I’ve heard or read a couple of strange stories in the last day or so about the nurses’ trade union making the case for a “pay equity” settlement for their members.
Of course, the very notion of “pay equity” settlements is bizarre, fit only for somewhere like the old Soviet Union. Some government officials decree that job x should be paid the same as job y, as if the price of a banana should be adminstratively and arbitrarily set equal to, say, the price of a kiwifruit because the two might have (say) similar nutritional value.
But what interested me were two lines being used by the nurses in support of the view that they were underpaid (neither line seemed to have much to do with the false equivalency of “pay equity”, but were rather intended to support the claim that nurses were – absolutely – underpaid).
The first, reported here, was this
“In Australia, nurses can be paid as much as $90,000 as a base rate with penal and on-call rates as well. The limit in New Zealand sits around $68,000.”
Last I looked, real GDP per hour worked in Australia (in comparable – PPP – terms) was 41 per cent higher than in New Zealand. That is the best aggregate measure of labour productivity. You’d expect wages and salaries for most jobs to be higher in Australia than they are in New Zealand. That appears to be so for nurses. A larger share of New Zealand’s population is in paid employment than is the case in Australia, so the difference in per capita income is a bit smaller, but still just over 30 per cent. In material terms, Australia is now a richer and more successful country than New Zealand is. Those gaps keep (slowly) getting wider.
Because of the somewhat-common labour market between the two countries that creates some specific problems for New Zealand. Plenty of people will look across the Tasman, weigh up the pros and cons of the heat, the snakes and spiders, and the challenges and opportunities of big cities, and move. Since our somewhat-common labour market applies across the board (not just, say, to public sector nurses), it isn’t a problem we can fix by simply agreeing to all pay ourselves more. Those sorts of outcomes have to be “earned” – not about individuals working harder, but about the economy as a whole finding better and remunerative opportunties, lifting earning possibilities for everyone. Do it enough, and one day that might even be a net flow of New Zealanders coming back from Australia (Ireland managed it, it can be done).
I’m sure the Nurses Organisation is better connected to people at the top of the government than I am, so I can only urge them to suggest to their friends and allies who currently hold office that economywide productivity might be elevated quite a long way up the list of government priorities (in the Labour Party “Our Plan for New Zealand” brochure dropped in my letter box the other day it featured not at all). Remind them, perhaps, that for decades New Zealand has been failing on this count, reducing successive governments to pretending to a success that just hasn’t been achieved. In consequence, wages are much lower than they really should be, and we’ve been more limited than anyone would have liked in dealing with all sort of other social problems.
(Of course, from a Nurses Organisation perspective the strategy I’m proposing would fail any sort of cost-benefit assessment: neither National nor Labour show any sign of being seriously interested in doing what it might take to generate much better productivity and incomes, and (by contrast) the nurses seem to have the government wrapped around their little finger on the pay-equity path to improving their own position. But I’m sure nurses are public-spirited people, and they have children too, not all of whom will choose to be nurses.)
The other strand of the nurses’ argument was a bit closer to home. A Wellington hospital nurse was quoted as saying
Only a quarter of the nurses she worked with lived within walking distance of their hospital. The result was that only a quarter of the nurses Ms Hopkinson worked with lived within walking distance of their hospital.
“We can’t afford to live in the communities we nurse in, we’re priced out of these neighbourhoods.” 12 years ago when she started, nurses lived in the central city, but that was no longer the case.
“They’re commuting from Featherston, from up the Kapiti Coast, Upper Hutt; they’re a long way away and they won’t be able to make it to us after an earthquake.”
Even in Wellington, it did seem a bit of a stretch to argue for a pay rise so that nurses could walk to the hospital when the 1 in 300 year earthquake hits. The present value of the cost of that possible post-quake complication will be pretty small indeed.
Now, as it happens I do live within walking distance of Wellington hospital. It is a pleasant middling suburb, and when I was younger I knew lots of nurses who lived in the neighbourhood, attended our church etc etc. It was close to their work and convenient. As I’ve noted previously, I bought my first (three bedroom, 30 year old) house in this same suburb 30 years ago – actually bought it from a teacher who was moving to Wanganui where housing was more affordable (it was near the peak of the then-boom). The Reserve Bank’s inflation calculator tells me I paid about $296000 in today’s money for that house.
Real wages and productivity have increased since then. Real GDP per hour worked has risen by a third, so roughly speaking spending $400000 on a house today would bear a similar relationship to incomes as $300000 then.
You cannot buy any house in Island Bay – still less a three bedroom house, 30 year old, decent-sized section, garage etc – for $400000. As it happens, earlier this week a real estate agent sent me a several page list of sales in the area in the last few months. The cheapest property sold was a unit with no land at all, and 60 square metres of house: that went for $400000. The next two cheapest ($507K and $570K) were also units and had 60 and 70 square metres respectively. The cheapest house that looks roughly comparable (size, age, but much smaller section) to that first house of mine went for $805000. The median price across those particular 37 properties was $960000.
It is insane. No wonder nurses can’t afford to buy anything decent reasonably close to Wellington Hospital (there are slightly cheaper suburbs, but they’ll all have had much the same escalation). It is not that nurses are underpaid. And it isn’t just the nurses. Anyone in a moderate-income job – especially if there is only one income, or one fulltime and one part-time income – will really struggle. And, much as I quite like Island Bay, it isn’t Fendalton or Remuera or St Heliers – yes, we have a beach too, but even with warming sea temperatures the sea is always more ‘refreshing’ than inviting.
It simply isn’t an issue about nurses, or nurses’ pay. It is a straightforward consequence of vicious choices that a series of central and local governments have made to mess up urban housing markets. Government has failed, very badly. And if it perhaps doesn’t impinge too terribly on the children of the wealthy, it greatly restricts the options of most everyone else looking to get into the housing market, nurses included. They are, to put it, colloquially, stuffed. And if that isn’t you or your children yet, it will be mine in a decade’s time. (Rents are not my primary focus, but in an age in which real interest rates are at record low, real rents should also be lower than ever.)
I’m sure the Nurses Organisation is better connected to people at the top of the government than I am, so I can only urge them to suggest to their friends and allies who currently hold office that fixing the urban land market might be elevated quite a long way up the list of government priorities (in the Labour Party “Our Plan for New Zealand” brochure dropped in my letter box the other day it featured not at all). Nice Mr Twyford appeared to understand the issue when he was in Opposition, but there has been as little action from him in government as there was from the class enemies of the Nurses Organisation, the previous government. Remind him, perhaps, of those fast-growing cities across swathes of middle America where good houses really are still affordable. There is no shortage of land in New Zealand, not even in Wellington (except to the extent the Nurses Organisation friends at the Wellington City Council make it artifically so. Do not just paper over the cracks, but fix the problem at source.
(Of course, from a Nurses Organisation perspective the strategy I’m proposing would fail any sort of cost-benefit assessment: serious land-use reform from either National or Labour still seems like a long shot (by contrast) the nurses seem to have the government wrapped around their little finger on the pay-equity path to improving their own position. But I’m sure nurses are public-spirited people, and they have children too, not all of whom will choose to be nurses. All of whom will eventually want houses.)
From any sensible policy perspective, so-called pay equity is just daft. From the perspective of any particular group of workers, perhaps it is the fastest path ahead – zero-sum game (well, worse) across the whole economy, but beneficial for those particular individuals. But, probably without really being aware of it, the Nurses Organisation put their finger on two really big symptoms of policy failure in New Zealand – productivity/earnings and housing – that affect almost everyone. While pursuing their own short-term self-interest, I would urge them to add their voice to the call for serious structural reform in these two areas. They need it. We all need it. Political parties, meanwhile, keep on failing to deliver.