The Working Poor

In Australia the four arguments against raising the wages of the lowest paid workers are:

  1. It reduces our business competitiveness against imports made overseas by workers who are paid even less.
  2. There are hugest numbers of the lowest paid, and if they were paid more, they would buy more, and the increased demand would fuel inflation.
  3. There are huge numbers of the lowest paid, and if they were paid more, their employers could not afford it, and small businesses would go out of business.
  4. We have a caste system of wages. If the lowest paid were paid more, in order to keep the caste system of wages, there would be a 'flood up' effect, as everyone else wanted more wages in order to keep their own margin difference. So the working poor would not end up any better after all.

Let us examine these economic arguments, which condemn 1,700,000 workers to working for such a pittance, that the government (taxpayers) subsidises (pays) a large number of their employers by granting their employees welfare to meet their very real needs.

1. Who are the lowest paid workers?

They work hard in useful jobs, very often in casual and insecure employment, without the super and perks that other workers and paid non-workers can expect

  • i. Those who have no minimum weekly award rates and work far below it (mostly but not only female, immigrant, piece-work home-workers) to the number of about ? Without them, it is said, all the Australian garment industry and quite a few others would go under to import competition.
  • ii. workers with minimum weekly award rates include:-

    Service workers such as car park attendants, child-care attendants, laundry workers, zoo keepers, stable-hands, and cleaners

    Industrial production workers - in forestry, the clothing industry, and storemen.

We could perhaps do without car park attendants (Cheers! cheers!) but the others are essential workers, unlike many who might list their occupations as speculators or confidence men or simply receivers of income. And for none of these essential workers are the jobs easy, non-fatiguing, high-status, or opening ways to upward mobility.

2. How low-paid are the low-paid?

(Source: Department of Employment and Workplace Relations figures for gross weekly wages, 2002)

i. Comparisons with average workers. Average weekly gross earnings for an Australian worker: $695 = $36,140 pa.

The minimum weekly aware rate for a forestry worker or car park attendant is $413.40 or $21,496 pa, which is nearly a third less than these average gross earnings..

Many low-paid workers, especially women on piece-work may be paid as little as $4 per hour, but $10 per hour is a generally accepted as a going rate.

Because their total income is so small, a higher proportion of their income goes on rent, food and paying the GST than it does for the rest of the adult population.

ii. Comparisons with the highly paid high flyers.

The CEOs of our top 150 public companies are given salary packages which average $1.300,000- million a year each, exclusive of options and other perks. That is, $25,000 a week each, and assuming that for such high pay they must put in an 80 hour week with no holidays, this works out at over $3,000 per hour. That is, each CEO is paid as much as 300 low-paid workers. The total salary packages of the 150 CEOs = the pay of 4500 low paid workers.

An even greater disparity exists in comparisons of the golden-handshakes when high-flyers and low-plodders are sacked.

An even greater disparity exists in comparisons of the recent annual increases in incomes paid to the highly paid and the low paid, considered as percentage rises as well as in actual sums.

3. Towards solutions.

Is it possible to re-size the normal curve of wages to help reduce the growing gap between very wealthy and very poor at each extreme?

i. The total salary packages of the 150 top CEOs add up to $195,000,000,. This sum distributed among the 1,700,000 low-paid workers would award each $114.7, or an extra $2.20 each per week.

But what about the poor CEOs, you ask. Well then, suppose they could think that $200,000 was sufficient inducement to work loyally and well for their company, then the total packages for the 150 top CEOS would add up to $30,000,000. This would still leave $165,000,000 surplus to distribute among the 1,700,000 low-paid workers, that is, $97 per annum or an extra $1.87 per week. This extra $1.87 per week could also be regarded as justified, as incentive for them too, to work loyally and well for their generous employers.

ii. In fact, how much extra could the lowest paid workers be paid supposing that all the workers who are paid over $500,000 pa plus the all those whose total income including unearned income is over $500,000 decided that 'ENOUGH WAS ENOUGH' and that they only really needed $200,000 pa to keep body and soul healthy. And the rest went into a common kitty to raise the pay of the lowest paid workers, ?

If all recipients of over $200,000 pa income decided that their surplus could go into a kitty for the lowest paid workers, it does really look as if the ACTU would not have to bother with seeking an extra $25 pay a week for the lowest paid - because they would be getting it already from those skimmings.

4. But what would the lowest paid workers
do with all that extra pay?

Would it set off spiralling inflation?

i. The lowest paid are unlikely to invest their extra pay in productive Australian industries - any more, it might be said, than most prudent Australian investors.

a. They are unlikely to save it, because the banks make sure it is unwise for them to do so. The banks after all, can borrow more cheaply from overseas in order to lend to Australians in debt.

b. The poorer workers might gamble the extra pay away in the hopes of making it return more - because they have no other way of making their money earn more.

This would return some of it to government revenue, and enrich some of the already wealthy.

c. They might buy more consolations for their hard working lives - such as drink and entertainment.

d. They might have more chance of keeping out of debt.

e. The government, if foolish, might move them into a higher tax bracket or take away some social security benefits such as health cards - but the government could do the sensible thing and raise the limen for them. And they might need less social security currently obtained on a variety of grounds.

f. They might be able to be more healthy and less depressed, with less financial stress, and be able to enjoy life more - and be less burden on social welfare and hospitals as they grew older. It is well known that the poor are less healthy and the rich, and it is not only that they are poor because they are less healthy - they are also liable to be less healthy because they are poor.

g. So far all that would have little effect on inflation - any more than if the earnings had been those of the $200,000 plus and not the lowest paid.

But they might buy more food, or clothes, or other consumer goods, and so with more demand, the suppliers might not be able to resist the temptation to charge more. Landlords might (would) also take the opportunity of charging more rent. So basic goods might rise in prices and so inflation rise there. This is rough on workers, if every chance they get to earn more is stymied by raising the cost of what they can buy with it. Certainly the whole issue of fair rents is an important side issue here.

h. What they would buy then would be rather different from what the $200,000 plus 'earners' would have spent their surplus on. The demand for luxury goods would indeed be less. Perhaps even fewer overseas trips and imports of luxury goods. Certainly more money would be in circulation rather than tied up in savings or going out of the country.

So it cant perhaps be argued that paying low paid workers more would increase our foreign debt because they would be buying more imports.

i. In fact, low-paid workers might even be more able to afford Australian-made products which are generally more expensive than multinationals' imported goods, even in the food line.

If they did so, then more Australian jobs would be saved, as well as more Australian businesses be saved from going down the drain.

In fact, if it were put to the low paid workers that any increase they are given should be spent on Australian-made goods, especially Australian-owned, then it might be one step around the increasing problem of our loss of economic independence, and with it our own industrial sustainability.

And then this idea might spread, and more Australian jobs be supported by the purchasing power of Australian workers. And in return, the Australian workers who have these jobs would do their durndest to make Australian products that were better than imports. And so we would have snowballing employment - because if all the needs that there are in Australian were being met, there would need to be far more jobs to supply them - and less emphasis on trying to make 'jobs' that are clearly and cynically 'mickey-mouse', waste making, and paying for giving administrative and mickey-mouse-course-providing jobs.

5. If the low-paid workers are paid more -

In fact . . in fact there are many more facts and speculations . .

i. What happens about on-costs such as superannuation, workers compensation and payroll tax that employers must pay? It is not beyond the wit of man or woman or government departments to work out more efficient dealings for super and compensation, and alternatives for that monumental injustice of payroll tax. (For example - treat speeding fines as revenue-raising and dont pretend they arent, and then just go all out to raise this 'tax' with hidden speed cameras? Only a short term windfall perhaps, but long term safer driving and less contribution of accidents to our GDP figures.)

ii. What happens about the workers on the next rung of the ladder, and the next and the next, who all want to have more in order to keep a margin between themselves and the rungs below? The rumbles rumble up to the teachers and other professionals, whose status is perceived to have dropped as their higher earnings lose distance from the workers below them. We have to play a ball-game of social justice here.

It is this 'flooding-up' effect that employers fear more than any 'trickle-down' from the high salaries of those at the very top.

We might do some calculations about that figure of the 'Average Weekly Wage' of $695 a week, so that the standard deviation became smaller, as the extremes of too low and too high were reduced. In a culture of 'enough is enough' we could have other incentives than enormous wealth to motivate us all to do our best, to be honoured by our fellows, to have satisfaction in our work, and decency in our working conditions, and more chances for life with family and friends, and opportunities to make our whole society and quality of life just that much more worth living in.

iii. And what about the overseas workers in the low paid jobs who work for multinationals who import their produce cheaply? Without whose jobs whole families might starve because there are no other jobs? Here again is another ball-game that is related, so that Australians can help to ensure that they too can have decent working conditions and fair wages, and their own countrymen benefit from what they produce, and so have their own 'internal snowballs' of improved quality of life there too.

iv. And what about those global corporations whose perceived interests would be threatened .. . More ball-games!

(Now if all this could be on TV under Sport,
what a great sport that would be!)

valerie yule April 2002

Inspired by an article by Ross Gittins in the AGE, 27.3.2002, 'Say it again, Sam: for CEOs enough's enough'. Sam Chisholm, chairman of Foxtel, was reported to be exposed as declining to take his fee as a director of Telstra on the grounds that 'I have enough'.