The idea of a living wage is not new. New Zealand’s Arbitration Court determined in November 1936 that a basic weekly wage of £3.16s for an adult male would be sufficient to maintain a husband, wife, and three children in a fair and reasonable standard of comfort. That’s $9.97 per hour in today’s dollars, using the Reserve Bank’s calculator.

That’s 54% of the recently proposed $18.40 basic hourly wage; yet that calculation assumes only two children, a spouse working 20 hours a week, and a great deal of existing state assistance.

It is only economic growth, based on productivity growth, which has allowed New Zealanders to increase their expectations as to what constitutes a fair and reasonable standard of comfort.

Yet, globalisation is putting a lot of pressure on the standard of living that can be enjoyed by unskilled workers in developed countries. Even that iconic New Zealand company, Icebreaker, started shifting production offshore to China in 2003-2004. All its socks are now reportedly made in the US. I don’t think anything but competitive necessity could have forced Chief Executive Jeremy Moon into offshore production.

Mandated wage increases not justified by productivity gains would put up the cost of living for wage earners and the unemployed alike. It would also reduce international competitiveness and make it harder for the unemployed to find work. In June 2013, 153,000 were unemployed, excluding seasonal considerations. National income would likely fall from reduced international competitiveness.

The good news, from a poverty perspective, is that a 2011 World Bank report assessed that between 1981 and 2005, the poverty rate in China dropped from 84% to 16%, and in India, from 60% to 42% - based on the common poverty benchmark of US$1.25 per person per day, at purchasing power parity for consumption in 2005. That’s still a real poverty line for millions of people.

People who are working hard on a very low wage could be forgiven for feeling resentful about wasteful government spending, those earning outrageous incomes, and those whom they suspect of malingering on welfare while they work. But the unemployed are victims too.

The enduring solutions lie in better skill attainment (e.g. greater adult literacy), making it much easier for those without work experience to get that experience, and removing the numerous artificial barriers to productivity growth and job creation. Upping wage rates ahead of productivity growth does not make the cut.