Economic Update: A "Living Wage"

[S11 E21] New

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On this week's show, Prof. Wolff comments on how and why "consumerism" matters and on why Biden's "progressive shift" is both like and unlike (far more limited so far) FDR's. Wolff then interviews two Canadian professors of labor studies, Bryan Evanson and Carlo Fanelli, on the stakes for labor in fighting for a "living wage."

Transcript has been edited for clarity

Welcome friends to another edition of Economic Update: a weekly program devoted to the economic dimensions of our lives, jobs, debts, incomes, our own and those facing our children down the road. I am your host, Richard Wolff.

I want to begin today's show talking about consumerism. Not consumer but consumerism. Let me explain. We are all consumers, that is, we all in our economic system have to go out every day and buy some or a lot of food, clothing, shelter, entertainment, transportation, all the things of life. Consumerism is when we give them more importance than what they kind of ought to have because they are one of many different activities we do besides consuming and buying things. If we focus too much on them, if we overdo it, that is what we mean by consumerism.

Let me explain it another way. It is an identity for many people. It has become the thing they focus on in their lives. It is why they go to work every day: to get the money so they can be consumers. It is the product, for example, of the enormously powerful advertising industry, which spends all its time and all its effort trying to persuade us that whatever issues we have in our lives (our personal relationships, our career issues, our friendships, our love relationships) everything can be better handled if only we buy this product or that product or the other service. This is making us overly focused on consumption.

There is nothing innocent going on here. For example, until the Second World War, here in the United States, working people were more apt to define themselves, to think about themselves as workers, not as consumers. The working people, the working class, you can see even now, percolating up; but the dominant theme for the last 75 years has been consumers. If you think of yourself as a worker, you right away understand that you are a worker and somebody else is a boss. It is an identity that explains and contains in it the differences amongst us. Consumer does not work like that because the boss consumes and the employee consumes, and this is an attempt to say we are all in it together. You know, like for the last year, we are all in it together to fight the pandemic, except if you know anything, you understand some of us are much better off fighting that pandemic than others. For example: those who kept their jobs; those who lost them; and those who run the industries that fired millions of Americans, all of that. So, worker is an identity in our society that leads you to understand differences. Consumer tries to erase all of that. Here is a couple of ways it becomes important: If you think of yourself primarily as a consumer, then the thing that interests you most, for example, when you have a struggle on the job, is getting more money because that can allow you to consume more. Yet a thousand studies show that the quality of your life during the workday (you know, five out of seven days, best hours of the day, you are either getting ready for work or doing the work or recovering from the work), the quality of that time, how it impacts your personality, your mental health, and your physical health, is at least as important as what you are buying and consuming. You kind of lose sight of that, which is what the employer wants because the employer can recover whatever it is he has to pay you in higher wage by changing the conditions of your work; making you work harder; making you work faster; making you come earlier; and making you stay later. If none of those things suffice, there is this other interesting thing that employers can do: they can jack up the price of what they sell to recoup whatever they have to pay you in a higher wage, and you are going to have to use your higher wage to pay the higher price, leaving you not that much better off. So, be wary of consumerism, of focusing your life on consumption. It is what people want you to do, who do not have your best interest at heart, and that is the politest way I know how to say that.

I want to spend the rest of first half of today's program talking about President Biden and in a particular way. President Biden has taken a position on a number of issues. He has come to be referred to as being somehow more progressive than he was expected to be or in some cases moving over more towards Bernie, AOC (Alexandria Ocasio-Cortez), and that wing of the Democratic party. If you are a Republican, you are horrified and claim he is going in a direction of socialism, but it is always the same real issue: how progressive is Mr. Biden?
Let us begin by giving the President his due. He has done some progressive things. There is no point in denying that. For example, he is proposing to tax corporations more than they were paying before, and to tax wealthy people more than they were paying before. In the standard of American politics, that is progressive. Likewise, he has proposed to spend money on all kinds of social programs that will benefit average Americans way more than the Trump administration ever did. So, by using Mr. Trump, the most recently past president of this country, he is certainly progressive; but that is a low bar that Mr. Trump has left us. So, let us look a little more deeply. Did Mr. Biden change? He may have. If he did become more progressive than he led folks to believe (than his past political record would suggest to anyone), why? What happened? How do we account for it? I think that will also explain how progressive he actually is.

Capitalism in America has changed. That for me is the single most important reality to explain what Mr. Biden has done. That should not surprise anyone who knows much about American history. When Franklin Roosevelt won the presidential race in 1932, he was a middle of the road Democrat. His past history in the state of New York and in his political life gave no one any reason to expect what he then became as the President of the United States. Mr. Biden is like Mr. Roosevelt in that way. He is doing some of the things Mr. Roosevelt did and for the same reason capitalism fell apart in the 1930s. Mr. Roosevelt had lived during a boom time of capitalism, doing his politics. He had to reverse himself because he was now living in a capitalism that was busted. Mr. Biden is like that. He inherited a capitalism that is in very bad trouble: that never really recovered from the crash of 2008 and 2009. Here it was in 2020, barely emerging from that calamity to have the system go down again. On top of it was the viral pandemic that nobody prepared Mr. Biden for. Mr. Trump did not do anything to deal with the problems of capitalism. If anything, he made them worse. Unemployment took off because of the pandemic and because of capitalism turning down. Inequality got much worse under Trump. The competition from China proved itself to be very powerful and much more powerful than Mr. Trump's trade wars and tariffs were able to stop, or even slow down. The American economic system inherited by Mr. Biden was catastrophic, and that is why he has become a bit more accommodating to progressive responses because the effort of the right wing in America epitomized by Mr. Trump did not solve anything. That is why those folks on January 6 were so frustrated. Nothing had gotten better and whoever they blamed (because they are big on to scapegoating) the bottom line was they had to scapegoat somebody because the situation kept deteriorating. Traditionally, Democrats respond to a caving capitalism by helping those at the bottom, whereas the Republicans tend to repress those at the bottom and distract the rest of the working class with patriotism or religion or guns or the usual distractions, they hope, will work so people do not get angry at the economic collapse. That is their basic dilemma.

Mr. Biden is no Franklin Roosevelt, not even close. Roosevelt had a program to deal with unemployment. The government hired 15 million Americans and gave them a job and a good income. Nothing Mr. Biden has proposed or said is doing that. We have tens of millions of people not working who were working five years ago. So, he is not doing any of that. He did not establish a new institution equivalent to social security, not even close. He could not even get the minimum wage raised. Roosevelt is the one who established the minimum wage in the depths of the Depression. So let us conclude this analysis by saying yes, Mr. Biden is like Mr. Roosevelt in that he realizes that the level of collapse of capitalism is so severe that it needs drastic efforts to tax those at the top to help the mass of people get through it. That is what Roosevelt did. No challenge to the dominance of the capitalist, no one took away their power to gather the profits into their hands and use them in any way they see fit. Mr. Biden is not proposing to change any of that either. So why isn't Mr. Biden even doing what Roosevelt did? There's a crucial difference between the 1930s and today and that is the most important point I want to give you today. In the 1930s, there was a massive movement from below: the biggest union organizing drive in American history that enlisted millions of American workers in the CIO (Congress of Industrial Organizations), the labor movement of that time. They were allied with two socialist and one communist party that were at their height in American history in terms of membership and social influence. You put together the New Deal coalition: unions on the one hand, socialist, communist, and social movements on the left into an alliance. Now you know why Mr. Roosevelt went much further than Mr. Biden is even imagining. Why? Mr. Biden does not have a powerful labor movement on the upswing allied with a powerful socialist, communist, and social movement left. The unions are at a 50-year low in membership and strength, and the left still has not recovered from the anti-communist, anti-socialist movements of the second half of the 20th century. Until that left regroups and organizes, we will see the minimum progressive movement that Mr. Biden has shown. I do not want to take away from the pressure on him from Bernie and AOC. That matters too, just like the real competition from China (where the government plays a much larger role) is suggesting something to Americans about what they may need to do. Those are important factors, but I think it is important to understand how Mr. Biden is like FDR, and how he falls far short even of that. We have come to the end of the first part of today's show. Before we get to the second half, I want to remind you, our new book The Sickness is the System: When Capitalism Fails to Save us From Pandemics or Itself, is available at Democracy at Work.info/books. I also want to thank our patreon community for their ongoing and invaluable support. If you have not already, go to patreon.com/Economic Update to learn more about how you can get involved. We urge you to do that. Please stay with us. We will be right back with today's guests: Professors Carlo Finelli and Brian Evans.

Welcome back friends to the second half of today's economic update. I am very pleased to bring to our microphones and to our camera, two specialists in a topic that I have long wanted to bring to your attention. The topic is the living wage. My guests and I (have two today instead of just one) are: 1) Professor Brian Evans. He is a professor in the Department of Politics and Public Administration at Ryerson University in Toronto, Canada. He has worked in policy positions and focuses his research on the neo-liberal phase of capitalism and the austerity politics that followed its crash back in 2008 and 2009; 2) My second guest is Professor Carlo Finelli. He is a professor and coordinator of the Work and Labor Studies Program in the Department of Social Science at York University, also in Toronto, Canada. He has also published on the neoliberal phase of capitalism in Canada. He is editor of Alternate Roots, a journal of critical social research. His writing is available at www.carlofenelli.org. Let me start with you Brian. Tell us briefly what exactly is, a quote-unquote, living wage. What is the difference between that and a minimum wage or an average wage? Tell us a little bit about the fortunes of the living wage in Canada.

Professor Brian Evans: Thank you Richard and thank you for inviting Carlo and I to be on the program. I thought about the question, and I have to think back to a trip I took to Vienna way back in 2013, a whole other era. At the time, they were having a national election and the Social Democratic Party was running on the slogan: “Work should pay enough to live.” That kind of captures the idea of the living wage. The idea of the living wage is basically that it should be a rate of compensation that pays a person an adequate amount of money to live a good life; not a sumptuous life of luxurious consumption, but a decent life. The living wage, there are different ways of calculating it. We will not get into that, but it is meant to be an hourly wage, which is calculated to allow a person to be able to pay for housing, public transit, child care, health care, including drug and dental, clothing, and you know maybe a little bit of going to a movie with the family once a month. But it is this idea of adequacy and that is where it makes a fundamental departure from the idea of the minimum wage or the reality, the policy of the minimum wage, which does not take into consideration anything to do with adequacy. Is it an adequate income to allow one to live? Minimum wages are a floor. I used to work for the Labor Ministry in Canada, and we would have these very casual calculations, you know, two percent, five percent, ten percent, pick one. It had nothing to do with whether or not that level of income allowed one to live an adequate life.

Professor Richard Wolff: As a professor of economics myself, one of the ways that traditionally one evaluates an economic system is precisely what kind of life it does or does not deliver to the vast majority of its people. If it did not deliver what you are calling a living wage, well it would be deemed an inadequate economic system. Let me turn a little bit to Carlo and ask a follow-up question. Capitalists learn from practice, and from going to business school, that it is clever to economize as it is put on labor costs: to be forever concerned to limit the number of workers you have to hire; to get more out of each of them; to pay them as little as possible; to use immigrants; or to move production to where wages are lower. Given all of these pressures on capitalists and how they typically respond, have they opposed living wages? How has that issue been dealt with particularly in Canada, since I know that you studied that.

Professor Carlo Finelli: As someone who has long looked at this perspective from the vantage point of workers, as opposed to the vantage point of employers, in taking a broad look at most of the scholarly journals, business press, three main arguments when distilled tend to distinguish pro and anti-living wage arguments. Amongst those really at the core of the anti-living wage arguments are three broad claims. The first argues that if you raise minimum wages to a level approximating a living wage, this inevitably results in job losses, reduced business investment, and decreased hours worked. A corollary to this is that since the majority of minimum wage workers are apparently teenagers living at home and attending school, increasing the wage floor would only result in the consumption of luxury or extravagant goods. The third really contends that increases the minimum wage do little to significantly improve the lives of low-wage workers, nor are they really an effective anti-poverty tool. With regards to the first claim, predictions of job losses and slower economic growth have not really panned out. On the contrary, we have evidence from the USA, UK, and Canada that we detail in our current book Rising Up that found that when one raises the wage floor to a level approximating minimum wages, it has beneficial effects by countering, for example, weak demand; increasing productivity; reducing after tax government redistribution; even increasing consumer purchasing power and higher employee retention.

The second claim about most minimum wage workers just being teenagers and living at home is just not borne by the evidence. It follows from this argument that there is apparently no need for minimum wages to be livable since minimum wage jobs are apparently a stepping-stone to better employment; but in Canada, for example, as in the UK, and to a somewhat lesser extent in the United States, nearly half of all minimum wage workers are over the age of 25, with few prospects for upward social or occupational mobility. There is some important contextual environments that also bear emphasizing with recent immigrants, women, racialized persons disproportionately represented, and seniors actually being amongst the fastest growing groups among them.

Thirdly, contrary to claims that living wages are not an effective anti-poverty tool, we have research again from Canada, the United States, and UK, that found that where living wages have been implemented, not only did the percentage of workers living in severe poverty diminish, but savings also increased. So, while Conservatives often raise this fear that mom and pop shops will be disproportionately impacted, the reality is that more than half of minimum wage workers are actually employed with businesses that have more than 500 employees.

Professor Richard Wolff: It is all striking to me listening to you that the employers have always had good reasons, don't you think, to not pay higher wages. Any proposal, whether it were living wages or anything else, has always gotten them to hire people like me to generate the kinds of arguments you have now very successfully counted. Let me go back to Brian and ask. Tell us a little bit. Have the labor unions in Canada embraced this idea? Is the living wage something that their organizational strategies are picking up and using well?
Professor Brian Evans: I wish they were in a much bigger way but they have not. To be fair, there are pockets in different parts of the country where the labor movement, the trade unions may be a little bit more attuned to the living wage campaigns. They have worked out local coalitions with different community organizations. It could be churches but unlike the United States, the living wage movement here is relatively underdeveloped. It tends to be one with more of a voluntary approach where people who advocate for the living wage meet with government officials, meet with maybe employers who maybe open-minded about the idea, and try and convince them with good ideas and good arguments that they should adopt a living wage rather than like we see in the United States of America, a much more political campaign, which is broadly made up of coalitions of community organizations, trade unions etc. Again, I know it is uneven. It varies from region to region, city to city, but it has much more of a coherent and political complexion in the United States than in Canada.

Professor Richard Wolff: I remember back to this struggle, a century ago, against child labor on the argument that having young people as little as five and six years of age working was anathema on 27 levels. The employer class made all the same arguments about why it was generous of them to hire children because it brought more money into the poverty-stricken family than if they could not market their children into the work. It was extraordinary and that was overcome in the end by a workers’ movement that simply said: you are not gonna wreck the lives of our children; we're not gonna let you do it; and you are gonna have to find other ways can you imagine. Can you imagine either some kind of movement like that demanding a living wage for adults for much the same reasons that you have yourself articulated? Then a related question: if work places were differently organized, if we had democratic working arrangements, worker co-ops, (whatever you want to call them), would they be more likely to understand and implement a living wage program than has been achieved, given the imperative to a capitalist to maximize profits and not the living conditions of the workers? I know it is a big question, but you guys do a lot of work on it. So, I would like both of you just to give me your sense of how to respond to that.

Professor Brian Evans: I grew up hearing stories from my grandparents and parents about the Great Depression. They lived in Detroit before they came to Canada, my grandparents did anyway. I grew up in a mining town in Canada where the CIO movement had taken hold in the 1930s and 1940s. An old union by the name of The International Union of Mine Mill and Smelter Workers. The CIO movement of the 1930s was in my opinion, the greatest social movement of our time. It changed our lives. It changed North America for working people anyway, and beyond that it changed the politics up to a significant point for many decades. Now, to your point Richard, in the moment that we are living in, do we have anything like that? No, we do not. Not in Canada, not in the United States. We have witnessed maybe the beginning of that kind of mobilization, particularly in the United States of America more than in Canada, centered around the Bernie Sanders campaign in 2015 and then again in 2019. We see maybe green shoots of that movement again. Again, I think what we are all lacking, (it hinges back to my earlier comment) is that trade union officialdom in both of our countries has not yet revived or refound that kind of social, political mobilization and inspiration that my grandparents had back in the 1930s.

Professor Carlo Finelli: Two factors that distinguish Canadian from US politics (besides having better hockey players and better beer of course) are: 1) We have in Canada, a modestly social democratic party that challenges power and holds significant electoral space in our parliaments; 2) The other is a generally higher trade union density, that is, the proportion of workers in our labor markets who are organized and part of a union, particularly in the private sector. Unfortunately, however, while we may have higher trade union density and a modest social democratic movement of some sorts, Canada still fails to crack the top 20 countries when it comes to the rate of collective bargaining coverage as a proportion of total employment. So, for decades then, employers have been increasing profit margins by cheapening labor via subcontracting; offshoring; converting full-time jobs to part-time jobs; temporary work; automation; and especially, most recently, misclassifying direct employees as independent contractors. So, often times, employers and governments have worked hand in hand to rewrite laws and regulations and to strengthen greater rights for employers and investors with fewer for workers. Of course, unions challenge this power and balance by creating a presence in local labor markets that can create kind of a countervailing force. We might call this a Reverse Amazon Effect, which has a tendency to bring down wages. So, I mean, it is part and parcel of rebuilding a workers’ movement, of course, is rebuilding our labor movement.

Professor Richard Wolff: That is the same issue we have here. Listen, we have run out of time, but I want to thank both of you for your work on the living wage, and for joining us and explaining it. It is my hope that that will also stimulate people listening and watching to move forward and fight for something like that. Thank you again, both of you, and to my audience, thank you for your attention, and I look forward to speaking with you again next week.

Transcript by Barbara Bartlett

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**Economic Update with Richard D. Wolff is a d@w production. We make it a point to provide the show free of ads. Please consider supporting our work. Become an EU patron on Patreon: https://www.patreon.com/economicupdate  and help us spread Prof. Wolff's message to a larger audience. Every donation counts!

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About our guests: Bryan Evans is a professor in the Department of Politics and Public Administration at Ryerson University. Prior to his appointment at Ryerson, he worked as a policy adviser and senior manager at the Ontario Ministry of Labour. His research interests include the politics of the neoliberal administrative state and public policy. Recent publications include The Public Sector in an Age of Austerity (with Carlo Fanelli) and “The Politics of Public Administration: Constructing the Neoliberal State,” in Canadian Political Economy (ed. Heather Whiteside). A forthcoming volume, Varieties of Austerity (with Heather Whiteside and Stephen McBride), examines the fallout of the 2008 crisis from a comparative perspective.

Carlo Fanelli is an assistant professor and the coordinator of the Work and Labour Studies program in the Department of Social Science at York University. He is the author of Megacity Malaise: Neoliberalism, Public Services and Labour in Toronto, co-editor (with Bryan Evans) of The Public Sector in an Age of Austerity: Perspectives from Canada’s Provinces and Territories, and editor of Alternate Routes: A Journal of Critical Social Research. He maintains a collection of his writing at www.carlofanelli.org and on Twitter @carlofanelli.

Recent Publications:

•  Rising Up: The Fight for Living Wage Work in Canada (with Bryan Evans and Tom McDowell) available at 50% off the month of June with code "nifty50" at https://www.ubcpress.ca/rising-up

•  Profiting From the Pandemic, The Hill Times (with Heather Whiteside)

Change and Continuity: Canadian Political Economy in the New Millennium (with Mark P. Thomas, Leah Vosko and Olena. Lyubchencko)

The Public Sector in an Age of Austerity: Perspectives from Canada's Provinces and Territories (with Bryan Evans) 

Learn more about Prof Wolff's new book, "The Sickness is the System: When Capitalism Fails to Save Us from Pandemics or Itself," now available. Visit us at www.democracyatwork.info/books

"Richard Wolff in his new book examines frightening and anti-democratic configurations of corporate power, offering not only a blueprint for how we got here, but a plan for how we will rescue ourselves and create new models of economic and political justice.” - Chris Hedges

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  1. Consumerism:
    1. https://www.bbc.com
    2. https://www.pbs.org
  2. Biden’s “progressivism”:
    1. https://news.yahoo.com
    2. https://www.theguardian.com
    3. https://www.usatoday.com

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