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The Living Wage Doesn't Work: So What Now?

The government's so-called living wage is keeping people in poverty.

by Tom Whyman
28 August 2018, 7:30am

(Iain Masterton / Alamy Stock Photo)

Remember how during the Miliband years a lot of activism on the left was focused on securing a “living wage”, i.e. the amount of money a full-time worker would actually need to be paid per hour in order to secure a baseline-acceptable, “no frills” lifestyle? Remember how in 2015 George Osborne, in one of his textbook moves of evil 4D chess, completely sucked all the air out of this campaign by declaring he was going to instigate a “National Living Wage”? Osborne’s “National Living Wage” was set at around a pound lower than the Living Wage Foundation’s estimate, and would anyway only apply in full to over-25s, but no matter: since journalists often refuse to acknowledge any distinction between words and reality, so he pretty much got away with it at the time.

OK so anyway as it turns out the National Living Wage is by no means enough for everyone on it to live. According to a recent report by the Child Poverty Action Group, a single parent working full-time on National Living Wage is still £74 short of the income needed for a “basic, no-frills lifestyle,” and a couple with two children are £49 short.

But how should we respond to this realisation? Here I will employ the tried-and-tested glowing brains meme method.

Small brain: If George Osborne says it’s a living wage, it must actually be one

We’ve already addressed this point. There’s a reason why this brain is the smallest one. As far as I can tell this is only something Tory advisers or sympathetic journalists might think, and in the case of the former it can only possibly be something they’ve convinced themselves of on pain of their jobs. As it presently exists, people in general cannot be expected to live on the Living Wage. Up is down, left is right, Kafka dreamt everything we’re currently experiencing before it happened.

Normal brain: we should raise the living wage to the point where people could actually live on it

The Living Wage Foundation currently defines a living wage as £8.75 outside London and £10.20 within London. This amount would, according to them, allow anyone working full-time to enjoy a basic but comfortable lifestyle – covering housing, food, and other essentials. Raising the National Living Wage to this amount (and for under-25s to boot) would of course be an improvement, and we should absolutely do it. But it is important to recognise the limits of this demand. What about people who are unable, through whatever circumstance, to work full-time? Should they not be entitled to a basic but comfortable lifestyle as well? And just how basic are we talking here, anyway? Can a super-austere lifestyle characterised by endless honest work ever really be considered "comfortable"? What if you lose your job, what happens to you then? At best, a "proper" living wage can only really function within the context of a decent welfare state which provides everyone with a reliable safety net.

Glowing brain: We should raise the living wage to the point where everyone on it can afford to live like a king

Why stop at guaranteeing people a no-frills lifestyle? This strikes me as a failure of imagination. If we’re letting companies pay people for their labour, then why not demand they pay them enough to reliably access real luxury? If you’re going to be leaving the house to go to work every day, then why shouldn’t you have the right to consume a steak dinner on your way back? If you’re going to be melting your brain and your destroying your health with a lifetime of empty, grey labour for somebody else, then why shouldn’t be able to refresh your horizons by jetting off on an elaborate holiday once a month? A crown for every worker, and a throne in every garage. OK: people are going to object here on the basis that paying workers, I dunno, £200 an hour would be "economically unfeasible". But personally, I’d be willing to take the risk: there’s every chance increased consumer demand would pay for itself.

Galaxy brain: There’s no such thing as a living wage

But this last point raises an important point: why are companies in the business of paying people for their labour anyway? Companies pay workers money for their labour because it is more profitable for them to pay them this money than not. Whatever you do at work, your boss needs this to get done because it’s essential for their making money out of whatever it is their company does. And the amount of money they make will always (of course) be more than what they’re paying you for the work – otherwise they wouldn’t, you know, pay for it (at least not for much longer).

The more you work, the richer your boss will get, relative to you. That’s why Marx reached the initially counter-intuitive-seeming conclusion that the more the worker works, the poorer they get. When you think about it in these terms, it is clear that there can be no such thing as a sustainable "living wage". At best laws that guarantee a higher wage can only lead to short-term, relative improvements in living conditions.

So what’s the alternative? Well, recently there has been a lot of talk about the state maybe providing a “Universal Basic Income” (UBI), which would guarantee everyone a basic standard of living regardless of whether they’re working or not. Naturally, UBI as a term is open to abuse just as “Living Wage” proved to be, but it would probably be good to sever the link between work and desert.

But measures like UBI, or a living wage, still leave people at the mercy of the rich and the powerful. So perhaps we need something more.

If it is basically impossible for anyone to reliably secure a decent standard of living through waged work then, as Marx suggested, it would be in pretty much everyone’s interests to overthrow capitalism and replace it with a system in which the workers own the means of production in common. Apart from anything else, campaigning to try and secure this would lead to the spectacle of the Tories trying to outmanoeuvre the left by proposing a hollow, bastardised version of Full Communism.

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