Cooking the Books: What’s a “Living Wage”? (2010)

The Cooking the Books column from the June 2010 issue of the Socialist Standard

 “A ‘Living Wage’ for all”, alongside a photo with the caption “Fighting the growing gap between rich and poor”, was the heading of the first election promise of the candidates of the Green Party in last month’s general election :

 “Green MPs will demand a ‘Living Wage’ to ensure low paid workers earn enough to provide for themselves and their families.”

 It’s an old demand, going back to the ILP in the 1920s and beyond. Presumably what the Greens have in mind is a wage that would allow a worker to afford decent housing, enough proper food, new clothes, to go on holiday and run a car (but perhaps not this last, as they’re Greens).
 
 To find the level they consider necessary to achieve this you had to go to their full manifesto where they say :

 “The Green Party will fight for a National Minimum Wage of 60% of net national earnings (currently this would mean a minimum wage of £8.10 an hour).”

 As the current minimum wage is £5.80 an hour what they were proposing was a massive 40 percent increase, a promise that put them up with the Trotskyists. In fact they were promising more than the ‘Trade Unionist and Socialist Coalition’ between Militant and the SWP which only promised an increase to £8 an hour.

 Even so, £8.10 an hour for a 40 hour week is only £16,848 a year, which hardly qualifies as an adequate “living wage”. But how’s it going to be implemented? Getting employers to increase the wages of anyone paid less than £16,848 a year to this is easier said than done. The unions haven’t been able to do it, otherwise it would have been done. But let’s assume for a moment that a law forcing them to do this was passed. What would happen?

 First, some employers would go bankrupt. Others would withdraw their capital from producing certain goods or services, so their price would rise. Eventually this would stabilise at a new, higher level at which employers would be able to make a profit even when paying the increased minimum wage. So the cost of living would go up, including for workers on the minimum wage.

 Second, given the increased labour costs, the introduction of previously unused labour-saving machinery would become cheaper vis-à-vis employing living labour. Employers would do this. So there’d be job losses and unemployment, particularly amongst the unskilled, would grow.

 Also it’s not clear how the Greens’ plan would reduce the gap “between rich and poor”, at least not between those who figure on the Sunday Times Rich List (25 April) and those on the minimum wage. It might reduce the gap between low-paid and higher-paid workers, but this would just be a change within the working class – what we socialists have always called a “redistribution of poverty” – which would not affect the gap between the income of the working class and that of the capitalist class.

 In any event, socialism is not about redistributing income and wealth from the rich to the poor, but about establishing a society that would not be divided into rich and poor. To adapt Marx, workers should replace the green demand for a “Living Wage” by the revolutionary demand for the “Abolition of the Wages System”.