Whether you’re on a high income or a low one, you’re probably not paid fairly. Australia is supposedly an egalitarian society, and a belief in the ‘fair go’ has lead to the fortunate introduction of a minimum wage, dependent on the industry. Somehow amongst our egalitarianism ideals, we have also come to embrace an unerring confidence in the assertion that everything is better if markets are free from regulation or too much scrutiny.
“You get monkeys if you pay peanuts”.
The power of this mantra means maximum salary capping on executive pay is an utterly taboo topic; it’s virtually political poison for any government which might entertain the idea that perhaps people aren’t being paid what they’re worth (as the free market purports), but rather what either side can get away with. So much for an honest day’s pay for an honest day’s work.
Everybody, no matter their income, wants to be paid more. They ask for a promotion, move companies to better paid positions, and seek out get-rich-quick (without working) investments to strive for an income that reflects their worth. Full-time wage earners take home anywhere from 2 x 8 times my average monthly income and yet constantly I hear their voices lament their various financial pressures. The media tell us middle income earners are “struggling to make ends meet” and politicians tell us Aussies are “doing it tough”. Meanwhile I cannot fathom what people spend all their money on! (See this article for Living on Less)
The poverty line is defined as ‘the estimated minimum level of income needed to secure the necessities of life’. In Australia, that’s set at 50% of the median income, and for a single adult is $426.30/week. Fun fact: that’s about 40% more than the Newstart allowance (let the dole bludgers starve!). Generally speaking, mostly by choice, I earn about $1200/month, sometimes a little more, and some months none at all. Before tax. Or super. Yep. Total.
“Why so little?” you’re asking, and what does it have to do with how much you get paid? My question to you is…
Why the hell are you paid so much, and do you reckon that my value in the job market compared to yours is possibly reflective of a broken system?
Are you aware that politicians, who work very hard I’m certain, live very comfortable lifestyles on a salary of $200K — $527,000, plus ‘entitlements’? They enjoy tax advantages reserved for the political class and those who can afford tax avoidance strategies (Paradise Papers anyone?), in addition to whatever funds they derive from their investments and passive income streams. When they leave parliament they walk in to private sector jobs secured as a result of their experience with the machinations of government and receive a lifetime 6-figure parliamentary pension. All on the public purse.
These are the people making decisions about me.
Me, who is 50% below the ‘minimum level of income needed to secure the necessities of life’. They debate about whether I should get paid penalty rates for working on a cultural leisure day.
Why are they called penalty rates? Is it because the people who coined the term acknowledge that those rostered to work at the applicable times are not in a position of benefit, but in fact are suffering a kind of forfeiture? Whether or not people who work Monday to Friday (excluding public holidays) agree that Saturday is equally as treasured as a Sunday, it seems it has simply become too burdensome on business owners to share the prosperity with the staff who contribute to their business’ success. Double time they say. Twice the hourly rate they cry!
Get real people. That’s 2 x fuck all. $20.08 to be exact.
Finally it was agreed; people working unsociable hours are getting paid too much. It’s “a step in the right direction towards modernising penalty rates to better reflect our 24/7 existence”, stated The Business Council of Australia, which isn’t open on the weekend. Oh the irony! The elected officials who decided to strip my additional remuneration earn minimum quadruple my hourly salary, every single hour of every single day whether they are in the office working, in parliament fighting like the bullies they are, or taking a helicopter to a fully catered party or football match. Too bad that the myth of trickle down economics behind this decision has even been debunked by the IMF.
I’m not envious. As Karl Widerquist says in his excellent story, My Own Private Basic Income
“That’s the Catch-22 for the people who complain about our economic system. You’re either hypocritical [if you’re wealthy] or jealous [if you’re poor].”
Trading Time
So how might we more fairly decide someone’s value in the market of life? Really the only finite, immutable, quantifiable thing every single person has in equal measure is our time. We are each granted the exact same number of hours per day. As for how many days, few people ever get to control such a thing. So let’s look at how we trade our time.
How much more valuable is your time compared with say….
an early childhood educator who teaches your child some of the fundamental things he or she will need to know in its lifetime to stay alive, as well as developing your offspring’s cognitive skills to encourage them to solve problems, innovate and create? She spends each of the hours of the day (during which you’re otherwise engaged) giving your precious child all the love and care possible, and ensuring our youngest members of the world feel a sense of belonging in your absence.
Is your time more valuable than hers? She earns an average wage of $21.22 per hour.
How about a Hollywood actor who spends a few months preparing physically and mentally for shooting a film whereby he’ll recite lines in character (written by someone else) and move around (as per instructions) on set (designed and built by other people)?
Is your time less valuable than his? He earns about $85 million per year.
Perhaps theirs and yours are equally important jobs, along with scientists, artists, nurses, builders, waiters, garbage collectors, CFO’s, train engineers, carers, social workers, taxi drivers, mothers. We all play a role in a functioning society, and we all benefit from what each of us brings to the table. At the most fundamental level we each have the same basic needs, many of our wants are alike — connection, acceptance, dignity — and we’re all on this blue dot together. So why is a cashier worth $24.49/hr (no leave, no benefits, no security), while a CEO is worth $2million/yr (plus bonuses, fringe benefits and tax offsets)?
Well it’s because of….
Hard work, they say. Well if hard work was the ticket to being worth more in the free market every woman in Africa would be rich.
A good education, they say. Why then has our government decimated the vocational training sector and currently gutting university funding? Why have Gonski reforms not been passed? Why are degrees increasingly worth less in the recruitment process if they’re the basis on which your worth is determined?
Natural skills and talents, they say. Is Justin Beiber really millions of times more talented than the singer-songwriter-musician playing gigs on the local live music scene who just wasn’t lucky enough to get ‘discovered’?
The responsibility the job entails, they say. A lot of highly paid people hold jobs that could financially cripple a community, damage an ecosystem, or even kill people. If we paid people according to the damage they could inflict, bus drivers, food handlers and marine biologists would be paid millions. The fact is highly paid people make monumental mistakes of a scale or significance equal to lower paid counterparts. And yet, in the free market their worth is derived neither from the importance of their work, nor from their infallibility.
Contribution to the company, they say. Jamie Dimon made (and hid) a $5.8 billion trading loss for JP Morgan Chase. Jeffrey Skilling introduced a complex and inadequate accounting system which lead to Enron’s bankruptcy. The executives at Shell opted to abandon its Alaskan Arctic drilling project wasting $7 billion of shareholders’ money in the process. Enough said.
Despite its demonstrable inadequacy, there persists this underlying belief in the free market’s unrivalled ability to recruit and pay people precisely what they’re worth to society.
The gender pay gap is further evidence of the myth of a fair and rational ‘free market’. Cultural norms and biological variables shuffle each gender disproportionately into different industries, and then the market decides to pay the predominantly female industries 16% less (officially). If we start counting all forms of labour as ‘work’, this differential is much greater. Women are frequently completely unvalued and, crucially, unpaid for work they perform.
The story goes that we’re living in a meritocracy. Spoiler: It’s BS and if you ask anybody who ever got a job because of a family or friend connection, you know it is. Adding insult to injury, apparently “the laws of supply and demand result in general equilibrium”. Supposedly, Adam Smith’s ‘invisible hand’ of the free market ensures that acts of self-interest will, in the long run, be fair overall and deliver a social dividend. Basically, let it be and things will take care of themselves. After two hundred years of this nonsense neoclassical economic theory we still aren’t where we’re meant to be….or are we?
It’s about your power versus theirs
During former Telstra CEO Sol Trujillo’s tenure, the company’s share price dropped by 30%, however when he left that job he walked away with $9million in salary and bonuses. Imagine if a high school teacher’s class saw a 30% drop in matriculation, or an ambulance officer saved 30% fewer lives. Do you suppose their worth would remain intact?
As Yonatan Zunger stated in his article, “Situations — economic, legal, social — that give one person more coercive power over other people increase the effective value of that person’s wealth, and decrease the value of the people’s that they can coerce.” And that is why you get paid what you do, why Sol Trujillo got paid what he did, and why the most I’ve ever earned is $47,000p.a.
Zunger goes on to state that “if I know that your failure to make a deal with me — not with the abstract market as a whole, but with me, right here, right now — is going to cost you a lot, then it doesn’t matter what competitors are [paying] out there in the field. I can make you accept less for what you’re offering.” Looks like staying in your job until you’ve got another one lined up is a masterstroke of brilliance. After all, $10/hr is better than no dollars an hour, and people will be subjected to and tolerate pretty immoral levels of exploitation when the chips are down.
Out of all the arguments for Universal Basic Income, I think eliminating this coercive power of the people determining your worth is the most salient.
Can we fix it? Yes, we can!
The problem with free market economic theory is that phrase, ‘all things being equal’. They’re not. And quite frankly, they never will be. But we can definitely do better.
The greatest trick the devil ever pulled was convincing the world he didn’t exist.
You have been deceived. We all have.
We walk around buying into the doctrine that celebrates wealthy people for how clever they must be, and demonises poor people as indolent, immoral and/or stupid. We cherish the self-made-man narrative because it fans our aspiration, meanwhile we overlook that 8 out of 10 startups fail. We so badly want to believe we have ‘earned it’ we turn a blind eye to the fact the migrant radiologist is only able to get work driving an Uber when he’s not stacking shelves at Coles. But yeah sure, he’s an ‘empowered micro-entrepreneur’.
Money in our politics is running the show, and the people with power and influence like it just how it is.
We are well past the point of tweaking. Little fixes here and there. It’s a broken system. Nothing less than an overhaul of how we express and measure value in our economy will even begin to undo the gross inequality of a free market wage system.
Explain to me again why we don’t financially compensate the irreplaceable work of a stay-at-home mum?
What’s the logic of homelessness services relying on an army of unpaid volunteers to continue their work?
Who decided that the farmers who grow your life-giving food are worth less than the contracts negotiator who saved the company millions by artificially suppressing prices at the farm gate?
Until we come up with better answers will we never be able to claim we’re paid what we’re worth. The fact is a free market system overcompensates some people for having the inclination and opportunity to exploit it to their advantage, and screws the rest of us because we mistakenly think we lack the power to demand anything else.
We do have the power.
It’s going to be a bumpy ride, but I promise, IT’S WORTH IT!
