How to reduce poverty: pay a decent minimum wage
IN Australia it’s Anti-Poverty Week, and much of the talk is about the growth of insecure work and risk of developing a working poor in this country.
The term “working poor” originates from the US, where low wages and a safety net riddled with holes entraps tens of millions of workers in perpetual poverty.
It is estimated that 10% of the total population of the US are working and living on or below the poverty line. With no decent minimum wage or industrial protections to speak of, the working poor in the US rely on tips and other measures to survive.
This is a state of affairs unions in Australia have fought long and hard to avoid.
Signs of change
Yet, there are signs of change in the US. A little over a fortnight ago, in an event that was overshadowed by the budget impasse between Congress and the White House, the Governor of the most populous state signed into law an increase to the minimum wage from US$8 ($8.40) to US$10 an hour ($10.50).
Although well short of Australia’s $16.37 (US$15.59), the passage of the new law by Governor Jerry Brown means that California will eventually have the highest state minimum wage in the country and will benefit 3 million Californians, half of those in full-time jobs on the minimum wage. Although it will not take effect until 2016, it is the first time the minimum wage anywhere in the United States has reached double-figures and there is now anticipation that the decision will flow onto other states.
“The minimum wage has not kept pace with rising costs,” said Governor Brown as he signed the laws. “This legislation is overdue and will help families that are struggling in this harsh economy.”
In the small city of SeaTac in Washington state, which until the California decision had the highest minimum wage at US$9.19 ($9.65) an hour, voters will next month cast verdict on Proposition 1, which would set a local minimum wage of US$15 an hour, almost achieving parity with Australia.
Earlier this year, President Barack Obama proposed raising the federal minimum wage from US$7.25 to US$9 ($7.62 to $9.45), accompanied by annual adjustments for inflation. The last rise in the federal minimum wage was 2009, and the US rate lags behind most industrialised nations.
“Let’s declare that in the wealthiest nation on earth, no one who works full-time should have to live in poverty, and raise the federal minimum wage to $9 an hour,” Obama said in his State of the Union Address in February.
That met with predictable opposition from business and employer lobbyists and Republican legislators, and Obama’s proposal, while not dead, has since gone nowhere.
WATCH: The Daily Show take on critics of a higher minimum wage
But fast food workers, who are among the lowest paid in the US, have decided not to wait. During the northern summer just finished, fast food workers employed by companies like McDonald’s and Domino’s Pizza in 50 American cities went on strike to demand a minimum wage of $15 an hour, and basic rights at work, including the right to unionise.
Unions have backed the fast food strikes, but say they cannot rely on employers to do the right thing without government intervention.
“By raising the minimum wage, we can reduce income inequality in our country and provide dignity to people who work 40 hours a week and still cannot provide for their families,” the President of the Service Employees International Union, Kay Henry, said recently. “Nobody with a full-time job should live in poverty.”
Movement in Germany
Coincidentally, Germany may also soon introduce a federal minimum wage for the first time, which is a major bargaining chip in negotiations to form a new government between the Christian Democrats and Social Democrats.
Meanwhile, back in Australia, the election of a new Coalition government has revived talk about cutting the minimum wage, which rose to $16.37 an hour following this year’s annual wage review by the Fair Work Commission.
During the election campaign, the Business Council of Australia released a document that called for a review of whether our minimum wage is too high. In his first media interview, the Family First Senator-elect for South Australia, Bob Day, advocated cutting the minimum wage, which he says is “too expensive” for business to employ people.
“There’s a fundamental problem between this gap between zero and the minimum wage which really needs a serious look at, it’s a serious barrier to entry [to employment],” Day, who is a member of the HR Nicholls Society, told the ABC’s Fran Kelly recently.
Employer groups are also vowing to continue their fight over penalty rates, after their latest effort was rejected by the Fair Work Commission last week. For hundreds of thousands of workers, particularly part-time employees, penalty rates are the only difference between a living wage and falling into the status of the working poor.
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