You could be $14k a year richer if these reforms never happened
Monday, 20 April 2026
Verity Johnson is an Auckland-based writer and business owner.
OPINION: At some point last year, probably after your mate just moved to Sydney, you’ll have sat back and thought, “How they can go, do literally the same job, and get paid so much more than they were in NZ? So much so that they can afford to fly back here four times a year, and mansplain Sydney to me as though I’ve never been…?”
Now, I think that’s a normal thing to ask. Why is our real income in NZ only 90% of the OECD average - and the gap with Australia so wide? (I’m not answering that, but the RBNZ Paul Conway does a good job of that here.)
I’m more interested in why it’s so hard to start a casual conversation, any conversation, about anything economic in NZ. Whether it’s a simple, “why do we get paid so badly?” Or a big, “why have we had the biggest rise, in the whole OECD, in income inequality between the 1980s and the mid 2000s?” You’ll always get the same response.
Someone will lean over, pat you on the knee and say, with all the authority of someone who has watched one YouTube video on the topic, “Yeah, that’s awful, but look, we can’t interfere in the natural order of the markets.”
The Markets. The goddamn, omnipotent, ever-present, ever watching, all-seeing, all-knowing, never explaining, holy-than-thou-thy-ignorant-peasant markets. The blanket reply that shuts down any reasonable discussion over very legitimate questions on whether the past forty years of neoliberalism really did know best.
They’re like the modern day Oracle of Delphi; the semi divine force controlling politics, economics, war, plague, pestilence, and the altar successive Government must sacrifice their first born to upon gaining power since 1985. (And is probably why we’re not really questioning the coalition's response to the current fuel crisis. Which has largely been, hands off, step back, tighten your belt and ride it out till the markets settle and see us right.)
But the thing is, we all know something is wrong with NZ. Something fundamental isn’t working in what we get paid, versus how much we need just to live.
So, when I read the other day in Max Rashbrooke’s book Too Much Money, that if the 1991 Employment Contracts Act (and other neoliberal reforms from the mid 80s) hadn’t happened… we’d be $14k better off right now… I stopped.
Sorry, what? I would be earning $14k more if it was like it was in the 80s? I had to call him to ask if this was true.
Yes. “Since the 1980s,” says Rashbrooke, “we’ve moved towards a world where much more company income goes to the people who own the company. Rather than those who work on the front lines. To the extent that the average wage is now approximately $14k a year less than it would be, if front line workers still received the same share of company income as they did in the 80s.”
Very, very simply, there’s this economics concept called the capital labour split. It’s a very fancy way of saying; imagine a company, imagine all the revenue it makes, now imagine how that money is split between the people who work for it (eg. employees) and the people who own it (eg. shareholders.)
According to research by economist Bill Rosenberg, the share of the revenue going to wage earners sat around 70% in the 1980s. It fell to under 60% by the late 2010s.
“If it had stayed at 70%, the average wage in 2020 would have been $14,000 higher.”
Christ. Right now, you and your partner would make the best part of $30k more. For doing precisely the same job.
But what happened was in 1991 neoliberal poster girl Ruth Richardson executed the Employment Contracts Act, smashed the Trade Unions, made it harder for people to bargain collectively, company owners gained far more power in the workplace and working people lost it.
“When you think about just how desperately people struggle to make ends meet now,” says Rashbrooke, “even when they’re in full time work. You think what a difference $14k would make to their lives. And that $14k is now going into the pockets of people who own companies, and shareholders, and equity stakes in firms… that is a really, really profound shift.”
Well yeah. Where was that in our history class? And yeah, I know to anyone - to anyone under 55 - we can’t imagine a different world. Even Trade Unions feel like a Thatcherite bogeyman in a fairy tale from long, long ago. It feels like there’s just no reasonable alternative….
Except, this reality clearly isn’t working.
Now, I’m not saying it’s all bad. I’m not suggesting we revert to communism, or Feudalism, or a command economy where we all get paid in gruel and inspirational talks by our dear leader.
I’m just saying, maybe the omnipotent Gods of the Markets haven’t always been looking after our best interests. Maybe it’s time to question them? Or at least have a serious conversation about a world where they aren’t the one, true, unquestioning faith?
Because if they did know best, where’s our $14k?
This story was updated to attribute some of the research mentioned to economist Bill Rosenberg.