Where next for the living wage?

Progress on low pay is imperative.

Tomorrow marks the start of the first Living Wage week. It is tangible proof that, 11 years after a small broad-based East London community alliance revived an idea first forged in the industrial heartlands of 1870s Britain, momentum for increased living wage coverage continues to gather pace.

And with good reason: at a time when powerful forces are bearing down on wages at the bottom end of the labour market, living wage campaigns have delivered tangible gains for thousands of low-paid workers. More widely, living wage initiatives have served as a powerful rallying cry against endemic levels of low-paid work, highlighting the power of social norms in challenging a low-pay, low-productivity economic model that is anything but pre-determined. 
 
Yet for all the success of the living wage campaign relatively few workers have secured a higher wage as a result of a living wage initiative. For example, there are an estimated 651,953 workers in London earning less than the London Living Wage, yet only around 10,341 London workers won a living wage in the six years between 2005 and 2011. This is not a cry of despair, simply a call for realism about the role that living wage initiatives can play in tackling our reliance on an extensive pool of low-paid labour and for targeting efforts where they will be most effective.  
 
Of course, the latter would be far easier if there was greater transparency around low-paid work. There is therefore a powerful case for amending the UK Corporate Governance Code to require listed companies to report on how many of their employees receive less then a living wage – as called for in the final report of the Resolution Foundation’s Commission on Living Standards. At a stroke such a move would begin to alter our tolerance of endemic levels of low pay, laying the ground for further gains. 
 
And we know that further progress is possible. Our estimates suggest that for large private sector companies in key sectors like banking, construction, food production and communications – where roughly a million people in total work below living wage rates – the costs of paying a living wage for all directly-employed staff are affordable at around 1 per cent of the firm’s wage bills. 
 
Of course, different companies will be better able to absorb these costs than others and the introduction of a living wage pay floor will be more challenging for companies in the major low-wage retail sectors (increases in wage bills of between 4.7 and 6.2 percentage points) but progress is still possible.
 
It is also imperative given the growing awareness that the public purse can no longer sustain the high cost of the UK’s reliance on 5 million workers – 1 in 5 employees – who earn above the legal minimum but below a living wage. It is not just low-paid workers and their families that bear the cost of low-paid work on this scale in strained budgets and diminished life chances. Taxpayers also pay to the tune of around £4 billion a year in in-work support for low earners. 
 
With few, if any, believing that the growth in tax credit support that occurred over the past decade can be repeated in these fiscally straitened times there is an urgent need to start developing an ambitious policy agenda to tackle low pay at source. For any policymaker serious about doing so living wages are an integral, if only partial, part of the solution. 
 
But there is a very real need to start matching words with deeds. Over the past decade politicians from across the political spectrum have competed to associate themselves with the idea of the living wage, safe in the knowledge that the voluntary nature of living wage agreements and their partial coverage made doing so almost consequence-free. With the role, rationale, strengths, limitations and policy potential of living wages now under increased scrutiny the window for endorsement devoid of decision is beginning to close. 
 
The transition from approval of living wage initiatives to concrete policy ideas to support their proliferation will not be easy. Yet there is a path for policymakers between inaction and reaching for a legislative solution in the form of a statutory living wage which few living wage advocates would endorse. That path not only involves fostering greater transparency around low pay but also thinking about the use of central and local government’s purchasing power and how the notional savings in state support that would accrue from more extensive living wage coverage might be used to help firms transition to better business models. None of this will be simple. But the alternative of not matching words with deeds is no longer a justifiable option at a time when we need wages to do far more of the heavy lifting if the living standards of low earners are not to decline rapidly. 
 
Matthew Pennycook is senior research and policy analyst at the Resolution Foundation
A street cleaner passes the Jobcentre Plus office in Bath (Photo: Getty Images)

Matthew Pennycook is MP for Greenwich and Woolwich, and member of the Energy and Climate Change Committee. He is PPS to John Healey. 

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Donald Trump ushers in a new era of kakistocracy: government by the worst people

Trump will lead the whitest, most male cabinet in memory – a bizarre melange of the unqualified and the unhinged.

“What fills me with doubt and dismay is the degradation of the moral tone,” wrote the American poet James Russell Lowell in 1876, in a letter to his fellow poet Joel Benton. “Is it or is it not a result of democracy? Is ours a ‘government of the people by the people for the people’, or a kakistocracy rather, for the benefit of knaves at the cost of fools?”

Is there a better, more apt description of the incoming Trump administration than “kakistocracy”, which translates from the Greek literally as government by the worst people? The new US president, as Barack Obama remarked on the campaign trail, is “uniquely unqualified” to be commander-in-chief. There is no historical analogy for a President Trump. He combines in a single person some of the worst qualities of some of the worst US presidents: the Donald makes Nixon look honest, Clinton look chaste, Bush look smart.

Trump began his tenure as president-elect in November by agreeing to pay out $25m to settle fraud claims brought against the now defunct Trump University by dozens of former students; he began the new year being deposed as part of his lawsuit against a celebrity chef. On 10 January, the Federal Election Commission sent the Trump campaign a 250-page letter outlining a series of potentially illegal campaign contributions. A day later, the head of the non-partisan US Office of Government Ethics slammed Trump’s plan to step back from running his businesses as “meaningless from a conflict-of-interest perspective”.

It cannot be repeated often enough: none of this is normal. There is no precedent for such behaviour, and while kakistocracy may be a term unfamiliar to most of us, this is what it looks like. Forget 1876: be prepared for four years of epic misgovernance and brazen corruption. Despite claiming in his convention speech, “I alone can fix it,” the former reality TV star won’t be governing on his own. He will be in charge of the richest, whitest, most male cabinet in living memory; a bizarre melange of the unqualified and the unhinged.

There has been much discussion about the lack of experience of many of Trump’s appointees (think of the incoming secretary of state, Rex Tillerson, who has no background in diplomacy or foreign affairs) and their alleged bigotry (the Alabama senator Jeff Sessions, denied a role as a federal judge in the 1980s following claims of racial discrimination, is on course to be confirmed as attorney general). Yet what should equally worry the average American is that Trump has picked people who, in the words of the historian Meg Jacobs, “are downright hostile to the mission of the agency they are appointed to run”. With their new Republican president’s blessing, they want to roll back support for the poorest, most vulnerable members of society and don’t give a damn how much damage they do in the process.

Take Scott Pruitt, the Oklahoma attorney general selected to head the Environmental Protection Agency (EPA). Pruitt describes himself on his LinkedIn page as “a leading advocate against the EPA’s activist agenda” and has claimed that the debate over climate change is “far from settled”.

The former neurosurgeon Ben Carson is Trump’s pick for housing and urban development, a department with a $49bn budget that helps low-income families own homes and pay the rent. Carson has no background in housing policy, is an anti-welfare ideologue and ruled himself out of a cabinet job shortly after the election. “Dr Carson feels he has no government experience,” his spokesman said at the time. “He’s never run a federal agency. The last thing he would want to do was take a position that could cripple the presidency.”

The fast-food mogul Andrew Puzder, who was tapped to run the department of labour, doesn’t like . . . well . . . labour. He prefers robots, telling Business Insider in March 2016: “They’re always polite . . . They never take a vacation, they never show up late, there’s never a slip-and-fall, or an age, sex or race discrimination case.”

The billionaire Republican donor Betsy DeVos, nominated to run the department of education, did not attend state school and neither did any of her four children. She has never been a teacher, has no background in education and is a champion of school vouchers and privatisation. To quote the education historian Diane Ravitch: “If confirmed, DeVos will be the first education secretary who is actively hostile to public education.”

The former Texas governor Rick Perry, nominated for the role of energy secretary by Trump, promised to abolish the department that he has been asked to run while trying to secure his party’s presidential nomination in 2011. Compare and contrast Perry, who has an undergraduate degree in animal science but failed a chemistry course in college, with his two predecessors under President Obama: Dr Ernest Moniz, the former head of MIT’s physics department, and Dr Steven Chu, a Nobel Prize-winning physicist from Berkeley. In many ways, Perry, who spent the latter half of 2016 as a contestant on Dancing with the Stars, is the ultimate kakistocratic appointment.

“Do Trump’s cabinet picks want to run the government – or dismantle it?” asked a headline in the Chicago Tribune in December. That’s one rather polite way of putting it. Another would be to note, as the Online Etymology Dictionary does, that kakistocracy comes from kakistos, the Greek word for “worst”, which is a superlative of kakos, or “bad”, which “is related to the general Indo-European word for ‘defecate’”.

Mehdi Hasan has rejoined the New Statesman as a contributing editor and will write a fortnightly column on US politics

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

This article first appeared in the 19 January 2016 issue of the New Statesman, The Trump era