Raise the Minimum Wage: Indexation not enough to bring working families out of poverty

Monday, January 27th, 2014
RELEASE: Indexation not enough to bring working families out of poverty

(Guelph, Ontario) - The Raise the Minimum Wage campaign in the city of Guelph is deeply concerned with today’s release of the Ontario Minimum Wage Advisory Panel’s recommendations. This concern comes from the fact that the report makes no recommendations that would bring working Ontarians out of poverty.

“Since the beginning, minimum wage workers, anti-poverty groups, unions and community organizations have been demanding that the minimum wage be increased to $14.” said Guelph Raise the Wage organizer Denise Martins. “This number was carefully calculated as the minimum amount necessary to lift workers above the poverty line. This demand was also coupled with the recommendation that the $14 must be indexed to cost of living. Although we commend the panel’s intentions in agreeing to index the minimum wage, and we see it as a victory for the thousands of Ontarians that have been raising their voice around this issue, it simply does not solve the problems of working people living in poverty.”

Campaign to Raise the Minimum Wage Builds Momentum

By Peter Miller,
Rebel Youth magazine 

The campaign to raise the minimum wage in Ontario is building momentum. On November 14 minimum wage workers and community members reached out to 50 MPPs demanding for them to sign on to the campaign.

Actions included protests outside of Premier Kathleen Wynn’s office in Toronto and NDP leader Andrea Horwath’s office in Hamilton. Delegations brought petition sheets, and large 5 billion dollar checks to represent the amount of money that would boost the economy from an increase to the minimum wage. There have been other events that show the campaign is picking up momentum. On November 5, a large forum in Scarborough attracted 250 people who discussed how to outreach and mobilize for the campaign.

Why we should fight to Raise the Minimum Wage

Guelph action on mimimum wages. Photo by author.

by Peter Miller, for Rebel Youth

It’s an exciting time to be a working class organizer in the United States and Canada. Fast Food workers are mobilizing in the United States for a Living wage of fifteen dollars an hour.  In August there were two stages of strikes affecting dozens of cities across the United States.

In Ontario, the Campaign to Raise the Minimum Wage was launched in March and is picking up momentum. Minimum wage workers and community members are demanding that the minimum wage bring workers and their families out of poverty, be based on a 35-hour work week, and be updated every year with the cost of living.

Thatcher's legacy

By Tristan Dineen and Johan Boyden

Rarely has class conflict been made so blatantly obvious.  Gathered under the vast dome of St Paul’s Cathedral and ringed by legions of police and military personnel, the royalty, robber barons, presidents, oligarchs, bankers, tycoons, war criminals, celebrities and aristocrats of the global capitalist class assembled in grand style to bid farewell to their champion: a woman who had dedicated her life to defending and expanding the profits and privileges of the few -- at the expense of the many.

But mere blocks away from where former British PM Margaret Thatcher lay in state masses of working class people gathered to basically celebrate the death of a woman who had brought them nothing but misery, impoverishment, heartless spending cuts, privatization of public services, foreign wars, union busting, regressive taxes, police crackdowns, and a reactionary legacy that keeps on killing, and uprooting.

Thatcher's trail of destruction is relevant for young people in Canada, to understand an important part of the global story of how gains of past struggle, and prospects for our future, were destroyed.

What went wrong?

Make poverty wages illegal! Raise the minimum wage!

Statement from the YCL (Ontario) Provincial Executive Committee. For other articles we are running this week about minimum wage, click here.

The inherent and insurmountable contradictions within capitalism are sharpening and have become more apparent in the current context of profound economic and environmental crisis.  One of the main symptoms of these contradictions is the “growing gap” between the “99% and the 1%”, or more precisely the majority that work, and shrinking minority that own. Consider the following:

The global corporate class has $32 trillion hidden in off-shore tax havens.
Canadian corporations are currently sitting on over half a trillion dollars on their balance sheets.
In 2011, Canadian CEOs made $7.7 million on average, or 285 times more than the median Canadian wage of around $27,000 for a single earner.
Top executive compensation at the 50 largest employers of low-wage workers – (firms like WalMart, Target and McDonald’s) – averaged $9.4 million last year.

Restaurant Organizing in the 1930’s and Today

During the Great Depression, restaurant workers were some of the most exploited workers in Canada. Recent immigrants were most likely to be hired. The struggles of these times are an important lesson as workers struggle today for higher wages, including raising the minimum wage.  For other articles we are running this week about minimum wage, click here.

By Peter Miller

In 1931, restaurant workers earnings in Canada, per week, were on average only 41 percent of the wage estimated for a decent living. Wages were low, hours brutal, and working conditions abysmal. The conditions of restaurant workers suffered with the large amount of unemployed workers during the global economic crisis, known as the "Great Depression."  From the 1930s until the Second World War, the Great Depression created a vast 'surplus army of labour' which the capitalists used to increase exploitation and profits.

Industrial food

In the 1930’s restaurants were becoming factories. A lot of equipment for increasing speed of production of meals was already developed by then, including dishwashers, meat slicers, and potato peeler machines. Restaurant owners were starting to emphasize efficiency, portion control, and standardization like we see today in fast food restaurants.

Anyone who has worked for Burger King or McDonalds can tell you that management emphasizes speed a great deal, with workers getting heat from management if they do not produce food within a certain time frame.

Management at fast food joints today also don’t like to see workers giving consumers any extra fries, or even extra ketchup on burgers. Portion control, speed of service, standardization, and the ability to give out poverty wages with impunity are all that matters for the bosses of Fast Food.

Fightback

The Food Workers Industrial Union of Canada, an affiliate of the Worker’s Unity League, formed in 1934 and began organizing restaurant workers right away.  The Food Workers Industrial Union of Canada (an affiliate of the WUL) organized twenty-one locals in 1934 in every major city in Canada.

In Toronto alone there were three locals comprising all workers in 30 restaurants in the city. The Financial Post stated that unionization of restaurant workers was “being duplicated in hundreds of restaurants across Canada.”

The Worker’s Unity League organized workers according to industry -- not craft, skill or trade -- in an era of craft unionism. The League was a huge threat to employers with this strategy because WUL locals could more easily go on strike and shut entire workplaces down.

By 1935, the WUL had a membership of over 40,000 members

Strike action

Labour disputes between restaurant workers affiliated with the WUC and their bosses often were over workers objecting to a 7-day work week of 10 to 12 hour days.

In February 1934 workers walked out of Preston Lunch in Toronto, demanding the recognition of their union, and demanding their 84 hour a week job be shortened to 54 hours a week for waiters and 60 hours a week for other employees.

At the Blue Goose Café at Vancouver in September 1933 workers walked out for better pay. Meanwhile, at the Carlton Tea Room workers joined the WUL but the boss used the American Federation of Labour to try to smash the more militant union. Worker’s fought hard though.

In May, three employees that were fired for insubordination and picketed the workplace during the spring and summer months of 1934. They received an injunction, but still picketed, were thrown in jail, but when released came back to picket more while aided at times by demonstrations of over 100 people. While the outcome of this strike is not reported, by August 17 people had been arrested during the dispute with mass demonstrations still going strong.

United action vs. class collaboration

Mr. Sims, the WUL General Secretary in 1934 described the League by saying: “We believe in united action to organize workers to be ready to fight. The A.F. of L. (American Federation of Labour - RY) believes in depending on the good sense of the boss. We don’t do that.

Depending on the good sense of the boss never gets you anywhere. The A. F. of L. believes that the worker and the boss can get along together if they have the right sort of agreement. We don’t believe that. All that the working class has got and will get is through showing a united front.”

Today we are in a similar situation, so using a similar philosophy and approach as the Worker’s Unity League had in 1930’s: that workers must be united, militant, and never trusting of their greedy corporate bosses.

Lessons for today

Today, restaurant service workers face poverty wages. Right now, working full time at minimum wage in Ontario puts workers 19% below the poverty line. Workers are also lucky if they get full time hours. In fast food restaurants like Burger King, employees usually receive shifts of only three or four hours at a time, and on average employees work less than 35 hours a week.

In Ontario, the amount of workers that make minimum wage has almost doubled between 2000 and 2009.  The result is that more and more workers are deciding between food and rent, and having to take two precarious, part-time jobs to try to make ends meet. As workers are fighting for dignity in the workplace, the fast food industry is enjoying huge profits and is a $200 billion industry.

Walmart struggle

In the United States, there has been some recent success in organizing Fast Food workers and workers at Walmart (as reported in the latest print edition of Rebel Youth, Winter 2013). On April 4, the second strike in the ongoing Fast Food Forward campaign for higher wages and union recognition happened in New York with hundreds of workers walking off the job.

Last November, fast food workers in New York City took part in an historic strike to demand $15 an hour and the right to join the union without intimidation. Since then, the movement’ s numbers have grown. Organizing efforts are happening in other major cities like Chicago.

During black Friday last year in the United States, Walmart workers walked off the job in 28 stores, in 12 different states. They protested Walmart’s practice of silencing workers that speak out for better working conditions.  The OUR Walmart campaign is what inspired workers to organize fast food restaurants throughout the states.

Campaign for a living wage

In Ontario, a coalition of groups including the Ontario Coalition against Poverty and the Worker’s Action Centre in Toronto is coming together to build a campaign for a living wage of 14 dollars an hour.  Demands are that the minimum wage should be a living wage set at 10% above the poverty line; the minimum wage should be calculated based on a 35-hour week; and the minimum wage should be updated every year with the cost of living.

Young Communist League members are working on this campaign on the ground, especially in Guelph and Hamilton.  The YCL's perspective is that the campaign must develop into a broader effort, including joining efforts with organizing the unorganized -- like unionising the workers that receive poverty wages in Ontario -- and other social reforms like a shorter work week with no loss in pay, another of the many demands made by the WUL.

As victories are won, more and more workers realize their power collectively, and that a injury to one is an injury to all. These are important lessons that ultimately point towards the necessity of abolishing the capitalist system based on exploitation of people and nature, and for socialism.

Information about the Workers Unity League’s organizing of restaurant workers was gathered from Ester Reiter’s book Making Fast Food: from the Flying Pan into the Flyer.  Readers interested in the WUL can also read Raising the Workers' Flag: The Workers' Unity League of Canada, 1930-1936 by Stephen L. Endicott, University of Toronto Press, 2012

Rosa on Reform and Revolution

Part of a special RY series on the reform struggle to raise minimum wages.  For the other articles we are running this week about minimum wages, click here.

Legislative reform and revolution are not different methods of historic development that can be picked out at the pleasure from the counter of history, just as one chooses hot or cold sausages. Legislative reform and revolution are different factors in the development of class society. They condition and complement each other, and are at the same time reciprocally exclusive, as are the north and south poles, the bourgeoisie and proletariat.

Every legal constitution is the product of a revolution. In the history of classes, revolution is the act of political creation, while legislation is the political expression of the life of a society that has already come into being. Work for reform does not contain its own force independent from revolution. During every historic period, work for reforms is carried on only in the direction given to it by the impetus of the last revolution and continues as long as the impulsion from the last revolution continues to make itself felt. Or, to put it more concretely, in each historic period work for reforms is carried on only in the framework of the social form created by the last revolution.

Here is the kernel of the problem.

It is contrary to history to represent work for reforms as a long-drawn out revolution and revolution as a condensed series of reforms. A social transformation and a legislative reform do not differ according to their duration but according to their content. The secret of historic change through the utilisation of political power resides precisely in the transformation of simple quantitative modification into a new quality, or to speak more concretely, in the passage of an historic period from one given form of society to another.

That is why people who pronounce themselves in favour of the method of legislative reform in place and in contradistinction to the conquest of political power and social revolution, do not really choose a more tranquil, calmer and slower road to the same goal, but a different goal. Instead of taking a stand for the establishment of a new society they take a stand for surface modifications of the old society. If we follow the political conceptions of revisionism, we arrive at the same conclusion that is reached when we follow the economic theories of revisionism. Our program becomes not the realisation of socialism, but the reform of capitalism; not the suppression of the wage labour system but the diminution of exploitation, that is, the suppression of the abuses of capitalism instead of suppression of capitalism itself.

Passage from Reform and Revolution, Ch.8 (1900)

Marx on Minimum Wages and Workers

As we suppose that no change whatever has taken place either in the productive powers of labour, or in the amount of capital and labour employed, or in the value of the money wherein the values of products are estimated, but only a change in the rate of wages, how could that rise of wages affect the prices of commodities?

Only by affecting the actual proportion between the demand for, and the supply of these commodities.

It is perfectly true that, considered as a whole, the working class spends, and must spend, its income upon necessaries. A general rise in the rate of wages would, therefore, produce a rise in the demand for, and consequently in the market prices of necessaries. The capitalists who produce these necessaries would be compensated for the risen wages by the rising market prices of their commodities.

But how with the other capitalists who do not produce necessaries? And you must not fancy them a small body. If you consider that two-thirds of the national produce are consumed by one-fifth of the population — a member of the House of Commons stated it recently to be but one-seventh of the population — you will understand what an immense proportion of the national produce must be produced in the shape of luxuries, or be exchanged for luxuries, and what an immense amount of the necessaries themselves must be wasted upon flunkeys, horses, cats, and so forth, a waste we know from experience to become always much limited with the rising prices of necessaries.

Well, what would be the position of those capitalists who do not produce necessaries?

For the fall in the rate of profit, consequent upon the general rise of wages, they could not compensate themselves by a rise in the price of their commodities, because the demand for those commodities would not have increased. Their income would have decreased, and from this decreased income they would have to pay more for the same amount of higher-priced necessaries.

But this would not be all.

As their income had diminished they would have less to spend upon luxuries, and therefore their mutual demand for their respective commodities would diminish. Consequent upon this diminished demand the prices of their commodities would fall. In these branches of industry, therefore, the rate of profit would fall, not only in simple proportion to the general rise in the rate of wages, but in the compound ratio of the general rise of wages, the rise in the prices of necessaries, and the fall in the prices of luxuries.

What would be the consequence of this difference in the rates of profit for capitals employed in the different branches of industry?

Why, the consequence that generally obtains whenever, from whatever reason, the average rate of profit comes to differ in different spheres of production. Capital and labour would be transferred from the less remunerative to the more remunerative branches; and this process of transfer would go on until the supply in the one department of industry would have risen proportionately to the increased demand, and would have sunk in the other departments according to the decreased demand.

This change effected, the general rate of profit would again be equalized in the different branches.

As the whole derangement originally arose from a mere change in the proportion of the demand for, and supply of, different commodities, the cause ceasing, the effect would cease, and PRICES would return to their former level and equilibrium. Instead of being limited to some branches of industry, the fall in the rate of profit consequent upon the rise of wages would have become general.

According to our supposition, there would have taken place no change in the productive powers of labour, nor in the aggregate amount of production, but that given amount of production would have changed its form. A greater part of the produce would exist in the shape of necessaries, a lesser part in the shape of luxuries, or what comes to the same, a lesser part would be exchanged for foreign luxuries, and be consumed in its original form, or, what again comes to the same, a greater part of the native produce would be exchanged for foreign necessaries instead of for luxuries.

The general rise in the rate of wages would, therefore, after a temporary disturbance of market prices, only result in a general fall of the rate of profit without any permanent change in the prices of commodities.

If I am told that in the previous argument I assume the whole surplus wages to be spent upon necessaries, I answer that I have made the supposition most advantageous to the opinion of Citizen Weston.

If the surplus wages were spent upon articles formerly not entering into the consumption of the working men, the real increase of their purchasing power would need no proof. Being, however, only derived from an advance of wages, that increase of their purchasing power must exactly correspond to the decrease of the purchasing power of the capitalists.

The aggregate demand for commodities would, therefore, not increase, but the constituent parts of that demand would change.

The increasing demand on the one side would be counterbalanced by the decreasing demand on the other side. Thus the aggregate demand remaining stationary, no change whatever could take place in the market prices of commodities.

You arrive, therefore, at this dilemma: Either the surplus wages are equally spent upon all articles of consumption — then the expansion of demand on the part of the working class must be compensated by the contraction of demand on the part of the capitalist class — or the surplus wages are only spent upon some articles whose market prices will temporarily rise.

The consequent rise in the rate of profit in some, and the consequent fall in the rate of profit in other branches of industry will produce a change in the distribution of capital and labour, going on until the supply is brought up to the increased demand in the one department of industry, and brought down to the diminished demand in the other departments of industry.

On the one supposition there will occur no change in the prices of commodities. On the other supposition, after some fluctuations of market prices, the exchangeable values of commodities will subside to the former level. On both suppositions the general rise in the rate of wages will ultimately result in nothing else but a general fall in the rate of profit.

To stir up your powers of imagination Citizen Weston requested you to think of the difficulties which a general rise of English agricultural wages from nine shillings to eighteen shillings would produce. Think, he exclaimed, of the immense rise in the demand for necessaries, and the consequent fearful rise in their prices!

Now, all of you know that the average wages of the American agricultural labourer amount to more than double that of the English agricultural labourer, although the prices of agricultural produce are lower in the United States than in the United Kingdom, although the general relations of capital and labour obtain in the United States the same as in England, and although the annual amount of production is much smaller in the United States than in England.

Why, then, does our friend ring this alarm bell?

Simply to shift the real question before us. A sudden rise of wages from nine shillings to eighteen shillings would be a sudden rise to the amount of 100 percent. Now, we are not at all discussing the question whether the general rate of wages in England could be suddenly increased by 100 percent.

We have nothing at all to do with the magnitude of the rise, which in every practical instance must depend on, and be suited to, given circumstances. We have only to inquire how a general rise in the rate of wages, even if restricted to one percent, will act.

Passage from Value, Price and Profit (1865)