Walmart’s Smartest Move Yet

American retailing giant Walmart, owners of ASDA in the UK, yesterday committed to paying their 500,000 workers at least $9 an hour by August, rising to $10 in 2016. This compares with a federal minimum wage of just $7.25, which President Obama has sought to raise to $10.10 (unfortunately blocked by Republican-controlled Congress). The move has been welcomed by America’s flourishing anti-low pay movement, despite it seeking a doubling of the federal minimum wage.

At the same time, Walmart going to give employees more ‘control’ over the hitherto erratic shift system that made life particularly difficult for employees with families to support and care for. To be sure, Walmart has taken significant steps away from its past as a bad employer.

I have conflicting views on this development. I certainly do not believe anybody should feel grateful to Walmart for finally living up to its most basic responsibilities as a highly profitable, multinational employer to pay more than the joke that is the federal minimum wage and give its workers a limited degree of security. When people are earning their income from you, you can’t leave them worrying if you’ll give them the hours they need to feed their children next week.

Retail lobbyists in the US have cited the move as proof that retailers do not need to be forced to pay higher wages. That is nonsense. There are tens of millions who languish on poverty pay still. A handful of chains, like Walmart and Ikea, raising their game barely dents that figure. Moreover, employers should not feel that they’re risking their competitive advantages by paying $9 or $10 an hour.

On the other hand, I would not dismiss the significance of the pay increase either. I doubt any commitment to guarantee pay above the minimum wage by the likes of Walmart would have been thought plausible ten or twenty years ago. Campaigning for a $15 minimum wage would have been thought nonsensical. It certainly would have been difficult to mobilise so many low-paid workers to that cause. The very fact that Walmart has made any concession to its employees at all represents a seismic social change.

Of course, Walmart might have calculated that this pay rise should be just enough to blunt the workers’ rights campaigns and alleviate pressure for future concessions. We don’t know. That calculation is wrong in any case: the same process is occurring in the American workforce as is beginning to occur in the UK’s: workers are beginning to organise and raise their aspirations in parts of the economy that never had trade unions. The supermarkets, the fast food restaurants, cleaning firms, industries where employees have rarely been a priority and are at last acting to improve their lot.

They won’t be waiting for Congress or the President to help them out, but they’ll get round to that in due course. (Who knows, they might even get the GOP on board… one day). Until employment regulations are improved, employees will have to fight for every dollar and every guaranteed hour.

Changing the law would be so much simpler.

Advertisements

Seven Pounds

In a welcome U-turn, Britain’s Chancellor has said that he would support an increase in the National Minimum Wage to £7.00 an hour, the level it peaked at in real terms before a series of sub-inflationary increases during the double-dip recession. It is understood that George Osborne had last year forbidden his Liberal Democrat colleague, Business Secretary Vince Cable, from directing the Low Pay Commission (which sets recommended levels for the NMW which Parliament always follows) to look at such an increase. Furthermore, Osborne fronted the Coalition initiative to defeat Labour’s legislative amendment that would have done exactly as Osborne wants: restore the NMW to pre-recession levels. Nevertheless, that was then and I’m interested in what will happen now.

The Coalition is aware that the ‘One Nation’ Labour theme of falling incomes and rising living costs poses a political challenge to it: people are angry that the wealthy are enjoying lavish tax cuts (the Conservatives are happy to slash the top Income Tax band to 40%) whilst most of us are having a distinctly hard time. Whatever one thinks of Messrs Cameron, Clegg, Osborne and Alexander, they are not political novices. Together with freezes on fuel duty, a lightening of social and environment levies on energy bills and now a possible hike in the NMW, the Government cannot now be accused of ignoring what Ed Miliband has termed the ‘cost of living crisis’.

I believe that Labour can and must go further than the Coalition on low pay. I think that there are three options the Labour leadership have with regard to NMW policy:

  1. Match the Coalition’s proposed 11% increase in the National Minimum Wage. Offer tax incentives to employers to pay Living Wage, and examine phasing in a full Living Wage by inflation-busting rises in the Minimum Wage. This is existing Labour policy.
  2. Promise to increase the National Minimum Wage by 22%, bringing it to the national Living Wage level of £7.65 an hour . The Coalition’s increase would bring the NMW to within striking distance of providing a liveable income. It would be difficult to argue that an extra £27 pay a week on top of planned rises would bankrupt employers.
  3. Increase the NMW to £7.65 an hour but encourage/pressurise employers in London to pay the London Living Wage of £8.80 an hour. Gradually introduce a London rate of the Minimum Wage.

I see no political or economic difficulty with the second option: yes, it is radical in that it makes Britain the first country in the world to guarantee full time workers a liveable  income independent of the state (with the possible exception of Housing Benefit- but housing costs are something that a Labour government should be tackling). But it is a modest rise in what is proposed already. Not modest to the employees. A 9% increase to somebody on such a low income is life changing. But it is modest for one of the world’s largest and most successful economies.

I’ve spent some time talking about Labour, but it would be fantastic to enlist rival political movements in the race to a Living Wage. If I woke up to hear David Cameron on the Today programme announcing legislation hiking the NMW to £9 an hour, I would be pleased, even if was inconvenient for my party. Granted, in such a universe, I would be riding a flying pig to my job as a telegraph proccessor, but you get my point. Osborne’s ‘£7 an hour’ comments should be viewed as a good sign as well as a challenge.

Yes, The Poor Should Pay Tax

Nick Clegg addresses the Conference Rally in B...

 

The signature policy of the Liberal Democrats in the Coalition government is a failed attempt at electoral reform the raising of the Personal Allowance  to £10,000. In other words, nobody is taxed on the first £10,000 of their earnings. Though this is a very progressive measure, rises in the Personal Allowance have been used by the Blair, Brown and Cameron governments as a means of artificially supporting those whose wages they have allowed to whither to the pitifully low level of the minimum wage.

 

As Nick Clegg has just called for a further rise in the tax free allowance to £10,500, I have been prompted to question the benefits of lifting the poor out of direct taxation altogether, as is his policy. Of course the well-off should bear the greatest burden of taxation: I support the re-introduction of a 50p tax band on incomes over £100,000 per year. I am proud that Britain can higher public spending than the US and still have lower levels of income and payroll taxes for most workers. However, I think its important that even the poor make a token contribution to the tax system so that they are true ‘stakeholders’ in the government, even if tax credits more than offset their tax bills. Elements of the right-wing press, already making dark implications about the value of the opinions of the unemployed, so how long until minimum wage workers are similarly ignored? The Conservatives are unlikely to support the policy unless there is political capital in it.

 

A much fairer policy would be to reduce indirect taxation, the most regressive taxes that there could possibly be. In particular, Value Added Tax (currently at 20%) is ripe for a reduction which would ease living costs, inflation and boost economic demand. It would benefit everyone, including the unemployed and very low earners who do not benefit from any rises in the Personal Allowance. Alternatively, Labour’s policy of a 10p tax band would be progressive but also give all workers the responsibility to contribute.

 

Moreover, I’m surprised that Mr Clegg believes that there is sufficient money available to the Government to provide what is a £100 tax cut to 24,000,000 people when we have a budget deficit to eliminate (and the Chancellor last week hinted that he realises that this proccess will in fact last until 2020, as people including Ed Balls- and me!- have said since three years ago) and shameful public spending cuts leading to an upsurge in homelessness and poverty, to name just some of the social problems that are exploding in Austerity Britain. Is giving the top three quarters of workers £1.96 a week really worth it when we could plough billions back into our beleaguered public services instead?

 

Don’t be fooled by the Personal Allowance changes: they merely amount to robbing Peter the broke pensioner to pay Paul the squeezed shop assistant.

 

 

 

A Devisive And Regressive Subsidy

 

I am one of the harshest critics of the UK’s Coalition Government. To claim otherwise would require monumental self-deception. However, I do place a good deal of emphasis on viewing my political opponents fairly, and accepting that most people have positive intentions- however misguided I consider them to be.  And as such, I seriously believe that Coalition ministers think their Childcare Tax Credit scheme will help parents. However, I doubt that its introduction a month before the approaching General Election is a coincidence, and the way in which it favours high earners is a coincidence.

Under the scheme, the Government will allow parents to buy childcare vouchers up to the value of £4,800 per child (aged under 12) per year. The government will then top up the balance by 25%, provided both parents are in work and earn no more than £150,000 each. Unsurprisingly, this has provoked wrath from families with stay at home parents, full time carers, and those who are puzzled that the Government have taken cash Child Benefit from households on £50,000 a year only to subsidise childcare for those on up to £300,000 a year. Also, there are justified claims that 20% subsidy for childcare is far too little assistance for those who can only access Minimum Wage jobs, for example.

In Britain we have done a lot to encourage mothers in particular to return to work at ever shorter intervals after they have given birth. It is only right that women should have a free choice as to whether to resume their careers promptly after having a child or to care full time for their young children. However, we are now failing to provide that choice. Instead, through the withdrawal of financial and societal support for stay at home parents of either gender we are now forcing toddlers into full-time childcare regardless of their parents’ wishes. In my view, the state should support parents in either course they should take, and do away with the insulting perception of stay at home mothers as unintelligent and stay at home fathers as ‘unmanly’ as the unenlightened prevailing stereotypes suggest. It is not the role of the government to dictate how parents bring up their children, and yet sadly the Childcare Tax Credit is another step towards this. The obvious question to ask here is: why does a stay at home parent need childcare? That is because it is encouraged for both the wellbeing of parents and children that some part time attendance of nursery takes place before entry to school.

Then there is the unfortunate fact that the Coalition is robbing Peter on £50,000 a year to pay Paul and his wife on a combined £300,000 year. Childcare can take a large bite out of the income of even a middle class household, and such blatant redistribution of money from these people to well-paid City executives is simply unjust and should be challenged. Would it not be simpler and fairer to subsidise childcare- and properly, at more than 20%- at source? I advocate the Norwegian system in which parents are charged a flat rate of about £2 an hour on a pay-as-you-go basis, and offered further means tested subsidy where it is most needed. Local authorities would take over nurseries and after school clubs directly, and remove the often large profit margins which have helped inflate fees so much over recent years. Such a scheme would cost several billions of pounds a year, but the economic benefits of increasing the disposable income of hard up families are vast and would do much to boost economic growth. Is this not a better alternative to a token subsidy that discriminates against large groups of people in this country?

 

It’s Progress

It is easy to fall into the trap of being permanently negative about events taking place in the political world. After all,  any believer in social justice in the “Age of Austerity” will inevitably have a lot to complain about. In the United States, the Democrats are engaged in a potentially devastating chess game with the Republican-controlled legislature (and the Senate, though part of the legislature, can only do so much) in an  absurd situation under which the two parties are trying to look as if they’re trying to reconcile the position that the richest 2% of the population should cough up more tax before Medicare, Medicaid and education should be touched, with the position that not only should these budgets be cut, but they should be cut even further than needed in order to fund more tax giveaways to the richest 2%, as advocated by Paul “Granny Starver” Ryan. And of course, in reality, many in the two parties are not even trying to look as if they’re trying to look as if they’re trying to reconcile these two contradictory positions.

_

In Britain, our government has just announced a series of real-terms cuts to benefits and tax credits going to hard-working families in order to fund a Corporation Tax cut- not only that, but only large businesses (or those that bother paying it, at least) will benefit. Some in the Labour Party, which has taken a few shaky steps in the right direction, are wavering on whether to oppose it. The false Tory rhetoric of “benefits scroungers sleeping in with the blinds drawn” has become so ingrained into the political scene that the disabled forced to undertake taxing and sometimes humiliating assessments; the conscientious job seeker on £71 per week in a barren employment market; and the families with parents on the Minimum Wage, struggling to meet the costs of housing, energy and childcare, will all have no political voice left for them.

Centre-left governments in Australia, Brazil and the more spirited one in France are constantly running into problems, and the forces of globalisation present a constant threat to social progress in nations rich and poor. Climate change has fallen off the radar altogether, though environmental, social and economic disaster creeps ever closer.

Nevertheless, I have always had little patience with the narrative that the modern world is in some sort of decline. Though I am hardly an optimist (or, come to think of it, an idealist) I take the view that overall, human life in the 21st Century is the best it’s ever been. The massive inequality and damaging austerity that is taking place today will affect society for decades to come, and many lives will permanently be shaped by it. However, austerity is causing sufficient anger that the development of a progressive alternative that the permanent legacy may well be a transformation of our politics for the better.

The Occupy movement benefited from and still enjoys widespread sympathy, even if this did not translate into sufficient political pressure. Today the public have a much more realistic approach to big business, and now lack patience with firms avoiding their tax liabilities in these times of hardship. Starbucks has just buckled to pressure from the public (in part) by agreeing to pay at least £10,000,000 per year in tax in 2013 and 2014. Yes, it’s people power, and we are going to see a lot more of it in the future. Google, however, safe in its near monopoly of the search market, has made it clear that it doesn’t care in the slightest. Dear reader, please consider Everyclick (UK only) or Ixquick as tax-paying, socially responsible alternatives.

Speaking of which, the United States has had a spot of good news: Apple is going to move a lot of its production back to America from China. Perhaps attempts to maintain viable industry and thus a self-sufficient economy are not doomed to failure after all. And again, the move is down to public pressure after hearing about the Foxconn (the name says it all, doesn’t it?) scandal. True, I am no fan of Apple (Personally, I prefer high-spec and reasonably priced electronics to overpriced, low-performance brushed aluminum that people often buy just to prove they’re well-off) but it is good to see just a little re-industrialisation- and something that will reduce the airmiles attached to electronics.

Things aren’t looking quite so bad (in the long run) after all.