Wednesday, January 03, 2007

Minmum Wage Blog Debate

Well the minimum wage debate rages in the pages of Progressive Bloggers, having said my piece here and here, I will simply add this link to the PB page where you can find the vast debate that is ongoing on this. Check out the posts and the comments. Comments have been extensive on my original post.

The Blogging Tories have not picked up on this issue, so I guess they have ceded the right wing position to Cherniak, on this.

And just to add another two bits into this debate I include excerpts from this interesting article from 1945.


Just as an average banker doesn
t understand money, the average wage worker does not understand wages. Most bankers know how to get money and how to keep it, but still they cannot explain its mystery. The worker may fight like a tiger to get an increase in wages, and he/she may know how to spend his income wisely, but the real nature of wages, as such, he/she generally does not comprehend, and may not even suspect.

It is quite impossible to understand the real character of wages without recognizing their connection with the working day. The proletarian, the modern wage worker, is a peculiar historical product. He/She differs from all other workers in history. He/She is not allowed certain days of the week to work for himself/herself and certain days to give to his/her master, as was the case with the feudal serf. In fact, on the average, he/she owns no tools of production and no place of his/her own in which to work. Nor is the proletarian the personal property of a master, with unrestricted control over his/her life and labor, as in the case of the slave.

The wage worker is in a different position. At the termination of a stipulated time, he/she carries home his/her pay envelope, what he/she now refers to as his/her
take-home wages (withholding tax, etc., deducted) . We will assume that he/she has been working steady, engaged in production, not for himself/herself of course, but for the buyer of his/her labor-power, his/her employer. However, he/she is not doing that for his/her health, nor because he/she likes work, or loves his/her boss. His/Her purpose is to get enough pay to purchase food, shelter and clothing for himself/herself and those depending upon him/her. In other words he/she tries to obtain a standard of living as high as possible.

The Money Wage

The cash which the worker takes home, when he/she receives his/her pay, has been called the nominal wage, or wage in name, twenty dollars, forty dollars, or such. Let us call it the money wage. But the worker is too sane just to want money to look at. He/She earns it with the idea of spending it, and generally he/she is forced to do so. The cost of living for him/her and his/her family compels him/her to spend his money wage on the necessaries of life, plus some small luxuries.

The Real Wage

What, therefore, the modern worker toils for is not money, but what the money will buy.
That which is thus obtained has been called the real wage. Without consideration of the cost of necessities, wages, as such, cannot be properly understood. A high money wage which would purchase but little, might be a very low real wage. If a worker receives, say, 20 per cent increase in his/her money wage, and, if in the meantime the cost of living had advanced 30 per cent, his/her real wage would actually have fallen. His/Her standard of living would be lowered.

g2: The
visible ride to being-lessness

The battle to maintain, or increase, real wages, to maintain living standards (the main function of a labor union) is a constant and terrific struggle for the workers. It is a battle which the workers must carry on. They cannot afford to relax or be off-guard, no matter how well-organized or how
great their temporary gains may be. This necessary, this unavoidable struggle, nevertheless, leaves labor at a disadvantage, in the long run, because of the nature of the present social set-up.

Under the present system of
private enterprise, capitalism, the workers as a class cannot rise, but only sink, economically. The capitalist system works that way and it will not work any other way. Competition for jobs, especially over a long period, reduces the workers to a starvation minimum. For the workers, in the long run, the natural wage is the minimum wage.

The Relative Wage

While the worker's main concern is with what he/she is actually going to receive in return for his/her services, it is important for him to understand what has been called the relative wage, or in other words, the amount of actual value he/she receives in relation to the value he
/she produces. If the worker produces new values to the amount of one hundred dollars, and he/she receives a wage whose value is twenty dollars, his/her relative wage then is but one-fifth of the value he/she has added by his/her labor.

This margin between the value the worker receives (his
/her wages), and the value he produces, has been called surplus value. Under the wage system, the former (wages) represents that part of the working day which we previously mentioned, the necessary labor time, the latter, the surplus value, is that which is produced during the remainder of the working day, during the surplus labor time.

Unless all these simple facts, and some others besides, are taken into consideration, it is impossible to fully comprehend the nature of the wage system.



Minimum Wage

Social Wage

Jason Cherniak

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Reg said...

Good points on all fronts Eugene. I personally don't pay anything less than $12 in my business because a) it's cheaper to pay the wage and retain good employees than to pay the minimum and have to retrain every two months when they jump for a $1/hour raise and b) I'd simply feel too guilty paying someone $15,600 per year knowing he/she has kids at home.

One thing that jumped out at me in the comments of your previous posts was the idea that by paying a higher minimum wage, we put more money into the economy. One commenter said that only happens when the money supply is increased. Technically that is true, but obviously we're not talking about the money supply as a whole, we're talking about the multiplier effect of spending, which you correctly indicate is much higher for the low wage earner since they are going to be spending that money locally (hopefully not at Walmart but that's another story) rather than a company paying it out as dividends out of country or some similar action that doesn't benefit the local/regional economy. As with any economic argument, for every theory there are countless ways to debunk it, but common sense tells us that a dollar spent in a town in Canada is better for the economy than a dollar paid to an investor overseas.

eugene plawiuk said...

Gee I missed ya Reg. Glad to have you back. Great comments especially the last sentence. Investors period don't buy things they invest. The whole Income Trust scam, while claiming to be providing income for retirees, in fact provides more income for the fund managers, and those can afford to invest in such schemes are already wealthy, so they in fact are not spending their earnings in the marketplace but reinvesting them. Thus cuopon clipping.

Walmart in the United States promotes increasing the minimum wage. Why? Then state sanctioned wages can be used as a write off as costs of doing business. Which our small business friends keep missing the point on. It also allows them to increase wages because it is 'the law' rather than paying increased wages as part of general policy. Of course they pay bonuses etc. on a selective basis.

But of course they are like the landlord who complains about having to improve his properties as being a cost when in fact they are a tax write off on his profits from rent.

AwaWiYe said...

>We will assume that he/she has been working steady, engaged in production, not for himself/herself of course, but for the buyer of his/her labor-power, his/her employer.

That's a fallacy resulting from an incomplete or misunderstood view of the role of the employer/business. The worker is engaged in production for the consumer. An employer/business is just a middleman who reduces transaction costs (performs a social good, really).

Suppose, for example, you were a machinist in 1947. You could buy a lathe and spend your days turning out engine pistons in your home shop, and then sell them door-to-door to people who wanted to assemble an automobile out of parts fabricated by other machinists and metalworkers and so forth. But this would be really inefficient, because of all the non-productive time spent travelling and approaching people who had no current interest in an automobile. But of course no-one had to do that, because there were capitalists and entrepreneurs who gathered together all the tools and labourers to fabricate automobiles (or component assemblies) in one location, and also created networks of dealers to sell automobiles, who gained the additional efficiency of only having to interact with people who were already self-selected potential buyers of automobiles.

What businesses and corporations do is allow workers to specialize and to maximize their productivity by concentrating work in their area of specialization, and also simplify the delivery chain (reduce transaction costs) between the worker and the consumer. The next time you meet someone who doesn't live on a subsistence farm but who has a highly specialized chosen employment - say, an academic or thinker whose work is high up the abstract value chain - join him in thanking capitalists and businesses for making it possible for him to not spend dawn to dusk in the fields.

eugene plawiuk said...

You completely miss the point of capitalism, which is to reduce the worker/comsumer, they are the same person, which is what makes capitalism revolutionary, to someone who sells not their labour but their 'time'. That is why every worker is a wage-slave, they do not sell a product as they did in pre-capitalist argrarian artisan America, they sell themeselves.

The de-skilling, multi-tasking and dumbing down of work in the social factories, whether Ford or U of T, is clear from the nature of the modern capitalism. Anyone is interchangable with anyone else in the production of surplus value.

That value is the labour time to proudce a product which is then sold.
Whether a car or a university class. The worker is not a tradesperson or artisan, they are a cog in the machine of capitalism.

Thus Toyota factories want their machinists to be able to also be electricians and carpenters, etc.

At university Tenure is gone, the academy now relies upon apprenctices to teach classes (Grad students, TA's, tempr teaching contracts) , not specialists (Professors).

Just in time production is the latest aspect of captialism, what is called Post Fordism. And that reality began on the shop floor and now permeates capitalist society even in the halls of academia.

The proletariat are not selling their skills but their time.

AwaWiYe said...

>You completely miss the point of capitalism

The point of capitalism is to reinvest capital in production.

>someone who sells not their labour but their 'time'.

No-one is paid to sit at a desk or stand at a work station. Labour - applied skills and knowledge - is what is paid. Time is just something that elapses. Fundamentally an economy is just a series of exchanges of skills and knowledge applied over time (labour), usually via proxies for labour such as "money" or "bushels of wheat" or "fired clay pots" or "engine assembly".

>That value is the labour time to proudce a product which is then sold.

There is no inherent value in labour or "surplus value". There is only the subjective value of what someone is willing to pay for something.

>Just in time production is the latest aspect of captialism

Just-in-time-production is merely an optimization of inventories.

>The proletariat are not selling their skills but their time.

They are selling their skills. If I put you on the shop floor at Ford Motor Company of Canada and handed you the tools for a work station, you'd be as useless as a sack of hammers no matter how long you stood there.