Minimum wages a guarantee of poverty?

Author: No Comments Share:

Kate French

Most of us have heard of the Minimum Wage which is set annually after a ‘wage hearing’ before the Fair Work Commission (FWC). The minimum wage is also known as the safety net wage.

living wage for all opt
mayday_NYC2013_DSC_0067, Michael Fleshman, flickrcc

Following years of fruitless annual submissions to the Fair Work Commission (FWC), Brian Lawrence of ACCER (Australian Catholic Council for Employment Relations) has had enough. He is fed up with the FWC, in particular with its failure to take much notice of the comprehensive economic studies that he and others have submitted, the miserly minimal annual wage increases awarded, and the evident social consequences of all of this: growing social exclusion at the expense of social cohesion. We are witnessing, he says, the undesirable rise of a permanent underclass, the working poor.

In Working Australia, 2014: wages, families and poverty he has comprehensively detailed the economic “issues and evidence” provided to the FWC, showing that the “safety net wage is failing to keep workers and their families out of poverty”. Poverty he simply defines as being precluded from having an acceptable standard of living. Brian wants his comprehensive evidence to be available to anyone wishing to make a submission to the FWC, for in spite of all the evidence, for some unexplained policy reason he says the FWC continues to allow poorer workers to fall by the wayside of contemporary living standards.

This is particularly reprehensible since the country has experienced a decade of unprecedented wealth creation and the lowest paid workers are by many economic measures worse off now.

How has this come about? Simply, low-paid workers are ‘unable to bargain’ for better wages. In the absence of collective bargaining, staggeringly one in six workers receives only the minimum wage. While most of us have benefited from the good economic times, the lowest paid workers have fallen behind, and are now closer than ever to the poverty line. Furthermore, without government family payments they would be below it.

If you think you have to be unemployed to be below the poverty line, you are wrong. Brian contends that low paid employees form a greater part of the total number of people in poverty than those who are unemployed.

brian lawrence 2_opt
Brian Lawrence

Safety net wages have failed to keep up and continue to be inadequate; alarmingly they have not kept low-paid workers from slipping into poverty.

The result is growing inequality and social exclusion. The gap between general (good) wage levels and safety net wages has ballooned, depriving many workers of a fair opportunity to live what the rest of us take for granted as necessary for a decent life.

Such an outcome is not inevitable but appears deliberate, said Brian. The FWC has repeatedly ignored or disregarded sound economic evidence put before it in the mistaken belief that by granting miserly safety net wage increases it was containing an explosion in overall general wage growth.

Inequality is the result and inequality matters. Unlike their wealthier neighbours, the poor have little political or economic power since their efforts are disproportionately concentrated on providing food, clothing and shelter. There is not much spare time for participating in society.

The minimum wage is a poverty wage and it impacts on children of the poor. There is ample evidence of the problems faced by poor children, with issues in health, behaviour, school underachievement, drugs, and welfare dependency, not always of course, but too often encountered to be ignored.

There is a Liberal Party poster which says ‘make poverty history, get a job’. Perhaps they mean a job that pays a decent wage, promotes proper care of children, stability of families, social inclusion and social cohesion? Sadly the present safety net wages won’t buy too much of that.

The goal of good public policies should be to reflect and enhance human dignity and the social participation of all groups. Neither competing economic ideologies nor simple slogans should be allowed to subvert this goal.

Kate French is a 4th year Arts-Law student at ANU, majoring in Philosophy. Between lectures, she reviews law books, and is a regular columnist for the student blog Survive Law!. She is also a member of ANU’s Community Legal Education Program which runs educational workshops for school students in the ACT. Kate is a past executive member of the ANU St Vincent de Paul Society. She has just returned from a semester studying at The University of Sheffield.

 

 

Previous Article

Minimum – or is that minimal? – wages

Next Article

Australians & war: Anzac Day

You may also like

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.