Tag Archives: wage gap

Jan 17 2014
Leave a comment
Business, Economy, Workplace

The dos and don’ts of reducing disparity

IMG-20120908-00198

In an astonishing turn of events, worthy of major international coverage, your humble scribbler finds himself in actual, authentic agreement with the right-wing, free-market- loving think tank, the Fraser Institute.  Sort of.

How this happened is less important than why, which I can summarize thusly: Even a blind pitcher will hit the broad side of a barn once in a blue moon if he’s standing next to a silo. . .or. . .something like that.

The point is when the Institute’s recent report, The Economic Effect of Living Wage Laws, concludes that such legislation in the United States – which is designed to raise poor people’s salaries and, so, reverse growing income disparity – are backfiring, it is largely, albeit lamentably, correct.

“The best available evidence from the U.S. serves as a cautionary tale for us in Canada about adopting living wage laws,” said Charles Lammam, the study’s author and Fraser’s resident scholar in economic policy. “When governments try to legislate wages, there’s typically a trade-off – while some workers may benefit from a higher wage, their gain comes at the expense of others who lose as a result of fewer employment opportunities,”

The press release continues on to explain: “Although activists claim living wage laws can increase wages with minimal costs, the reality is quite different. According to the best available research, a 100 per cent increase in the living wage (for example, going from an hourly minimum wage of $10 to $20) reduces employment among low-wage workers by between 12 and 17 per cent.”

The reason has to do with labour market shock. When living wages are “mandated” to rise regardless of other factors and circumstances, businesses cut back jobs – especially the lower-end ones – and training programs precisely because they are not likewise “mandated” to employ anyone. The relationship between the supply of jobs and the regulations governing pay rates asymmetrically disadvantages workers.

This has the corollary effect of undermining overall productivity and innovation in the private sector despite the fact that Mr. Lammam found evidence suggesting that “employers also respond to living wage laws by hiring more qualified workers and passing over those with fewer skills thereby reducing the opportunity for less-skilled workers to participate in the labour market.”

All of which only means that which we already know: Governments are lousy micromanagers of wages and prices. But can they play any productive role in narrowing the income gap between the rich and the rest? Fraser doesn’t say, but I suspect their answer would be: “a minimal one, thank you very much.”

This is where I (with a sense of great relief) would part company with the Institute.

The socio-economic costs of wage disparities, which are growing rapidly in the western world, are several and serious. As more money flows to fewer people, lobbies and special interests skew public spending priorities.

Suddenly, the infrastructure on which a fair and democratic nation relies – everything from public transportation, roads and bridges to schools and hospitals – becomes less important than tax cuts for the wealthy.

The malign effect on the culture is equally worrying. Prolonged, structural economic inequality creates class systems and all the attendant evils of social immobility: little access to high quality education and jobs; and few, if any, opportunities for meaningful career advancement. In effect, permanent, grinding working poverty becomes the norm for millions until, of course, comes the revolution.

Governments, then, owe it to themselves and to the people – all the people – they represent to be mindful of even the slightest imbalances in the scales of social justice. The role they play is not properly reactive (living wage legislation, as one example), but proactive. Robust, progressive, encompassing social policy designed to create the conditions for broad and general prosperity is what they can and do best.

They should start with a redistributive frame of mind by tithing the personal wealth of rich more aggressively. The notion that economic opportunity trickles down from the top is utterly bankrupt. Rich people spend less of their incomes, per capita, in their local economies than do middle-class wage earners.

Governments should also provide corporate generators of wealth with more incentives for plant reinvestment, job training and apprenticeship programs – for, in effect, a national, private-sector “manpower” program that focusses, once again, on people as much as it now does on profits.

Such are, of course, humble proposals that have, in the current political climate,  about as much chance of being adopted as I have.

On this matter, too, I am certain the Fraser Institute would concur.

Tagged , , ,
Jan 10 2014
Leave a comment
Business, Corporate Responsibility

That’s one for you and 171 for me

DSC_0180

The wretchedly poor are far more likely than the stupendously wealthy to publicly disclose their incomes. After all, the former needn’t ever worry about being kidnapped for a ransom of mac and cheese.

So, we must turn to the Canadian Center for Policy Alternatives (CCPA) to learn that the rich are, indeed, getting richer faster than everybody else in the country.

According to a folio entitled All in a Day’s Work? released last week, the annual compensation packages of Canada’s 100 highest-paid CEOs included, on average, a base salary of $1 million, cash bonuses amounting to $1.73 million, corporate shares and stock options worth $3.93 million, and miscellaneous perks and pensions valued at $1.29 million for a grand total of $7.95 million, giver or take a grand or two.

If anyone is counting, that amounts to 171 times more than the average Canadian wage, which tops up at about $47,000 a year. And, it gets worse (unless, of course, you’re rich, in which case it’s getting better all the time).

“The average wage in Canada increased by 6 per cent between 1998 and 2012 while the average compensation of Canada’s highest-paid CEOs increased by 73 per cent during that same time period (inflation-adjusted),” author Hugh Mackenzie writes. “Reality was harsher for Canada’s minimum-wage workers: If they were lucky enough to have a full-time, 40-hour a week job, minimum-wage workers earned, on average, $20,989 in 2012.”

In fact, another source, the AFL-CIO, says the wage cap in industrialized countries – including Canada – is wider and accelerating faster than even these numbers indicate. In the United States a top CEO, earning an average of $12.2 million annually makes 354 times what a wage-earning stiff pockets in a year. In Canada, the ratio is 205:1. In Germany, it’s 147:1. In England, it’s a downright egalitarian 84:1. “In the past few decades, CEO pay has skyrocketed while the average worker’s pay has stagnated despite increases in productivity,” the union’s website observes.

Of course, the purpose of these timely revelations is not a little political. Neither the CCPA nor the AFL-CIO are especially fond of corporate fat cats. To be sure, the CCPA can’t resist thundering its disapproval: “Five ears after a global recession knocked the wind out of Canada’s labour market, throwing tens of thousands of workers onto the unemployment line and sidelining a generation of young workers, the compensation of Canada’s CEO elite continues to sail along.”

But if such criticisms are expected from the usual assortment of fellow travelers outside the gates and beyond the moat, less predictable is the chorus against excessive compensation rising within the castle keep, itself.

Here’s what McGill University professor of management Henry Mintzberg had to say in a piece he penned for the Wall Street Journal in 2009:

“These days, it seems, there is no shortage of recommendations for fixing the way bonuses are paid to executives at big public companies. Well, I have my own recommendation: Scrap the whole thing. Don’t pay any bonuses. Nothing.”

As Dr. Mintzberg concludes, “Too many large corporations today are starved for leadership – true leadership, meaning engaged leadership embedded in concerned management. And the global economy desperately needs renewed enterprise, embedded in the belief that companies are communities. Getting rid of executive bonuses, and the gambling games that accompany them, is the place to start.”

The larger point is that, ever since much of the world’s financial sector collapsed under the weight of an adept minority’s avarice, fairness and equity (or least some semblance of these scarce resources) have become centerpieces of economic development and job creation among the abused and disaffected majority.

That’s why obscenely high pay packets for CEOs, such as Canadian Pacific’s E. Hunter Harrison who earns a staggering $49.1 million a year, affects public opinion (and perhaps even public policy) more directly today than ever before.

Will it be enough to imbue the system with a little sanity? “Despite the scrutiny and pressure,” Mr. Hugh Mackenzie writes, “the pay of CEOs in Canada and elsewhere has proven to be remarkably resilient.”

All of which suggests a reason other than fear of kidnapping why Canada’s stupendously wealthy are loath to discuss their loot in public: Lest they die of embarrassment.

Tagged , ,
Sep 25 2013
Leave a comment
Employment, Humour

Forget ‘slow pay.’ How about ‘no pay?’

DSC_0133

Help Wanted: Are you a self-starter, a go-getter, someone who takes care of business and, to paraphrase Bachman-Turner Overdrive, loves to work for nothing all day?

Are you young, eager, over-educated, underemployed, desperate to gain a toe-hold in the wonderful world of work? Are you at the end of your rope?

If this sounds like you, then look no further. We at The Ritual Abuse Corporation – one of the largest private employment agencies in the world – want to meet you. Our inboxes are on fire thanks the steadily rising number of our clients who are searching for someone just like you; someone who will fill a short-term, unpaid internship and whistle a happy tune whilst doing it. “Thank you mother,” you’ll croon, “may I have another?”

You must have heard about this. It’s all the rage in the post-apocalyptic, financially melted global economy.

According to an article a in the Daily Mail, out of the UK, a couple years back, “Firms across the country are increasingly relying on unpaid interns in a bid to cut costs in a tough economic climate, according to a new study. Bosses in the design and digital industry expect more work for less money, leading to fewer permanent staff members and more unpaid interns, according to think tank the Institute for Public Policy Research, which carried out a survey of 500 agency workers.”

More recently, Susan Adams, a staff writer at Forbes, observed, “As the ranks of the unemployed have swelled and the surplus of jobless college students and grads has grown, increasing numbers of people young and old have been signing on for unpaid internships, wanting to make contacts and accumulate résumé lines that can help them get paying work.”

Indeed, it’s a win-win for everybody – a joyful alliance between probity and exigency. Think of the opportunities that await you.

As an unpaid intern, everything is within your job description. On any given day, you might find yourself slinging coffee. When your bosses (a group which comprises just about everyone else in the organization) spill said coffee, you’ll be dispatched to clean up the mess. Think of the contacts you’ll make. Imagine the résumé lines you’ll be able to accumulate.

Of course, your employer also benefits from not having to book your wages and benefits (because, officially, there are none). That means it gets to keep its hard-earned cash in the bank where it’s been sitting for years.

That’s important, especially when you consider the natural oder of the universe, neatly summarized in a CNN Money piece late last year: “Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever. In the third quarter, corporate earnings were $1.75 trillion, up 18.6 per cent from a year ago. . .That took after-tax profits to their greatest percentage of GDP in history. But the record profits come at the same time that workers’ wages have fallen to their lowest-ever share of GDP. ‘That’s how it works,’ said Robert Brusca, economist with FAO Research in New York, who said there is a natural tension between profits and the cost of labor. ‘If one gets bigger, the other gets smaller.’”

Still, you shouldn’t delay hitching up for the next available unpaid tour of duty. Storm clouds are gathering and pretty soon it may begin to rain on everyone’s parade. Consider one recent headline.

“Two former interns have filed complaints with government against Bell Mobility, alleging the telecom giant broke labour laws by not paying them for work they did for the company,” CBC News reported in June. ‘It felt like I was sitting in an office as an employee, doing regular work. It didn’t feel like a sort of training program,’ said Jainna Patel, 24, who was an unpaid intern with Bell for five weeks last year. ‘They just squeezed out of you every hour they could get and never showed any intent of paying.’”

In fact, that sounds very much like another species of unpaid labour that even we, at The Ritual Abuse Corporation, would never condone: entrepreneurship.

Tagged , ,
%d bloggers like this: