There is a potent argument for increasing the minimum wage by at least the rate of inflation. But there is not for the ambit claim new ACTU chief Sally McManus is making for a leap of $45 a week, which would put undue and potentially overwhelming pressure on small businesses, the main engine of employment.
Nor is there for the parsimonious position of business lobby groups that the lowest-paid workers in our prosperous nation should get an increase below the pace of growth in the cost of living, and thus take a cut in their real wages.
And nor is there for the Turnbull government's posture in its submission to the independent industrial umpire, the Fair Work Commission, that increasing the minimum wage is "not an efficient way to address relative living standards or the needs of the low-paid".
That is preposterous, as is the government's position that the minimum wage should be increased, well, only minimally (it has not nominated an amount) because low-paid workers "are often found in high-income households".
Employment Minister Michaelia Cash was unable in a radio interview on Thursday to state what proportion of people on the minimum wage are in such households, but later suggested it was "just under 50 per cent".
This is a diversion; the key point is that people on the minimum wage – be they the main income earners of households or students or young full-time workers – are struggling financially. Further, the government's construction is misleading, as more than 60 per cent of low-paid employees live in households in the bottom half of household incomes, while only about one in 10 live in one in the top fifth.
The economic case is that a rise of at least 1.5 per cent (the current rate of inflation), and preferably a little more, would preserve the purchasing power of the low-paid. This would mean an increase of about $10.10 a week, practically all of which would be spent on daily living costs, thus stimulating overall demand in the economy. The Australian Chamber of Commerce and Industry and the Australian Retailers Association suggest an inadequate 1.2 per cent increase.
Last year, the commission increased the minimum wage – which is earned by about 200,000 people, accounting for less than 2 per cent of the workforce – by 2.4 per cent to $17.70 an hour, or $15.80 a week, taking it to $672.70 for a 38-hour week.
The equity element of the case for an increase is based on the historically high gap between the wealthiest and poorest in Australia. A study last year by social researchers McCrindle, based on official statistics, found that the top 20 per cent of households earn half the total income in the economy and own more than 60 per cent of the wealth, while the lowest 20 per cent get 4 per cent of the income and own less than 1 per cent of the wealth.
Another policy research organisation, the Australia Institute, found that of the $170 billion in tax cuts in the past decade, the top 10 per cent of income earners garnered as much as the bottom 80 per cent.
The government risks being seen as blithely out of touch, particularly as its position comes amid its push to give businesses a $50 billion tax cut and its support for a marginal reduction in Sunday penalty rates for some retail and hospitality workers.
We supported the commission's penalty rates decision on the grounds that the historical justification – to dissuade businesses from operating on weekends – no longer holds. But we also argued that the reduction should be phased, and offset by increases in the minimum wage. We urge the commission to do the fair and rational thing.