The living wage: does it pay?

Wellington's Bicycle Junction started up six years ago to build, fix and sell bikes – and coffee. Staff are paid a living wage because it's the right thing to do and business is thriving, says owner Dan Mikkelsen.

Dan had been working as a head chef in a catering business, then “fell into owning a shop” when he started importing cargo bikes.

“I’d seen how hard and how long people worked in hospitality for very little wages and I never really thought that was quite right.

“And I certainly didn’t want to be part of a business that did the same.”

People should be able to afford their rent and food without having to work longer than 40 hours, he says.

In New Zealand, the living wage – described as the income necessary to provide workers and their families with the basics of life – is $20.55, while the adult minimum wage is $16.50.

Mikkelson’s eight staff are paid more than the living wage – and some up to 25 percent more than the going wage for similar work.

It may cost more, but Bicycle Junction attracts quality staff and the business benefits, he says.

“We don’t charge more for a bike just because we pay living wage.

“We have engaged staff who are fresh and ready for work and give great service and people come back in for that.”

“If all companies were paying the living wage, sure, some [prices] might go up, but I wouldn’t think it would make the cost of living go up so much that you weren’t still a lot better off.”

Two years into the business, when Dan was already paying more than the living wage, he joined the nationwide campaign.

Small business is leading the way in fair pay, he says, but he’d like to encourage larger firms to join.