'Labour is essential': Living wage about more than just economics

This opinion piece was originally published on Oct. 10, 2018.

The debate over a living wage for all workers is raging across North America.

The latest chapter began in 2012 with spirited activism by low-wage workers in New York City many of whom were women and people of colour under the slogan "Fight for 15." Similar activist-driven campaigns have had success in some Canadian provinces.

In Ontario, the "15 and fairness" campaign was instrumental in pushing Kathleen Wynne's Liberal government to raise Ontario's minimum wage to $14/hour in 2018 and to $15/hour in 2019. While those reforms are currently under threat from the reactionary policies of Doug Ford, the movement has not ended. In Alberta, the Rachel Notley-led NDP has increased the minimum wage to $15/hour as of October 1.

Now in Saskatchewan, NDP leader Ryan Meili has promised to raise the province's minimum wage to $15/hour if his party forms government after the next election. Perhaps not surprisingly, this announcement has been praised by workers and criticized by business organizations.

Andrew Stevens at the University of Regina has written that such a raise would benefit more than 100,000 workers in Saskatchewan, a majority of whom are women. The Canadian Federation of Independent Business (CFIB) called it "bad economics," saying it is unsustainable and a threat to jobs.

There is not one simple answer, but a scan of the literature suggests that business arguments tend to focus on narrow economics alone, while pro-labour arguments tend to move beyond economics to emphasize why a fairer redistribution of labour market surpluses leads to a more just society.

Living Wage as Economics

A living wage is defined as one sufficient for a full-time worker to not live in poverty.

Whenever the idea of a living wage comes up, the debate centres around what it would mean for the bottom line of (usually small) businesses. Such a focus is surprising, given that we know the largest segments of minimum wage workers work for firms employing more than 500 workers. Nevertheless, the standard response from organizations such as the CFIB is that small businesses can't absorb the costs, so jobs will be lost.

For a business to not compensate that labour at a fair price raises the question of whether it is ethical for it to operate in the first place.- Charles Smith

There is no doubt that in a capitalist economy, rising business costs affect short- and long-term investment decisions. Yet there is little evidence that raising wages to a living wage has a direct correlation with lower employment levels.

In fact, as Jim Stanford has argued in his book Economics for Everyone, employment levels are rarely determined by the labour market alone but rather by how much private businesses want to produce. In other words, employment decisions will rest on how much labour produces (and what businesses think they can produce and sell) rather than labour costs.

Research in the United States has made similar arguments, suggesting that raising the minimum wage does not negatively affect employment because it lowers employee turnover and increases organizational efficiency.

Such observations help explain why Ontario's job numbers went up significantly after the province raised its minimum wage in 2018.

Living Wage as Fairness

Focusing on economics alone misses a vital point about paying workers a living wage. Arguing against living wages suggests that workers themselves do not create value through their labour.

Businesses don't employ workers out of charity or for altruistic reasons. Labour is essential. Workers transform existing commodities into something that has value in the market. Workers' labour not simply good or risky business or entrepreneurial ideas is essential for the long-term viability of a business and its bottom line.

Paying workers a living wage recognizes their humanity- Charles Smith

For a business to not compensate that labour at a fair price raises the question of whether it is ethical for it to operate in the first place.

What gives a business the right to profit off the labour of its employees while not compensating them in a way that allows them to live a full life, free from poverty?

Living Wage as Justice

In 1919, the International Labour Organization proclaimed that "labour is not a commodity." At the root of that belief is that workers are living, breathing, human beings.

This principle is too often lost on those opposing a mandatory living wage. Paying workers a living wage recognizes their humanity. It recognizes that workers of all races and genders deserve dignity and respect.

It also creates a material foundation for workers to expand their life beyond economic subsistence. Imagine the artistic, cultural, political, and creative opportunities unleashed when workers have the material foundation to explore new ideas and dreams.

Living wages do not just mean giving workers better economic choices, although certainly that is a real benefit. Living wages allow workers real choice in how the fruits of their labour materialize within larger society.

Surely this is a notion in which we can all defend.

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