cost of a basic but decent life style for a target household of two adults and two children using a range of official and independent data sources dealing with household expenditure. The necessary level of gross income to be paid by an employer as a living wage was determined using a model that incorporated income tax and government transfers. The research resulted in the recommendation of an hourly living wage rate of NZ$18.40. The necessary detail of the calculation gives legitimacy to the living wage campaign but poses a challenge for on-going calculation while also highlighting the interaction between labour market and non-market policies that address the situation of the low-paid worker.