About 5% of workers earn the minimum wage, but far more cluster just above it. Researchers say the floor has risen into territory that used to be comfortably above it — and structural factors beyond minimum wage policy explain why.
About 5 percent of New Zealand workers now earn the minimum wage, but the more telling figure is how many people earn only a little more.
The minimum wage now sits at roughly the 30th percentile of the wage distribution, up from the 10th percentile in 2001, according to University of Otago senior lecturer Murat Ungor. That means three in ten workers earn at or below a level that used to be well clear of the floor.
New Zealand's minimum wage is now $23.95 an hour, up from $13.75 in 2013 and $20 in 2021. In 2008 it was $12 — meaning the floor has nearly doubled in under two decades.
What the numbers show
The proportion of workers on the minimum wage has fluctuated over time. Government data shows it sat between 3.2 and 4.2 percent between 2015 and 2019, jumped to around 8 percent after 2019 as minimum wage increases accelerated, then fell back as broader wage growth caught up — settling below 5 percent in 2025.
About 122,500 people earned less than the minimum wage last year, a group that includes some students, trainees, and people in specific exemption categories.
The Kaitz index — which measures the minimum wage as a share of the median wage — puts New Zealand at about two-thirds. By that measure, Australia has a similarly high absolute minimum but a lower ratio relative to median wages.
Why the middle isn't rising
Ungor said structural factors go well beyond minimum wage policy to explain why so many workers remain clustered near the floor.
These include a heavy industry mix in low-wage sectors — retail, hospitality, agriculture, and care work — as well as a productivity-wage decoupling that dates back to labour market reforms in the 1980s and 1990s. The result is a self-reinforcing cycle: when wages are low, employers have less incentive to invest in productivity improvements, which keeps both wages and productivity suppressed.
The proximity of Australia compounds the problem. "Australia, with consistently higher wages across most occupations, acts as a continuous drain on skilled workers," Ungor said. The combination of relatively low wages, high capital costs, and small domestic markets discourages the investment that would pull the wage distribution upward.
What this means for the workforce
The picture helps explain why many New Zealanders working full time still find themselves financially stretched despite a labour market that has absorbed large minimum wage increases without clear disemployment effects to date.
Further minimum wage increases are not off the table — but Ungor says the mechanics may differ from the past two decades. "Substitution away from low-skilled labour, potential hours reductions, and whether firms absorb the cost through lower profits, higher prices, or reduced hiring" all become more relevant as the floor moves higher into territory previously occupied by higher-skilled workers.
For workers, the data underscores that minimum wage policy is only one lever in a much larger set of structural factors determining what people take home.
The comparison with Australia extends beyond the minimum wage floor. Australian taxpayers can claim a percentage of phone, internet and home office expenses against taxable income — a deduction with no direct New Zealand equivalent, and one that compounds the income gap for workers crossing the Tasman.
This article is for general information only and is not personalised financial advice. Seek advice from a licensed financial adviser (registered on the FSPR) for guidance specific to your situation.