tag:theconversation.com,2011:/nz/topics/minimum-wage-793/articlesMinimum wage – The Conversation2024-03-19T10:45:17Ztag:theconversation.com,2011:article/2222242024-03-19T10:45:17Z2024-03-19T10:45:17ZNigeria’s fuel subsidy removal was too sudden: why a gradual approach would have been better<p>Nigeria <a href="https://www.economist.com/middle-east-and-africa/2023/06/08/nigerias-new-president-scraps-the-fuel-subsidy">removed</a> fuel subsidies entirely in May 2023. This came as a surprise because of the political risks associated with subsidy removal. Previous administrations were <a href="https://www.theguardian.com/world/2012/jan/16/nigeria-restores-fuel-subsidy-protests">reluctant</a> to jettison the subsidies.</p>
<p>The subsidies had been in place since the <a href="https://www.ictd.ac/publication/fuel-subsidy-social-contract-microeconomic-analysis-nigeria-rib/#:%7E:text=Subsidies%20exist%20because%20the%20government,oil%20price%20shock%20in%201973">1970s</a>, when the government sold petrol to Nigerians at a price below cost – though most consumers weren’t aware of this. </p>
<p>The 1977 <a href="https://gazettes.africa/archive/ng/1977/ng-government-gazette-supplement-dated-1977-01-13-no-2-part-a.pdf">Price Control Act</a> made it illegal for some products (including petrol) to be sold above the regulated price. The <a href="https://www.britannica.com/biography/Olusegun-Obasanjo">Olusegun Obasanjo</a> regime introduced this law to cushion the effects of <a href="https://www.npr.org/2021/05/29/1001023637/think-inflation-is-bad-now-lets-take-a-step-back-to-the-1970s">inflation</a>, caused by a worldwide increase in energy prices.</p>
<p>Fuel subsidies have been controversial in Nigeria, and some analysts see them as inequitable. Very few Nigerians own vehicles. Nigeria is among the countries with the <a href="https://nigerianstat.gov.ng/elibrary/read/903/#:%7E:text=Estimated%20vehicle%20population%20in%20Nigeria,population%20ratio%20is%20put%200.06.">least number of vehicles</a> per capita, with <a href="https://nigerianstat.gov.ng/elibrary/read/903/#:%7E:text=Estimated%20vehicle%20population%20in%20Nigeria,population%20ratio%20is%20put%200.06.">0.06 vehicles</a> per person or 50 vehicles per 1,000 Nigerians.</p>
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Read more:
<a href="https://theconversation.com/nigerias-fuel-subsidy-is-gone-its-time-to-spend-the-money-in-ways-that-benefit-the-poor-204701">Nigeria’s fuel subsidy is gone. It's time to spend the money in ways that benefit the poor</a>
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<p>So critics have <a href="https://theconversation.com/nigerias-fuel-subsidy-is-gone-its-time-to-spend-the-money-in-ways-that-benefit-the-poor-204701">argued</a> that the subsidies benefited mainly the elites even though they could afford to buy fuel at market prices. </p>
<p>The subsidies were also considered to be a drain on public finances, costing the government <a href="https://www.reuters.com/business/energy/nigerias-nnpc-spent-10-billion-fuel-subsidy-2022-2023-01-20/">US$10 billion</a> in 2022. About <a href="https://www.dataphyte.com/latest-reports/nigerias-expenditure-on-fuel-subsidy-in-17-years-adequate-to-build-three-450000bpd-refineries-neiti/">40%</a> of Nigeria’s revenue in 2022 was spent on fuel subsidies.</p>
<p>Fuel subsidies in Nigeria were notorious for their opacity and graft. <a href="https://punchng.com/probe-missing-2-1bn-n3-1tn-subsidy-payments-or-face-lawsuit-serap-tells-tinubu/">Billions of dollars</a> were said to have been lost through corrupt practices in the payment of the subsidies. </p>
<p>These are some of the reasons they were removed. </p>
<p>But now questions are being asked about the way it was done. In a public opinion poll conducted last year, <a href="https://www.noi-polls.com/post/fuel-subsidy-removal-7-in10-nigerians-lament-over-the-negative-impact">73%</a> of Nigerians said they were dissatisfied with the manner in which the fuel subsidy was removed. </p>
<p>As <a href="https://theconversation.com/profiles/stephen-onyeiwu-170137">an economist</a> who has studied the Nigerian economy for over four decades, I can see why the fuel subsidy had to go. </p>
<p>As I argued in a <a href="https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966">previous article</a>, fuel subsidies were bad for the Nigerian economy. They worsened budget deficits and the country’s debt profile, encouraged corruption, and diverted resources away from critical sectors of the economy. They were also inequitable, transferring the national wealth to elites. </p>
<p>But, as has become clear from the <a href="https://theconversation.com/inflation-in-nigeria-is-still-climbing-while-it-has-slowed-globally-heres-why-222226">unprecedented inflation</a> in the country partly caused by the removal of fuel subsidies, the abrupt removal of the subsidy was not the best strategy to use. </p>
<p>I believe this action should have been staggered over several months. This would have provided a soft landing, and gradually exposed Nigerians to the full market price of fuel. Doing so in one fell swoop amounts to shock therapy that is very traumatic for an already beleaguered and impoverished citizenry.</p>
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Read more:
<a href="https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966">Fuel subsidies in Nigeria: they're bad for the economy, but the lifeblood of politicians</a>
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<h2>Why removing the subsidy should have been gradual</h2>
<p>The <a href="https://theconversation.com/bola-ahmed-tinubu-the-kingmaker-is-now-nigerias-president-200383">Bola Tinubu</a> administration could have chosen from various mechanisms to minimise the negative impact of subsidy removal. </p>
<p>As proposed by the <a href="https://documents1.worldbank.org/curated/en/099061623093529051/pdf/P1779950377213012089e701681a43e5558.pdf">World Bank</a>, a temporary price cap would have ensured that fuel price increases did not inflict too much pain on consumers. This approach would also have enabled the government to significantly reduce, but not eliminate, the fiscal burden of the subsidy. </p>
<p>Another approach is periodic price adjustments: setting the price based on a moving average of previous months’ import costs. These adjustments could have been made together with a price cap. The <a href="https://documents1.worldbank.org/curated/en/099061623093529051/pdf/P1779950377213012089e701681a43e5558.pdf">Philippines</a> is one country that successfully removed fuel subsidies in the 1990s, using the price adjustment mechanism.</p>
<p>Gradually phasing out subsidies would have been a better approach for a number of reasons. </p>
<p>Firstly, Nigerians had become suspicious of government’s intentions, given their economic experiences with the previous administration of <a href="https://www.britannica.com/biography/Muhammadu-Buhari">Muhammadu Buhari</a>. Those <a href="https://newtelegraphng.com/agony-over-buharis-bad-economic-legacy/">experiences</a> include high <a href="https://tradingeconomics.com/nigeria/inflation-cpi">inflation</a> and <a href="https://tradingeconomics.com/nigeria/unemployment-rate">unemployment rates</a>, rising poverty and insecurity. </p>
<p>Tinubu should have re-established government credibility and good intentions first. He could have offered economic succour such as cash transfers and food subsidies for poor Nigerians, wage increases for workers and retirees, scholarships or tuition waivers for indigent students in tertiary institutions, free lunches for primary and secondary students in public schools, and subsidised public transport. </p>
<p>After demonstrating he meant well, he should have gradually rolled out the subsidy removal. Nigerians would have been psychologically prepared for what was coming, including inflation. </p>
<p>The inflationary impact of subsidy removal would have been less severe. Nigerians would have been more tolerant of difficult economic policies. People will accept difficult economic policies if they know their government is humane and pro-people. </p>
<p>Secondly, an incremental approach would have enabled the government to come up with programmes targeted at those most likely to be hurt by subsidy removal. This would have ensured buy-in. The “<a href="https://guardian.ng/politics/tinubus-subsidy-removal-and-palliative-dilemma/">palliatives</a>” introduced by the Tinubu administration and state governments are temporary and have a <a href="https://punchng.com/palliatives-knocks-trail-distribution-beneficiaries-decry-inadequate-foodstuffs-delay/">limited reach</a>. </p>
<p>Gradual subsidy removal would have enabled the government to engage with groups that would be affected by the policy. Groups representing labour, manufacturers, students, women and others could have provided insights into what would be needed to help their members adjust. </p>
<p>This interactive approach would have promoted transparency and credibility in the conduct of government policies.</p>
<p>Many vulnerable Nigerians were already under severe economic pressure. Apart from <a href="https://tradingeconomics.com/nigeria/unemployment-rate">high unemployment</a> and <a href="https://nigerianstat.gov.ng/elibrary/read/1092#:%7E:text=In%20Nigeria%2040.1%20percent%20of,considered%20poor%20by%20national%20standards.">poverty rates</a>, <a href="https://tradingeconomics.com/nigeria/inflation-cpi">inflation</a> was biting very hard. </p>
<p>The abrupt removal of fuel subsidies, without first putting in place shock-absorbing measures, will make it more difficult for the government to achieve the policy’s long-term aims: fiscal sustainability; higher levels of investment in productive sectors of the economy; economic growth; and investment in renewable energy.</p>
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Read more:
<a href="https://theconversation.com/nigerias-transport-grant-isnt-the-best-way-to-allocate-fuel-subsidy-savings-heres-what-is-172982">Nigeria's transport grant isn't the best way to allocate fuel subsidy savings: here's what is</a>
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<h2>Minimising the negative impact of subsidy removal</h2>
<p>Tinubu should minimise the negative impact of subsidy removal and <a href="https://www.centralbanking.com/central-banks/reserves/foreign-exchange/7959058/nigeria-liberalises-exchange-rate">liberalisation</a> of the foreign exchange market. These two phenomena interact to cause the <a href="https://theconversation.com/inflation-in-nigeria-is-still-climbing-while-it-has-slowed-globally-heres-why-222226">inflation</a> that the country is facing. </p>
<p>First, savings from ending the subsidy should be used to develop productive capacities in agriculture, labour-intensive manufacturing and services. </p>
<p>Manufacturing activities like agro-processing, textiles, footwear, leather products, arts and crafts should be targeted for development. This would generate high-paying jobs that might help Nigerians to cushion the effects of inflation. </p>
<p>In an economy that’s functioning well, wages always adjust to reflect price increases. In Nigeria, however, too many people are either unemployed or in the <a href="https://www.researchgate.net/publication/352695633_EMPLOYMENT_IN_THE_INFORMAL_SECTOR_IN_NIGERIA_IMPLICATIONS_FOR_SUSTAINABLE_ECONOMIC_DEVELOPMENT">informal sector</a>, with limited opportunities to adjust their earnings to reflect inflation. </p>
<p>Funds saved from subsidy removal should be invested in public infrastructure (mass transportation, road construction, electricity generation, water supply). </p>
<p>Funds should also be used to develop people’s capabilities through massive investment in health and education. Part of the savings should be used to support and sustain the <a href="https://www.nuc.edu.ng/president-tinubu-signs-student-loan-bill/">student loan programme</a> announced by the Tinubu administration. </p>
<p>Successful radical economic reforms, such as the ones implemented in <a href="https://academic.oup.com/book/6796/chapter/150948559">Rwanda</a>, usually give people an incentive to be more productive, creative and innovative. But policies that are punitive, with marginal or no benefits, are unlikely to succeed.</p>
<p>It remains to be seen whether Tinubu’s economic policies will spur sustained and inclusive economic growth, as well as alleviate poverty.</p><img src="https://counter.theconversation.com/content/222224/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nigeria’s sudden and total removal of fuel subsidies was not the best strategy to use.Stephen Onyeiwu, Professor of Economics & Business, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2185332023-11-24T17:15:13Z2023-11-24T17:15:13ZHow minimum wage rises will affect the early years education and childcare sector<figure><img src="https://images.theconversation.com/files/561529/original/file-20231124-29-9cv7e5.jpg?ixlib=rb-1.1.0&rect=0%2C8%2C5964%2C3925&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/nursery-children-playing-teacher-classroom-1240454104">Rawpixel.com/Shutterstock</a></span></figcaption></figure><p>The early years sector – nurseries and childminders who offer services to children under the age of five – waited expectantly for news of investment in the UK chancellor’s recent <a href="https://theconversation.com/autumn-statement-experts-react-to-national-insurance-and-business-tax-cuts-194286">autumn statement</a>. But this was not delivered, even though Jeremy Hunt presented 110 economic measures designed to boost UK growth and productivity.</p>
<p>Expanding access to early years care is vital for addressing socio-economic inequality, educating society’s youngest members, enabling early interventions in children’s lives and helping more parents access the labour market or increase their participation in work. </p>
<p>In his 2023 spring budget, Hunt announced a significant extension in entitlement for “free hours” of early education and care for parents of pre-school children. The government has committed an additional £4.1 billion by 2027-2028 to fund the expansion, which includes £204 million in 2023-24 (from September) to bring funding closer in line with the cost of provision. </p>
<p>The basis of this expansion must be high-quality early years education and care, which can only be delivered by committed professionals who are highly trained, recognised and rewarded. These working conditions lay the foundation for the learning conditions of our youngest citizens.</p>
<p>Even with the additional financial input from the spring budget, however, the <a href="https://www.cbi.org.uk/media/utccayj5/cbi-budget-submission-2023.pdf">CBI has estimated</a> that the full cost of this expansion will be more than twice as much, at £8.9bn. The early years sector had high hopes that the autumn statement would bring further announcements to close this funding gap and support early years providers in delivering this expansion. </p>
<p>Providers we interviewed for <a href="https://static1.squarespace.com/static/646ca30371a2ef6a657e9309/t/65482050ded6710668b8b62a/1699225681784/Retention+and+Return.pdf">a recent study</a>, for example, put increased base funding rates per child at the top of their wish list for the support needed to fuel the expansion. But that wasn’t announced in the autumn statement.</p>
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<a href="https://theconversation.com/autumn-statement-experts-react-to-national-insurance-and-business-tax-cuts-194286">Autumn statement: experts react to national insurance and business tax cuts</a>
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<h2>Minimum wage boost will help childcare workers</h2>
<p>The government did <a href="https://www.gov.uk/government/news/largest-ever-cash-increase-to-the-minimum-wage">increase minimum wage rates</a>, however. These rises are welcome: they support the lowest-paid workers to improve their standards of living and experiences of work. Enduring low pay remains a structural feature of the early years sector. </p>
<p><a href="https://static1.squarespace.com/static/646ca30371a2ef6a657e9309/t/65482050ded6710668b8b62a/1699225681784/Retention+and+Return.pdf">Our recent research</a> showed that low pay and lack of pay progression over time were seen by staff as a key reason for job dissatisfaction. </p>
<p>But many providers are already struggling to pay the wages of their staff while also affording other inflation-linked pressures. Minimum wage increases will push up the wage bill for many nursery providers and may lead to further compression of pay scales, which could drive more workers out of the sector. </p>
<p>In <a href="https://www.earlyeducationchildcare.org/early-years-workforce-report">a report on the workforce</a> co-authored with the Early Education and Care Coalition, we identified retention of staff as one of the key challenges facing the sector. More specifically, this would help support the expansion in childcare places needed under government plans. </p>
<p>Instead, we found evidence of a growing early years’ workforce crisis: 57% of nursery staff and 38% of childminders are considering quitting the sector within the next year. Even before the announced minimum wage increase, many nurseries told us they were unlikely to offer new entitlements to children under three because they can’t recruit and retain suitably qualified staff. </p>
<p>Now that providers must manage additional costs to boost employee wages too, the proposed childcare expansion plan is likely to be undeliverable.</p>
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<img alt="Person at a protest with a pink sign that says raise the minimum wage." src="https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=465&fit=crop&dpr=1 600w, https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=465&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=465&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=585&fit=crop&dpr=1 754w, https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=585&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/561530/original/file-20231124-25-de9mi0.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=585&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Childcare workers deserve better pay but the industry is struggling to cope with mounting costs amid government plans to expand free childcare.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/raise-minimum-wage-sign-workers-rights-1930504145">Mr Doomits/Sutterstock</a></span>
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<h2>How to help the early years sector</h2>
<p>Retention of current staff and packages to attract committed early years professionals back to the sector are both essential to deliver current places for children and enable expansion in the short term. </p>
<p>Retaining current childminders is crucial, as many are leaving the sector in order to retire. This leaves a smaller pool of potential “returners”. Our research shows that many people who have recently left are still very committed to the sector and would be willing to return if issues such as pay and working conditions are addressed.</p>
<p>As the largest buyer of early years provision, through free hours entitlements, the government has a central and defining role in addressing the recruitment and retention crisis by improving these terms and conditions. The chronic underfunding of the free hours programme has left virtually no scope to address low salaries in the sector, <a href="https://childcare-during-covid.org/wp-content/uploads/2022/02/CDC-19-Final-report.pdf">both during and since COVID</a>.</p>
<p>In order to encourage early years professionals to remain or return, pay must be improved across the board. Sufficient increases should track improved training and increasing seniority. Ongoing monitoring of pay and conditions is also needed. </p>
<p>The early years sector has been held back for far too long because of piecemeal interventions that have short-term effects but fail to address the wider issues its workforce is facing.</p><img src="https://counter.theconversation.com/content/218533/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Norman consults to the Early Education and Childcare Coalition. She receives funding from the ESRC and the Early Education and Childcare Coalition. </span></em></p><p class="fine-print"><em><span>Jennifer Tomlinson consults to the Early Education and Childcare Coalition. She receives funding from the ESRC and the Early Education and Childcare Coalition.</span></em></p><p class="fine-print"><em><span>Kate Hardy consults to the Early Education and Childcare Coalition. She receives funding from the ESRC and the Early Education and Childcare Coalition.</span></em></p>The autumn statement failed to deliver for the early years sector, which will struggle to deliver an expansion in childcare promised in the 2023 spring budget.Helen Norman, Senior Research Fellow at Leeds University Business School, University of LeedsJennifer Tomlinson, Professor of Gender and Employment Relations, University of LeedsKate Hardy, Professor of Global Labour, University of LeedsLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2158642023-10-19T18:39:11Z2023-10-19T18:39:11ZHealth care workers gain 21% wage increase in pending agreement with Kaiser Permanente after historic strike<figure><img src="https://images.theconversation.com/files/554397/original/file-20231017-19-xxi7c6.jpg?ixlib=rb-1.1.0&rect=89%2C99%2C3234%2C2019&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Striking Kaiser Permanente workers hold signs as they march on Oct. 6, 2023, in Vallejo, Calif. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/striking-kaiser-permanente-workers-hold-signs-as-they-march-news-photo/1720876420?adppopup=true">Justin Sullivan/Getty Images</a></span></figcaption></figure><p><em>The Coalition of Kaiser Permanente Unions <a href="https://www.cnn.com/2023/10/13/business/kaiser-permanente-strike-deal-reached/index.html">reached a tentative agreement</a> with its employer on a new four-year contract on Oct. 13, 2023. They agreed following the <a href="https://theconversation.com/why-are-thousands-of-kaiser-health-care-workers-on-strike-5-questions-answered-214926">largest documented strike of U.S. health care workers on record</a>, which involved more than 75,000 workers in several states and the District of Columbia. A majority of the <a href="https://www.healthcaredive.com/news/kaiser-permanente-unions-tentative-agreement-bargaining-sessions/696611/">unions’ 85,000 members will need to approve the deal</a> for it to become final. The <a href="https://go.seiu-uhw.org/l/45502/2023-10-13/9517nl">voting began on Oct. 18</a>.</em></p>
<p><em>The contract’s terms will make Kaiser “able to deliver on our mission of providing high quality, affordable and accessible health care to our members,” <a href="https://calmatters.org/health/2023/10/kaiser-permanente-union-strikes-california-contract/">Kaiser Vice President and Chief of Human Resources Greg Holmes said</a>.</em></p>
<p><em>The Conversation asked <a href="https://scholar.google.com/citations?user=ZuwzOscAAAAJ&hl=en&oi=ao">Michael McQuarrie</a>, an Arizona State University sociologist who directs its Center for Work and Democracy, to explain what’s in the settlement and why it matters.</em> </p>
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<h2>What are the terms of the settlement?</h2>
<p>Kaiser workers will get a <a href="https://www.npr.org/sections/health-shots/2023/10/13/1205788228/kaiser-permanente-strike-contract-deal-reached">21% raise over the life of the contract</a>, with a 6% salary increase in October 2023, and 5% in October 2024, 2025 and 2026.</p>
<p>The contract notably also includes a new hourly minimum wage for Kaiser workers in California, which will increase to US$25 by 2026. That pay level will be required of all California health care employers by that time, however, because <a href="https://calmatters.org/health/2023/10/california-minimum-wage-health-care-law/">California Gov. Gavin Newsom has signed a new law</a> to that effect.</p>
<p>In <a href="https://about.kaiserpermanente.org/who-we-are/labor-relations/new-agreement-with-the-coalition-of-kaiser-permanente-unions">other states, the contractual minimum hourly wage will be $23</a> once all of the raises called for in this new contract are phased in.</p>
<p>The contract also calls for some improvements to benefits, such as <a href="https://about.kaiserpermanente.org/who-we-are/labor-relations/new-agreement-with-the-coalition-of-kaiser-permanente-unions">larger performance-related bonuses</a>. The final settlement reportedly includes a <a href="https://www.fiercehealthcare.com/providers/largest-healthcare-worker-strike-us-history-scheduled-begin-wednesday-across-kaiser">guaranteed performance bonus of at least $1,500</a> if Kaiser meets financial benchmarks and patient health benchmarks.</p>
<p>Bonuses for working shifts that include hours after 5:30 p.m. would rise to $3.25 an hour, I’ve learned from workers involved in the negotiations. That means if this contract is ratified, these evening and night shifts would see an increase from <a href="https://www.seiu1199nw.org/wp-content/uploads/2021/02/KPWA-SWEA-2019-2023.pdf">$2 in the 2019-2023 contract</a>. Without that monetary incentive, workers usually try to get more desirable daytime shifts, increasing turnover and exacerbating staffing gaps at night.</p>
<p>The new contract would also leave in place restrictions on Kaiser’s ability to outsource or subcontract union jobs, which were <a href="https://www.unioncoalition.org/80000-workers-kaiser-permanente-reach-tentative-contract-settlement/">included in the prior contract</a> that Kaiser and the unions agreed upon in 2019.</p>
<p>And the coalition of unions has agreed to streamline the process for internal bidding on open positions to help Kaiser resolve staffing shortfalls. In addition, the contract includes provisions for training new health care workers that the union had sought. </p>
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<figcaption><span class="caption">The deal will set a minimum hourly wage of $25 in California, where many of Kaiser Permanente’s facilities are located, and $23 in other states.</span></figcaption>
</figure>
<h2>Why did workers feel the strike was necessary, and did it achieve their aims?</h2>
<p>My contacts within the union told me that they had the impression that Kaiser had essentially withdrawn from negotiations in the weeks leading up to the strike – although its management team did return to the table at the eleventh hour before the strike began. The bargaining <a href="https://www.unioncoalition.org/2022-psp/">officially began in April 2023</a>.</p>
<p>The unions in the coalition had rejected the terms Kaiser was offering at that point, which included lower wages and plans to expand its reliance <a href="https://www.unioncoalition.org/2023-agreement-expires/">on subcontracted workers</a>. Kaiser also never responded to the coalition’s last economic proposal until the <a href="https://www.unioncoalition.org/2023-economic-proposal/">last-minute negotiations</a> that failed to avert a strike.</p>
<p>The COVID-19 pandemic <a href="https://theconversation.com/why-are-thousands-of-kaiser-health-care-workers-on-strike-5-questions-answered-214926">strained relations between Kaiser’s managers and workers</a> to unprecedented levels. United Healthcare Workers West/SEIU, the coalition’s largest union, <a href="https://seiuuhw.wpenginepowered.com/wp-content/uploads/2022/05/2022-04_Report_Staffing-Survey-10.1_DIGITAL.pdf">surveyed its members in 2022</a> and found a heavily stressed workforce who felt that management was unresponsive to their concerns. <a href="https://www.kff.org/coronavirus-covid-19/issue-brief/nursing-facility-staffing-shortages-during-the-covid-19-pandemic/">Numerous academic studies</a> <a href="https://doi.org/10.1016%2Fj.jradnu.2022.02.007">support these findings</a>. </p>
<p>Kaiser has been seeking for months to <a href="https://about.kaiserpermanente.org/who-we-are/labor-relations/kaiser-permanente-hiring-10000-new-staff-members-for-coalition-jobs">hire 10,000 new workers by the end of 2023</a> to fill vacancies that have led to understaffing and put stress on its workforce.</p>
<p>That Kaiser’s engagement in talks with the unions increased after the strike suggests that the unions’ actions made a big difference. So does the fact that Kaiser ultimately agreed to terms that were closer to the unions’ original demands on wages, benefits and subcontracting once workers went on strike than it had previously said it would accept.</p>
<h2>How have workers responded to the proposed settlement?</h2>
<p>Union members have to vote in favor of ratification for this contract to go into effect. Leaders of the strike and workers who were involved in the negotiations have told me they’re optimistic that this will happen. Voting <a href="https://www.seiu-uhw.org/press/more-than-85000-kaiser-permanente-healthcare-workers-win-landmark-new-contract/">began on Oct. 18</a> and should <a href="https://go.seiu-uhw.org/l/45502/2023-10-13/9517nl">conclude by Nov. 3</a>.</p><img src="https://counter.theconversation.com/content/215864/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael McQuarrie works with and does research on unions and other organizations. The Center for Work and Democracy has received funding from United Healthcare Workers West/SEIU, which is part of the Coalition of Kaiser Permanente Unions.</span></em></p>Beyond higher wages and improved benefits, the terms of the Kaiser settlement would ensure better staffing, which the unions have argued is critical for providing quality patient care.Michael McQuarrie, Director of the Center for Work and Democracy, Arizona State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2154872023-10-16T14:11:34Z2023-10-16T14:11:34ZKenya’s cost of living crisis: expert unpacks what’s driving it and what should be done<p><em>Kenyans are grappling with the high cost of living. Policy analyst Adan Shibia led a technical team that prepared a recent report on the <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206">state of Kenya’s economy</a>. We asked him to unpack what’s driving costs, who’s affected and what can be done about it.</em></p>
<h2>What is the cost of living crisis in Kenya and how bad is it?</h2>
<p>There has been a general increase in prices of necessities like food, transport and energy. But incomes haven’t risen as much as prices. As a result consumers have less purchasing power than before. They are being forced to consume less of everything, or reallocate spending. </p>
<p>Real earnings growth <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=23">declined</a> by an average of 2.7% between 2020 and 2022. The earnings growth rate has been lower than inflation. </p>
<p>Since 2022 Kenya has been experiencing high inflation. Between June 2022 and June 2023 overall inflation <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=67">averaged</a> 8.7%, peaking at 9.6% in October 2022. This was the highest inflation recorded since 2017.</p>
<p>The government has a <a href="https://www.treasury.go.ke/wp-content/uploads/2022/08/NOTICE-ON-PRICE-STABILITY-TARGET.pdf">policy target</a> of maintaining inflation within 2.5 percentage points above or below 5%. So the ceiling would be 7.5%. In June 2022 overall inflation rose above this ceiling, and remained above it up to June 2023. </p>
<p>Inflation is a measure of the rise in prices of a “basket” of goods selected by the Kenya National Bureau of Statistics. The main drivers of inflation were <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=36">food and transport (fuel)</a>. These on average <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=65">account</a> for 42.56% of the consumption basket for all households in Kenya. Price increases for food and fuel averaged 13.5% and 12.3% between June 2022 and June 2023. </p>
<p>The triggers for this inflationary pressure were prolonged drought in 2022 and the Russia-Ukraine war, which disrupted global supply chains of food, energy and fertiliser. </p>
<h2>Who is being affected the most?</h2>
<p>There are three groups of consumers who are affected more than others. </p>
<p>The first group are low-income earners who <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=76">spend</a> over 60% of their incomes on food. The analysis in the Kenya Economic Report 2023 shows that prices of cereals, legumes, tubers, fruits and vegetables all increased substantially. </p>
<p>Low-income earners are also affected through prices of other commodities in the <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=65">consumer basket</a>. These include housing (rent and utilities) and transport. This is particularly the case in urban areas. </p>
<p>The second group of people affected most are minimum wage earners. The rise in their incomes didn’t match inflationary trends. The minimum wage has <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=92">lagged</a> behind the living wage, which is how much a worker must earn to pay for their family’s minimum basic needs. The basic needs are food, housing, clothing, healthcare, education, water, sanitation, transport and communication.</p>
<p>Minimum wage provisions are not well enforced, especially in the informal sector, where 83% of <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=33">those employed</a> work. </p>
<p>The third group are those living in arid and semi-arid parts of the country, where rainfall is low and erratic and temperatures are high. Households in these counties generally have low incomes and face multidimensional poverty. In counties such as Turkana and Wajir households <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=99">spend</a> over 70% of their income on food. They are also more likely to be affected by climate related shocks that disrupt food supply and livelihood sources. </p>
<h2>What’s driving the rising cost of living?</h2>
<p>A confluence of factors in the domestic and global markets is responsible. </p>
<p>In the domestic market, <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=201">prolonged drought</a> in 2022 was the main trigger. This disrupted food supply, increasing reliance on imports. The <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=81">depreciation</a> of the Kenya shilling against major trading currencies like the US dollar, the euro and the pound sterling also contributed to the rise in prices of imported commodities like food, fuel and fertiliser. While Kenya is a net exporter of <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=77">unprocessed food items</a>, it is a net importer of <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=125">processed food products</a>. </p>
<p>Within the global context, the Russia-Ukraine war disrupted supply of cereals (especially wheat), edible oils, energy and fertilisers. Kenya was to a large extent <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=38">dependent</a> on imports of wheat and fertiliser from Russia and Ukraine. </p>
<p>The <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=85">surge</a> in oil prices within the global markets also trickled to <a href="https://www.epra.go.ke/services/petroleum/petroleum-prices/">pump prices</a> locally. </p>
<h2>What policy priorities could help?</h2>
<p>The long-term solution is policies that stimulate the private sector to produce and distribute goods and services more efficiently. Mechanisms to support markets include platforms for trading and access to information. A policy and legal framework that defines rules of interaction among market participants is also useful. This creates a level playing field for everyone. Markets also need clarity on property rights and incentive systems. </p>
<p>Strengthening the role of markets is vital because government has limited resources to subsidise basics like fuel, electricity and maize flour. With stronger markets, private sector players would also be more efficient in production and distribution of products. </p>
<p>Secondly, Kenya needs cushions against drought-related shocks. The key here is climate-smart agricultural practices such as improved crop varieties, adoption of early maturing crop varieties, irrigation and kitchen gardening technologies. And it’s vital to have better early warning systems, to prepare for climate change related risks. </p>
<p>The third consideration is improved infrastructure to ensure food supply: market information systems, transport and storage facilities. </p>
<p>Fourth, price fluctuations need to be addressed. The Kenyan government is currently rolling out County Aggregation Industrial Parks across the 47 counties. They are intended to support agro-processing industries by providing space, utilities, cold storage and so on. They will help even out prices of products across seasons. Processing fresh produce is essential for longer shelf lives and stable prices. </p>
<p>Fifth, the government must encourage private sector investment in the production of electric mobility vehicles. Fuel is the second key driver of inflation in Kenya. Kenyan households spend 9.65% of their income on <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=148">transport</a> and the transport sector <a href="https://kippra.or.ke/download/kenya-economic-report-2023-main-report/?wpdmdl=14955&ind=1695886127206#page=149">consumes</a> 75% of imported petroleum products. A shift to electric mobility is an opportunity to reduce exposure to global fuel price fluctuations. </p>
<p>Sixth, cushioning the vulnerable sections of the population is an area for consideration. This includes enforcement of minimum wage provisions and aligning it with the living wage. Access to affordable financial services such as credit and insurance would help households avoid falling into extreme poverty due to shocks and catastrophic expenditures such as health-related expenses. </p>
<p>Well-targeted social protection interventions are essential as policies are implemented towards market-enabled solutions for effective interactions of demand and supply.</p><img src="https://counter.theconversation.com/content/215487/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Adan Shibia is affiliated with the Kenya Institute for Public Policy Research and Analysis (KIPPRA), where he works as a senior policy analyst in the private sector development department. The author declares no conflict of interest in relation to this article. </span></em></p>There’s a need to support production and efficiencies in supply and distribution of essential goods and services in Kenya.Adan Shibia, Senior Policy Analyst, The Kenya Institute for Public Policy Research and Analysis (KIPPRA)Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2145472023-10-05T11:11:29Z2023-10-05T11:11:29ZOntario’s 2-tier minimum wage: As discriminatory now as it was in the 1990s<iframe style="width: 100%; height: 100px; border: none; position: relative; z-index: 1;" allowtransparency="" allow="clipboard-read; clipboard-write" src="https://narrations.ad-auris.com/widget/the-conversation-canada/ontarios-2-tier-minimum-wage-as-discriminatory-now-as-it-was-in-the-1990s" width="100%" height="400"></iframe>
<p>The province of Ontario <a href="https://news.ontario.ca/en/release/1002886/ontario-increasing-minimum-wage-to-1655-an-hour">has increased</a> its minimum wage to $16.55 per hour — unless workers are students under the age of 18, in which case their labour is only worth $15.60.</p>
<p>Québec and Manitoba eliminated their two-tier minimum wage in the late 1980s over concerns that the wage differential amounted to age discrimination and therefore violated Canada’s <a href="https://www.justice.gc.ca/eng/csj-sjc/rfc-dlc/ccrf-ccdl/">Charter of Rights and Freedoms</a>. Ontario almost did as well 30 years ago. But the Ontario NDP government broke its promise, as I detail below.</p>
<p>The issue is personal for me. When I was 17 years old, I was hired by my hometown library. But a week into the job I was called into the head librarian’s office and told that they had made an administrative error. They would need to pay me the lower rate. </p>
<p>With that, my wages dropped from $4 an hour to $3.15. Over the next year, I worked for substantially less than other students hired at the same time and who were doing the same work. This is an experience not easily forgotten.</p>
<h2>Age discrimination</h2>
<p>A few years later, I did something about it. As the head of a provincial student group, <a href="https://ondy.ontariondp.ca/">Ontario New Democratic Youth</a>, I launched a campaign on the issue in late 1989. As I wrote at the time: </p>
<blockquote>
<p>“If the two-tiered system was based upon any other category (of difference), it would not be tolerated.” </p>
</blockquote>
<p>We made the case that it was “unfair to value one person’s labour less than another’s simply on the basis of age.”</p>
<p>We then launched a Charter of Rights and Freedoms challenge on the issue of age discrimination with the help of Toronto labour lawyer <a href="https://goldblattpartners.com/our-lawyers/steven-barrett/">Steven Barrett</a>. A notice of application was submitted to the Supreme Court of Ontario in April 1990.</p>
<p>But then, most unexpectedly, the Ontario NDP won the election in September 1990 and <a href="https://www.tvo.org/article/orange-shockwave-how-ontario-got-its-first-ever-ndp-government">Bob Rae</a> became premier.</p>
<p>It seemed strange to us to continue the court challenge as our youth group was the party’s youth wing. Besides, the Ontario NDP had promised to eliminate the two-tier minimum wage in its election platform. It was also mentioned in <a href="https://www.poltext.org/sites/poltext.org/files/discoursV2/Ontario/ON_DT_1990_35_01.txt">the government’s first speech from the throne</a>. So, we dropped the lawsuit. </p>
<figure class="align-left ">
<img alt="Court documents." src="https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/552305/original/file-20231005-28-q6twsi.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A photo of the paperwork pertaining to the lawsuit the author’s youth group launched and then dropped.</span>
<span class="attribution"><span class="source">(Steven High)</span></span>
</figcaption>
</figure>
<p>The Ontario government reduced the student differential in 1991 to 45 cents an hour from 85 cents an hour, promising to eliminate it altogether the following year.</p>
<p><a href="https://www.thespec.com/news/hamilton-region/ndp-politician-bob-mackenzie-dead/article_8a4536d2-8d22-5e9b-92bb-7d90e9c320ee.html">Bob Mackenzie</a>, the NDP’s labour minister, even told the media at the time that the under-18 minimum wage “just cannot work in a society that promises equality and fairness. In fact, the existence of the student differential is currently before the courts in a challenge under the Charter of Rights and Freedoms.” </p>
<p>But then something changed, and the NDP decided to maintain the lower differential.</p>
<p>I have long wondered what happened. </p>
<h2>Employer lobbying</h2>
<p>Thirty years later, I am writing a book on how the NDP government responded to the industrial crisis. So, I decided to do some digging in the archives to find out why. </p>
<p>Thanks to <a href="https://www.ola.org/en/members/all/richard-alexander-allen">Richard Allen</a>, an NDP cabinet minister and historian who donated his records to McMaster University, I discovered that the Ontario Restaurant Association and other employer groups lobbied hard to convince the NDP cabinet to reverse itself.</p>
<p>According to archival material, they argued:</p>
<blockquote>
<p>“The student minimum wage category should not be seen as discriminatory against young inexperienced workers, instead it should be viewed as an affirmative action initiative which assists young inexperienced workers in gaining employment.” </p>
</blockquote>
<p>These were tough economic times and the youth unemployment rate was a dismal <a href="https://www.macdonaldlaurier.ca/files/pdf/MLI-PCrossYouthUnemployment10-15-webready.pdf">18 per cent</a>.</p>
<figure class="align-left ">
<img alt="A newsletter on newsprint with the headline Youth Viewpoints." src="https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=800&fit=crop&dpr=1 600w, https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=800&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=800&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1005&fit=crop&dpr=1 754w, https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1005&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/552307/original/file-20231005-15-gui2v6.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1005&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">An Ontario New Democrat newsletter on the minimum wage differential for students.</span>
<span class="attribution"><span class="source">(Steven High)</span></span>
</figcaption>
</figure>
<p>To find out more, I filed an access-to-information request and discovered that a decision was made in September 1991, the same month the <a href="https://springmag.ca/rae-days-lessons-from-the-social-contract-30-years-later">NDP abandoned its longstanding promise to deliver public auto insurance</a>, to hold off on eliminating the youth differential. </p>
<p>Instead, the Student Minimum Wage Consultation Group was formed with representatives of the four main employer groups in the hospitality industry, all with a strong vested interest in maintaining the youth differential, as well as two service-sector unions and an obscure student group nobody ever heard of. </p>
<p>The consultation group recommended keeping the differential.</p>
<h2>Discriminatory differential</h2>
<p>In its April 1993 cabinet submission on the subject, the Ministry of Labour conceded that the differential was discriminatory but recommended it was maintained anyway.</p>
<p>Here is how they worded it: </p>
<blockquote>
<p>“Clearly, the student minimum wage does discriminate on the basis of age and student status. The student component does not appear to present any legal difficulties, but the age discrimination is a complex legal issue.” </p>
</blockquote>
<p>It went on to say that “legal analysis concluded that if a Charter challenge were to be raised again there is a risk that the student differential could be found to violate the Canadian Charter of Rights and Freedoms on the basis of age discrimination.” </p>
<p>Thanks to us dropping our case, the ministry could advise: “There is no legal ruling directly on this issue and no current challenge.” The NDP cabinet therefore agreed with the warped line of reasoning that paying less to younger workers was a form of affirmative action. </p>
<p>Thirty years later, young people in Ontario are still paying the price: 95 cents an hour, to be precise.</p><img src="https://counter.theconversation.com/content/214547/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Steven High receives funding from the Social Sciences and Humanities Research Council. Thirty years ago, he was a member of the New Democratic Party.</span></em></p>Ontario almost joined Manitoba and Québec in eliminating the under-18 minimum wage 30 years ago. Then Bob Rae reneged on an election promise.Steven High, Professor of History, Centre for Oral History and Digital Storytelling (COHDS), Concordia UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2129132023-09-08T15:58:13Z2023-09-08T15:58:13ZHow unions could help reality TV cast and crew win better pay and working conditions<p>“Just because you can exploit young, doe-eyed talent desperate for the platform TV gives them, it doesn’t mean you should.” Original Real Housewives of New York star Bethany Frankel <a href="https://variety.com/2023/tv/news/bethenny-frankel-reality-union-strike-1235674531/">recently issued</a> this rallying call for unionisation of reality TV. She hopes to instigate a “<a href="https://mashable.com/article/reality-tv-reckoning-union-bethenny-frankel">reality reckoning</a>” that will help other unscripted TV performers realise their rights to better pay and working conditions.</p>
<p>And so just as actors and screenwriters are <a href="https://theconversation.com/what-are-hollywood-actors-and-writers-afraid-of-a-cinema-scholar-explains-how-ai-is-upending-the-movie-and-tv-business-210360">going on strike</a> in the US, reality TV stars are asking whether it’s their time to demand better protections and rights as workers. </p>
<p>US union the Screen Actors Guild and American Federation of Television and Radio Artists certainly thinks it’s time. It’s <a href="https://www.sagaftra.org/sag-aftra-statement-representation-and-protection-reality-performers">supporting Frankel</a> in her fight for reality TV star unionisation. </p>
<p>Our research has <a href="https://thesociologicalreview.org/magazine/august-2021/film-and-television/grafting-on-love-island/">highlighted the need</a> for a greater focus on the conditions for participants in these shows, who are often filmed in controlled environments (think contestants locked in a house together for weeks without clocks, with meals and free-time restricted) and under contractual arrangements that can involve non-disclosure agreements and tie-ins after the show. </p>
<p>Research into <a href="https://www.bournemouth.ac.uk/sites/default/files/asset/document/BU_State_of_Play_2021%20%281%29.pdf">working conditions for production staff</a> in this sector also suggests that long hours, bullying, harassment, sexism, lack of accommodation for childcare, stress and mental health problems are rampant. </p>
<p>Reality television has often been at the centre of screen labour discussions, particularly after its relatively cheap production costs led to <a href="https://www.forbes.com/sites/reehines/2023/05/17/reality-tv-to-the-rescue-amid-writers-strike-abc-and-fox-lean-on-unscripted-shows/?sh=682b15757916">a production boom</a> during the previous Writers Guild of America strike in 2008-9. It was largely regarded as a <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/9781118599594.ch2">scab genre</a> by the wider industry as a result. But this time around, reality show participants are making their own demands that could change the nature of television production.</p>
<p>And this is not only a US issue. UK cast members from The Only Way is Essex reportedly <a href="https://employeebenefits.co.uk/towie-boycott-itv-party-pay-dispute/">went on “strike”</a> in 2019. They boycotted ITV’s summer party in protest at the amount they were being paid and <a href="https://www.thesun.co.uk/tvandshowbiz/9603820/itv-towie-stars-strike-low-pay/">are thought to have received</a> a bump in pay within 24 hours.</p>
<p>Even more significantly, in 2011 a French court ruled that participants on Temptation Island (a show where couples are sent to an island to try the single life) should be treated as salaried staff, setting a precedent for <a href="https://www.taylorfrancis.com/chapters/edit/10.4324/9780203843567-10/reality-tv-job-fran%C3%A7ois-jost">considering reality television as work</a>. Discussing the kinds of working conditions they endured, their lawyer, Jérémie Assous, <a href="https://www.theguardian.com/world/2011/apr/06/france-reality-tv-contestants-ruling">said at the time</a>: “The principle is universal and simple. You cannot make people work 24 hours a day, seven days a week. That is slavery.” </p>
<p>In 2019, an Australian reality TV participant <a href="https://www.theguardian.com/media/2019/oct/22/house-rules-channel-seven-ordered-to-pay-compensation-to-reality-show-contestant">won her case</a> for compensation for post-traumatic stress disorder against Australian home renovation show House Rules. The broadcaster, Channel 7, had argued contestants were not workers.</p>
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Read more:
<a href="https://theconversation.com/new-house-rules-landmark-ruling-could-trigger-other-workers-compensation-claims-from-reality-tv-stars-125801">New house rules: landmark ruling could trigger other workers' compensation claims from reality TV stars</a>
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<p>While these cases could set precedents for better treatment of people on reality TV shows, their rights are in a grey area that depends on local labour laws in a global TV production industry. Reality television participants as a group have long made money and built brands for the sector, with little compensation for their time and toil. </p>
<p>In the UK, Love Island participants reportedly earn <a href="https://www.thesun.co.uk/tv/11020100/love-island-prize-contestants-paid/">a £250 weekly fee</a> while on the show – although this seems to have <a href="https://www.ok.co.uk/lifestyle/love-island-contestants-weekly-fee-29175531">increased over the years</a>, it’s still well below <a href="https://www.gov.uk/national-minimum-wage-rates">the UK minimum wage</a>. </p>
<p>Of course, the show becomes a platform for <a href="https://www.heart.co.uk/showbiz/celebrities/molly-mae-hague-tommy-fury-net-worth/">the lucky few</a> who launch lucrative (but <a href="https://www.ilo.org/wcmsp5/groups/public/@ed_dialogue/@actrav/documents/meetingdocument/wcms_161381.pdf">precarious</a> careers such as social media influencing, brand endorsements or other lower-level public appearances. But this kind of unwaged “<a href="https://www.jstor.org/stable/j.ctt1q31skt">hope labour</a>” is prevalent in the digital economy and creative industries.</p>
<figure class="align-center ">
<img alt="Blurred image of three couples on a beach on a tv screen, with hand holding remote control in the foreground." src="https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/547203/original/file-20230908-29-jdzebm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">People often sign up for reality TV shows hoping to develop lucrative social media-based careers.</span>
<span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/reality-tv-show-stream-on-television-2029589708">Tero Vesalainen/Shutterstock</a></span>
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</figure>
<h2>What do reality TV workers need?</h2>
<p>Problems around workers’ rights in reality TV come from two directions. </p>
<p>First, concerns about pay and <a href="https://variety.com/2023/music/global/rebecca-ferguson-x-factor-itv-ofcom-abuse-1235636204/">the contracts that participants might sign</a>. Some hand over their rights “in perpetuity throughout the universe” – a common legal phrase that indicates the unending ownership rights of these production companies over performances. </p>
<p>During our research, we found a report (not available online) from <a href="https://www.equity.org.uk/">UK union Equity</a> to the <a href="https://www.gov.uk/government/publications/national-minimum-wage-low-pay-commission-report-2011">Low Pay Commission</a> that said talent show contestants have signed contracts that waive protection over worker time laws via a loophole under the National Minimum Wage Act for competitions.</p>
<p>The second issue is around the treatment of participants during the production process. In the UK this issue was raised as part of <a href="https://committees.parliament.uk/work/6345/reality-tv-inquiry/">a 2019 parliamentary inquiry into reality television</a> as a direct result of a number of high-profile suicides linked to reality television. </p>
<p>A subsequent Ofcom consultation led to <a href="https://www.ofcom.org.uk/consultations-and-statements/category-2/protecting-tv-radio-participants">a change in the Broadcasting Code in 2020</a>. Broadcasters must now demonstrate adequate duty of care and a more robust approach to informed consent. This means placing a greater emphasis on welfare support, mental health and analysis of psychological risk. But this change has not led to a conversation about worker rights and pay.</p>
<h2>Joining a union for reality TV workers</h2>
<p>The UK has fewer long-running reality shows with regular fixed cast members than the US. And given the complexity and uncertainty around reality TV work in general, it remains to be seen how unionisation could apply across multiple formats and sub-genres. </p>
<p>But <a href="https://thesociologicalreview.org/magazine/august-2021/film-and-television/grafting-on-love-island/">it’s still important</a> for duty of care issues to be thought about alongside questions of workers rights, pay and contractual obligations.</p>
<p>As part of an Arts and Humanities Research Council-funded project called Re-CARE TV: Reality Television, Working Practices and Duties of Care, we are researching this issue. We are partnering with <a href="https://bectu.org.uk/about/">Bectu</a> (the creative industry workers’ union), to find solutions to improve the <a href="https://eprints.bournemouth.ac.uk/35897/1/BU_State_of_Play_2021%20%281%29.pdf">working conditions of crew</a>. </p>
<p>We are also working with Equity to examine the benefits of more formalised union representation to better inform reality participants of their contractual rights and expectations of care. </p>
<p>It’s important to take this type of entry into a media career seriously so participants and production staff can lay the foundations for a fruitful career – just like people in any other profession. </p>
<p>Reality television has pioneered precarious, competitive, exploitative and non-unionised models of work that are now endemic across the creative industries. So, while it might be surprising that the “scab genre” is now at the forefront of calls for a more caring industry, it is clear that it is about time for change.</p><img src="https://counter.theconversation.com/content/212913/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Helen Wood receives funding from Arts and Humanities Research Council, UKRI and has previously received funding from the ESRC and British Academy. </span></em></p><p class="fine-print"><em><span>Jack Newsinger receives funding from Arts and Humanities Research Council, UKRI, and has previously received funding from the British Academy and the British Film Institute. </span></em></p><p class="fine-print"><em><span>Jilly Kay receives funding from Arts and Humanities Research Council, UKRI. </span></em></p>Reality TV workers may not need their own union but they could benefit from joining existing unions serving the creative industries.Helen Wood, Professor in Media and Cultural Studies, Aston UniversityJack Newsinger, Associate Professor in Cultural Industries and Media, University of NottinghamJilly Kay, Lecturer in Media and Communication, University of LeicesterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2106712023-08-18T12:39:44Z2023-08-18T12:39:44ZTipping etiquette and norms are in flux − here’s how you can avoid feeling flustered or ripped off<figure><img src="https://images.theconversation.com/files/542867/original/file-20230815-23-mw6txd.jpg?ixlib=rb-1.1.0&rect=298%2C54%2C5743%2C3841&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Digital payment methods may automatically prompt you to leave a gratuity.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/TippingFatigue/11bc6c8b9388484fa0dbf543db35dc47/photo?Query=tip%20fatigue&mediaType=photo,video,graphic,audio&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=5&currentItemNo=0">AP Photo/Nam Y. Huh</a></span></figcaption></figure><p>Tipping has gotten more complicated – and awkward – in North America.</p>
<p>The ever-growing list of situations in which you might be invited to tip includes <a href="https://haveyourselfatime.com/smoothie-king-tipping-etiquette/">buying a smoothie</a>, <a href="https://bestlifeonline.com/places-you-should-never-tip/">paying an electrician</a>, <a href="https://www.marketwatch.com/story/should-you-tip-your-flight-attendant-it-all-depends-on-the-airline-2019-01-08">getting a beer from a flight attendant</a> and <a href="https://support.actblue.com/donors/about-actblue/what-are-actblue-tips-for/">making a political donation</a>. </p>
<p>Should you always tip when someone suggests it? If yes, how do you calculate the right amount? And if you don’t, are you being stingy?</p>
<p>As <a href="https://scholar.google.com/citations?user=iU_D4EwAAAAJ&hl=en">marketing professors</a> who <a href="https://scholar.google.com/citations?hl=en&user=s5S9eAoAAAAJ&view_op=list_works&sortby=pubdate">specialize in customer interactions</a>, we’re researching how <a href="https://doi.org/10.1177/10946705231166742">digital payment technologies have changed how and when customers tip</a>. Our research suggests that asking for <a href="https://journals.sagepub.com/doi/10.1177/1094670519900553">tips before service</a> and <a href="https://www.msi.org/working-papers/whos-in-control-how-default-tip-levels-influence-customer-response/">suggesting tip amounts that are too high</a> can frustrate customers and be bad for business.</p>
<h2>What’s new</h2>
<p>U.S. customers historically tipped people they assumed were earning most of their <a href="https://ssrn.com/abstract=465942">income via tips</a>, such as restaurant servers earning less than the minimum wage. In the early 2010s, a wide range of businesses started processing purchases with iPads and other digital payment systems. These systems often prompted customers to tip for <a href="https://www.fastcompany.com/3022182/how-square-registers-ui-guilts-you-into-leaving-tips">services that were not previously tipped</a>.</p>
<p>Today’s tip requests are often not connected to the salary and service norms that used to determine <a href="https://www.theatlantic.com/technology/archive/2023/01/technology-pandemic-economy-gratuity-tipping-etiquette-square/672658/">when and how people tip</a>.</p>
<p>Customers in the past nearly always paid tips after receiving a service, such as at the conclusion of a restaurant meal, after getting a haircut or once a pizza was delivered. That timing could reward high-quality service and give workers an incentive to provide it. </p>
<p>It’s <a href="https://theconversation.com/customers-hate-tipping-before-theyre-served-and-asking-makes-them-less-likely-to-return-132078">becoming more common</a> for tips to be <a href="https://theconversation.com/payment-apps-asking-for-specific-tips-before-service-annoy-the-heck-out-of-users-but-still-generate-bigger-gratuities-180083">requested beforehand</a>. And new tipping technology may even <a href="https://abc7news.com/amazon-fresh-tipping-tip-delivery-driver-automatic/13325771/">automatically add tips</a>.</p>
<h2>Tip creep and tipflation</h2>
<p>The prevalence of digital payment devices has made it easier to ask customers for a tip. That helps explain why <a href="https://www.nytimes.com/2015/02/01/business/dollar3-tip-on-a-dollar4-cup-of-coffee-gratuities-grow-automatically.html">tip requests are creeping</a> into new kinds of services.</p>
<p>Customers now routinely see menus of suggested default options – often well above 20% of what they owe. The amounts have risen from <a href="https://www.npr.org/2022/03/29/1089587173/the-land-of-the-fee-2021">10% or less in the 1950s</a> to 15% around the year 2000 to <a href="https://www.cnbc.com/2022/01/14/is-25percent-the-new-20percent-how-much-to-tip-in-a-post-pandemic-world.html">20% or higher today</a>. This increase is sometimes called <a href="https://www.cbsnews.com/news/tipping-backlash-inflation-who-should-get-tipped/">tipflation</a> – the expectation of ever-higher tip amounts. </p>
<p>The <a href="https://www.vox.com/the-goods/22446361/pandemic-gratuity-covid-service-work">COVID-19 pandemic</a>, which hastened the adoption of digital payments and <a href="https://doi.org/10.1177/0886368721999135">increased sympathy for service workers</a>, amplified both tip creep and tipflation.</p>
<figure class="align-left zoomable">
<a href="https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Soda fountain attendant serving young woman in a black and white photo taken in the 1950s" src="https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=747&fit=crop&dpr=1 600w, https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=747&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=747&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=939&fit=crop&dpr=1 754w, https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=939&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/542872/original/file-20230815-17-m69ndx.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=939&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Tips used to be smaller.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/soda-fountain-attendant-serving-young-woman-royalty-free-image/53271877?phrase=tip+restaurant+service+black+and+white&adppopup=true">George Marks/Retrofile RF via Getty Images</a></span>
</figcaption>
</figure>
<p>Tipping has always been a <a href="https://www.npr.org/2023/07/17/1187275511/tipping-minimum-wage-tips-tip-screen">vital source of income</a> for workers in historically tipped services, like restaurants, where the tipped minimum wage can be as low as <a href="https://www.dol.gov/agencies/whd/state/minimum-wage/tipped">US$2.13 an hour</a>. Tip creep and tipflation are now further supplementing the income of <a href="https://www.nytimes.com/2022/10/13/business/economy/tipped-wage-subminimum.html">many low-wage service workers</a>.</p>
<p>Notably, tipping primarily benefits some of these workers, such as waiters, but not others, such as cooks and dishwashers. To ensure that all employees were paid fair wages, some restaurants banned tipping and increased prices, but this movement toward no-tipping services has <a href="https://www.newyorker.com/culture/annals-of-gastronomy/the-limitations-of-american-restaurants-no-tipping-experiment">largely fizzled out</a>.</p>
<p>So, to increase employee wages without raising prices, more employers are succumbing to the temptations of tip creep and tipflation. However, <a href="https://www.theatlantic.com/ideas/archive/2019/10/american-tipping-system-makes-no-sense/600865/">many customers are frustrated</a> because they feel they are being asked for too high of a tip, too often. And, as our research emphasizes, tipping now seems to be more coercive, less generous and often completely dissociated from service quality. </p>
<p>While digital tipping can be an easy way for customers to <a href="https://www.nytimes.com/2022/04/19/dining/tipping-gratuity-restaurants.html">help workers or express their gratitude</a> for good service, <a href="https://www.nytimes.com/2023/04/09/briefing/tipping-confusion-food-delivery-apps.html?searchResultPosition=2">many Americans feel uncertain</a> about what to do when asked for a tip.</p>
<h2>3 questions to always ask</h2>
<p>Here are some questions you can ask yourself when faced with almost any tipping decision. </p>
<p><strong>1. Should I tip?</strong></p>
<p>It’s generally up to you to decide whether you will tip and how much.</p>
<p>To avoid being <a href="https://doi.org/10.1177/1094670519900553">pressured into tipping when you don’t want to</a>, establish your own norms for different services. That will make you less likely to be surprised by an unexpected or high-pressure tip request. Many customers do pay tips in those situations but get upset.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Tip jar full of dollar bills with a 'thank you' written on a strip of tape adhered to it" src="https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=450&fit=crop&dpr=1 600w, https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=450&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=450&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=566&fit=crop&dpr=1 754w, https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=566&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/542871/original/file-20230815-26-1zfy69.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=566&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Sometimes it’s best to chip in with a little cash.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/glass-tip-jar-at-checkout-counter-royalty-free-image/1324730309?adppopup=true">Catherine McQueen/Moment via Getty Images</a></span>
</figcaption>
</figure>
<p>We advise you to always tip when there’s a clear tradition of doing so: dining at full-service restaurants or ordering a drink at a bar, traveling by taxi, having meals delivered to your door and getting a haircut.</p>
<p>We also recommend tipping employees you believe are being paid less than a fair wage. Though it can be difficult to determine whether employees are underpaid, learning whether your state or city <a href="https://www.epi.org/minimum-wage-tracker/?gclid=CjwKCAjw5_GmBhBIEiwA5QSMxAJ3gRSsi_Jz-Ny8ZacR8aM7pW0FmaCazBhvhq0vzZtzSpDM63s-wBoCOX4QAvD_BwE#/min_wage/New%20Jersey">guarantees a minimum wage</a> that’s well above the federal requirement can help.</p>
<p>For many tipped services, quality varies widely. In these situations, you can use tips to reward better service, if you pay after receiving it; or you can give workers a tip beforehand as an incentive to treat you well.</p>
<p>Likewise, pay a tip if you’re likely to use the service again. You will earn a reputation as a good or bad tipper, and employees will treat you accordingly.</p>
<p>There’s a wide range of services that may or may not require a tip. These include quick-service cafes and takeout, where customers order at a counter rather than being waited on at a table. You will need to decide what to do in those situations on a case-by-case basis. <a href="https://www.foodnetwork.com/fn-dish/news/2014/05/should-you-tip-your-barista">Tipping a barista</a> who has skillfully prepared your fancy latte makes more sense to us than tipping a worker who rings up a can of soda.</p>
<p>In many instances, paying and tipping in cash makes the most sense because you can avoid coercive technology and ensure that the employee who helped you directly receives the tip. That way, the employee will know you appreciate their service, and you can be fairly certain that their employer is not somehow <a href="https://www.epi.org/publication/employers-would-pocket-workers-tips-under-trump-administrations-proposed-tip-stealing-rule/">swiping their tip money</a>.</p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A card reader tablet with tip options that are for $1, $2 and $3, custom or no tip" src="https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/542868/original/file-20230815-25-uwuvhj.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">When is it OK to just say no?</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/TippingFatigue/e26fc772b27c4a76a60d20c4f041c58d/photo?Query=tip%20fatigue&mediaType=photo,video,graphic,audio&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=5&currentItemNo=3">AP Photo/Nam Y. Huh</a></span>
</figcaption>
</figure>
<p><strong>2. How much?</strong></p>
<p>This question is especially important when preservice tips are requested. If service quality may vary based on your response, for example with food delivery, food trucks, bars and restaurants, we suggest tipping the middle or high default tip amount, which will often be around 20%, or a flat dollar amount that is the rough equivalent. That approach will avoid the possibility of getting poor service. Of course, this can result in frustration if service doesn’t meet your expectations.</p>
<p>An alternative strategy is to tip the lowest recommended option, which is often close to 10%, then add an additional cash tip if the service is good. While using this strategy risks bad service, it’s a wise way to go if you plan to be a repeat customer.</p>
<p><strong>3. Can I skip it this time?</strong></p>
<p>If a tip request comes as a surprise, that usually means there is no norm you’re familiar with for that service. We recommend that you don’t tip in that situation, despite the social pressure. If you wind up tipping anyway, we recommend either not returning to the business or writing a polite but critical review online describing your uncomfortable experience.</p>
<p>We don’t believe there’s a reason to feel guilty leaving no tip or a low tip when you are using a service that is not traditionally tipped or where service quality is not affected by the tip amount, such as when making a donation or <a href="https://nypost.com/2022/09/27/woman-asked-to-tip-while-online-shopping/">ordering an office chair from an internet retailer</a>. </p>
<p>Ultimately, tipping is voluntary, which makes it a personal choice.</p>
<p>But whether you tip or not, you should always treat service workers well, especially tipped service workers. They are often exposed to the worst customer behaviors, <a href="https://www.nytimes.com/interactive/2018/03/11/business/tipping-sexual-harassment.html">including harassment</a>, which is never appropriate – no matter how much a customer tips.</p><img src="https://counter.theconversation.com/content/210671/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Tipping seems to be more coercive and less tied to service quality these days.Nathan B. Warren, Assistant Professor of Marketing, BI Norwegian Business SchoolSara Hanson, Associate Professor of Marketing, University of RichmondLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2047012023-05-04T13:06:00Z2023-05-04T13:06:00ZNigeria’s fuel subsidy is gone. It’s time to spend the money in ways that benefit the poor<figure><img src="https://images.theconversation.com/files/523498/original/file-20230429-26-fszr0s.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Protestors in Lagos rally against plans to remove the fuel subsidy in 2012. </span> <span class="attribution"><span class="source">Pius Utomi Ekpei/AFP via Getty Images</span></span></figcaption></figure><p>As anticipated, Nigeria’s new president <a href="https://theconversation.com/bola-ahmed-tinubu-the-kingmaker-is-now-nigerias-president-elect-200383">Bola Ahmed Tinubu</a> has jettisoned the fuel subsidy, which is estimated to cost the Nigerian treasury about <a href="https://www.reuters.com/business/energy/nigerias-nnpc-spent-10-billion-fuel-subsidy-2022-2023-01-20/">US$10 billion</a> annually. This is about <a href="https://www.budgetoffice.gov.ng/index.php/resources/internal-resources/budget-documents/president-budget-speech/viewdocument/21#page=7">24%</a> of Nigeria’s 2022 budget.</p>
<p>Fuel subsidies have been in place in Nigeria since the <a href="https://theconversation.com/fuel-subsidies-in-nigeria-theyre-bad-for-the-economy-but-the-lifeblood-of-politicians-170966">1970s</a>. They began with the government routinely selling petrol to Nigerians at below cost. But most Nigerians were unaware that this was being done.</p>
<p>Fuel subsidies became institutionalised in 1977, following the promulgation of the <a href="https://gazettes.africa/archive/ng/1977/ng-government-gazette-supplement-dated-1977-01-13-no-2-part-a.pdf">Price Control Act</a>, which made it illegal for some products (including petrol) to be sold above the regulated price. This law was introduced by the General Olusegun Obasanjo regime to cushion the effects of the surging <a href="https://www.federalreservehistory.org/essays/great-inflation#:%7E:text=The%20Great%20Inflation-,1965%E2%80%931982,Fed%20and%20other%20central%20banks.">inflation</a> across the world, caused by increases in energy prices.</p>
<p>In recent years the World Bank has urged Nigeria to remove the fuel subsidy. It <a href="https://www.thecable.ng/world-bank-nigerias-fiscal-debt-pressures-will-increase-if-petrol-subsidy-isnt-removed">argued</a> that failure to do so would exacerbate the country’s fiscal challenges and worsen its debt profile. </p>
<p>The previous administration set June 2023 as the date on which the subsidy would be removed. But an announcement in <a href="https://punchng.com/breaking-fg-suspends-fuel-subsidy-removal/">late April</a> said this had been pushed out.</p>
<p>Nigerians are being hit from all sides by a combination of factors that are making their lives increasingly difficult. These include the <a href="https://www.bbc.co.uk/news/world-africa-64417130">rising cost of living</a>, which is reflected in <a href="https://www.cbn.gov.ng/rates/inflrates.asp?year=2023">double-digit inflation</a>, <a href="https://theconversation.com/nigerian-workers-struggle-as-cost-of-living-outstrips-incomes-182069">stagnant wages</a>, <a href="https://punchng.com/reps-move-against-non-payment-of-salaries-pensions/">non-payment or the late payment of salaries</a>, a <a href="https://www.bloomberg.com/news/articles/2023-03-26/nigeria-dispenses-banknotes-to-end-three-month-cash-crunch?leadSource=uverify%20wall">cash crunch</a> and <a href="https://www.premiumtimesng.com/news/headlines/576987-why-fuel-scarcity-persists-across-nigeria-marketers.html">fuel scarcity</a>.</p>
<p>There are concerns that the removal of the subsidy will impose even further hardships on Nigerians by raising fuel and transport costs. This would further erode their real purchasing power and increase the number of the working poor in the country. </p>
<p>In anticipation of fuel price increases, there were <a href="https://www.vanguardngr.com/2023/05/subsidy-removal-commuters-groan-as-fuel-sells-for-n750/">reports</a> of panic buying, long queues, hoarding of fuel and shutting down of petrol stations across the country. </p>
<p>As <a href="https://theconversation.com/profiles/stephen-onyeiwu-170137">an economist</a> and Nigerian, I have followed debates around subsidies particularly close. Fuel subsidies are not only unsustainable and inequitable, they also lack a sound economic rationale. </p>
<p>Political considerations appear to take precedence over economic logic in this debate. Previous administrations have baulked at getting rid of the fuel subsidy. </p>
<p>In my view removing it could benefit workers and poor Nigerians. But only if it were carefully managed and implemented. I’m in favour of discontinuing the fuel subsidy and distributing a significant portion of the savings to low-income Nigerians. </p>
<p>Resentment towards subsidy removal can be avoided if better alternatives are explained to Nigerians.</p>
<h2>Three reasons why subsidies are bad</h2>
<p><strong>Over-consumption:</strong> Setting the fuel price below the market price encourages over-consumption, with no significant linkage effects on other sectors of the economy. Linkages are usually created when the consumption of a good or service results in the emergence of new economic activities. </p>
<p>Consuming fuel beyond a socially optimal quantity does not have that effect. Instead, it diverts resources away from more productive sectors of the economy. The <a href="https://www.reuters.com/business/cop/19-countries-plan-cop26-deal-end-financing-fossil-fuels-abroad-sources-2021-11-03/">global trend</a> is to discourage fuel consumption by making it more expensive through higher sales taxes. Discouraging investment in fossil fuel projects is another route.</p>
<p><strong>Negative outcomes:</strong> Subsidising fuel exacerbates pollution, global warming and road accidents – what economists call <a href="https://corporatefinanceinstitute.com/resources/economics/negative-externalities/">negative externalities</a>. This is when one person’s actions negatively affect other people who are not part of the actions. </p>
<p><strong>Inequality:</strong> Subsidies reinforce inequality. The artificial reduction in the market price of fuel benefits upper income households the most because they are the ones who use the most fuel. They own the most cars in Nigeria, especially the ones that guzzle fuel. Nigeria is among the countries with the <a href="https://nigerianstat.gov.ng/elibrary/read/903/#:%7E:text=Estimated%20vehicle%20population%20in%20Nigeria,population%20ratio%20is%20put%200.06.">least number</a> of vehicles per capita, with 0.06 vehicles per person or 50 vehicles per 1,000 Nigerians. With an abysmally low minimum wage of <a href="https://wageindicator.org/salary/minimum-wage/nigeria">N30,000</a> (US$64) per month and non-availability of car loans, most Nigerian workers cannot afford a car.</p>
<h2>Solutions</h2>
<p><strong>Raise productive capacity:</strong> The savings from removing the subsidy should be used to build the productive capacities of Nigerians. These are described by the <a href="https://unctadstat.unctad.org/en/Pci.html">United Nations Conference on Trade and Development</a> as:</p>
<blockquote>
<p>the productive resources, entrepreneurial capabilities and production linkages that together determine a country’s ability to produce goods and services that will help it grow and develop.</p>
</blockquote>
<p>What Nigeria needs urgently is an increase in its productive capacities. It could achieve this through:</p>
<ul>
<li><p>cash subsidies for restarting viable industrial enterprises</p></li>
<li><p>subsidised agricultural inputs for farmers</p></li>
<li><p>loans to students in tertiary institutions</p></li>
<li><p>scholarships for those studying subjects that support industrial development</p></li>
<li><p>investment in technology</p></li>
<li><p>massive investment in infrastructure, with priority for projects that use direct labour </p></li>
<li><p>a special loan programme for entrepreneurs in the informal sector. </p></li>
</ul>
<p>Investments such as these would give Nigeria the biggest bang for its buck, rather than the current wasteful spending on the corruption-infested fuel subsidies regime. </p>
<p>Nigeria’s fuel subsidies have encouraged arbitrage, whereby unscrupulous business people buy fuel at the subsidised price and <a href="https://dailynigerian.com/cross-border-fuel-smuggling/">resell</a> it at a higher price across the country’s borders. This practice is partly responsible for the perennial fuel scarcity in Nigeria.</p>
<p><strong>Cash transfers:</strong> Savings from scrapping the fuel subsidy could be used to augment Nigeria’s Conditional Cash Transfers programme. This was introduced in 2016 as part of the Buhari administration’s <a href="https://statehouse.gov.ng/policy/economy/national-social-investment-programme/">Social Investment Programme</a> (SIP). </p>
<p>Eligible individuals are entitled to a monthly cash payment of 5,000 naira (about US$11). But only <a href="https://www.dataphyte.com/latest-reports/governance/chartoftheday-beneficiaries-by-state-of-nigerias-conditional-cash-transfer-in-2020/">784,176</a> individuals received the payment in 2020.</p>
<p>Fuel subsidy removal will enable the government to significantly increase this number. Individuals with an income of N30,000 per month or less should qualify for a new cash transfer programme. It can be designed to last for six months. </p>
<p>To cushion the effects of subsidy removal, the Nigerian government has obtained an <a href="https://www.voanews.com/a/nigeria-secures-800-million-ahead-of-fuel-subsidy-removal/7040296.html">$800 million</a> relief package from the World Bank. The money, which should be added to the pool of funds available for the conditional cash transfer program, is expected to be distributed to 10 million households as cash. </p>
<p>Apart from being an assurance that the government does care for them, a cash transfer would also help stimulate the economy by spurring the demand for goods and services, which has been stagnant.</p>
<p>The inflationary impact of cash transfers from fuel subsidy savings will be minimal, since new money is not created in the economy. In any case, inflation in Nigeria is mainly due to supply constraints, rather than demand.</p>
<p><strong>Safety nets:</strong> There are no institutionalised safety net programmes for most Nigerians, which is why they regard the fuel subsidy as one way in which the government supports poor people. </p>
<p>The harsh reality is that fuel subsidies benefit mainly upper class households, who consume most of the fuel in Nigeria.</p>
<p>To overcome the perception – and to provide genuine support for those struggling to survive – the government should use the savings to subsidise mass transport systems, agricultural inputs, education, affordable healthcare and low-income housing.</p>
<h2>Conclusion</h2>
<p>At first blush, one might think it’s politically risky for the Bola Tinubu administration to start on the rocky foundation of scrapping Nigeria’s fuel subsidy. </p>
<p>But fixing difficult and politically unpopular economic problems is a hallmark of effective leadership. </p>
<p>If implemented properly, fuel subsidy removal may be an important legacy of the Tinubu administration, one that will differentiate him from past administrations.</p>
<p>_This article was updated on 30 May 2023 to reflect the fact that fuel subsidy has been removed. _</p><img src="https://counter.theconversation.com/content/204701/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Fuel subsidy removal can benefit workers and poor Nigerians, if the process is carefully managed and implemented.Stephen Onyeiwu, Professor of Economics & Business, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2020312023-04-26T02:20:52Z2023-04-26T02:20:52ZFor some workers, low-paying jobs might be more of a dead end than a stepping stone<figure><img src="https://images.theconversation.com/files/521708/original/file-20230418-20-6xnqdn.jpg?ixlib=rb-1.1.0&rect=49%2C35%2C4686%2C3706&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Getty Images</span></span></figcaption></figure><p>The most recent <a href="https://www.1news.co.nz/2023/04/01/minimum-wage-benefits-increase-from-today/">rise in Aotearoa New Zealand’s minimum wage</a> has again put the spotlight on low-wage jobs and the established belief that <a href="https://www.oecd.org/els/emp/oecdemploymentoutlook1997-low-wagejobssteppingstonestoabetterfutureortraps.htm">low wages are a starting point for workers</a> who are quickly able to transition into higher-paid employment. But <a href="https://workresearch.aut.ac.nz/__data/assets/pdf_file/0010/436177/working-paper-20_15.pdf">our research found</a> the situation is not so straightforward. For older New Zealanders, possible options for finding their way out of low-wage work are quite limited. </p>
<p>In our research, we explored whether low-wage workers can easily transition to better-paying opportunities. We wanted to examine whether low-pay creates a lock-in effect, or whether workers in New Zealand have sufficient scope to climb up the salary ladder.</p>
<p>For a number of reasons, it is increasingly important to understand the labour market dynamics faced by low-wage workers. A worker’s earning level corresponds to the degree of pain caused by the current cost-of-living crisis. Low-wage earners are <a href="https://www.rnz.co.nz/news/on-the-inside/470887/not-all-workers-will-benefit-from-a-tighter-labour-market">feeling the pinch</a> more than those with higher incomes.</p>
<p>Moreover, being on low-pay for a persistent period can negatively affect people’s financial resilience and their ability to <a href="https://www.1news.co.nz/2023/04/14/survey-finds-many-kiwis-living-with-no-emergency-savings/">manage rainy day funds</a> for unexpected expenses.</p>
<h2>New Zealand’s low-wage sector</h2>
<p>In 2020, the OECD estimated about one in ten New Zealand workers (8%) could be classed as <a href="https://stats.oecd.org/Index.aspx?QueryId=64193">low-waged</a>. This figure is substantially below the levels observed in other countries such as the United Kingdom (18%) and the United States (24%). </p>
<p>Previous studies have evaluated an average worker’s prospects of transitioning from <a href="https://www.treasury.govt.nz/sites/default/files/2007-09/twp02-29.pdf">a low-paying job to higher-paid employment</a>. Some studies found a certain degree of “permeability” in the labour market – being on low-pay is more of a temporary phenomenon as, over time, workers can climb up the pay ranks.</p>
<p>However, there are some empirical challenges when testing the earning prospects of the low-wage workers. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/lifting-the-minimum-wage-isnt-reckless-its-what-low-earners-need-183643">Lifting the minimum wage isn't reckless – it's what low earners need</a>
</strong>
</em>
</p>
<hr>
<p>First, the socio-economic backgrounds of workers are incredibly varied. Young workers, for example, are much more likely to start with low-salaried work but are better qualified when compared with older workers on low pay.</p>
<p>Not surprisingly, our analysis found the chances of transitioning from low-pay to higher pay depends on individual characteristics like age and qualification. And outcomes are also not set in stone, given on-the-job training and switching employers could improve earning prospects.</p>
<h2>Administrative data on earnings</h2>
<p>We used Stats NZ’s <a href="https://www.stats.govt.nz/integrated-data/integrated-data-infrastructure/">Integrated Data Infrastructure</a> (IDI) to track a group of low-paid workers over time. We then estimated how their chances of exiting low-pay for higher-pay jobs changed during this period. And, given that an individual’s background plays a prominent role in these changes, we performed our analysis separately for an individual’s age and qualification.</p>
<p>Our starting point was the 2013 Census. We looked at men between the ages of 20 and 60 years old in March 2013, their monthly wages and salaries between 2013 and 2016, and their qualifications. </p>
<p>We defined someone as low-paid if their monthly earnings were in the lowest 20% of the salary distribution. To put the threshold into perspective: the minimum wage in March 2013 stood at NZ$13.50 for an adult, or a monthly wage of $2,268 for a 40 hour week. Our low-pay threshold is at $2,936.</p>
<p>In terms of qualifications, we used the New Zealand Qualification Framework. We focused on three qualification groups: no qualification (Level 0), medium qualification (Level 1 to 4) and high qualification (Level 5 to 6 and higher).</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1645954524077764609"}"></div></p>
<h2>Who exits low pay – and who doesn’t?</h2>
<p>We found workers aged 20 to 25 with a medium or high level of academic qualification saw the biggest move away from low wages. The probability of staying on low pay after a year dropped 9 percentage points for workers aged 20-25 with the highest level of qualification. </p>
<p>For workers of the same age group with a medium level of qualification, the estimated drop was 5-6 percentage points. However, the estimated decline hovered around 1-2 percentage points for workers their age without any qualification.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/inflation-is-raising-prices-and-reducing-real-wages-what-should-be-done-to-support-nzs-low-income-households-175915">Inflation is raising prices and reducing real wages – what should be done to support NZ’s low-income households?</a>
</strong>
</em>
</p>
<hr>
<p>On the other end of the age spectrum (50+), we found low-pay persistence hardly changed with time. There were also almost no differences between the three qualification levels.</p>
<p>The same pattern emerged over a longer period of time. Five years after the 2013 Census, we found only 30% of those workers in their early 20s were still on low pay. For workers in their 50s, the respective share was 60%. </p>
<p>Moreover, workers with qualifications were much more likely to transition into higher-paid jobs than those without. But this positive effect was substantially reduced with the worker’s age.</p>
<h2>Job hopping to improve wages</h2>
<p>Our research illustrated that earning prospects appeared most promising for young and highly qualified workers. We took the analysis a step further by looking at whether moving into better paying firms helped wage growth.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1551376687790702595"}"></div></p>
<p>Using Inland Revenue tax records to look into the average firm-level wages, we found the chances of entering higher-paying firms drops with age. And while we found that having a higher qualification improves the likelihood of a transition, this positive effect subsides with age. </p>
<p>It is clear labour welfare policy initiatives to help low-waged workers need to be more nuanced than a simple one-size-fits-all approach. Young workers with some sort of qualification have, on average, good chances of exiting low-pay positions. However, the prospects are very different for young workers without a qualification, or for older workers.</p><img src="https://counter.theconversation.com/content/202031/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alexander Plum has received funding from Health Research Council (HRC) and receives funding from the MBIE Endeavour Fund. </span></em></p><p class="fine-print"><em><span>Kabir Dasgupta has previously received funding from the Health Research Council and Ministry of Business, Innovation, and Employment Endeavor Fund. </span></em></p>Research shows older workers, and those without qualifications, struggle to move out of low-wage work. The evidence challenges claims that the minimum wage is a stepping stone to higher pay.Alexander Plum, Senior Research Fellow in Applied Labour Economics, Auckland University of TechnologyKabir Dasgupta, Senior Economist, Federal Reserve Board, Auckland University of TechnologyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/2031062023-04-04T21:28:17Z2023-04-04T21:28:17ZAlberta’s minimum wage report leaves out labour perspectives in favour of corporate interests<figure><img src="https://images.theconversation.com/files/519118/original/file-20230403-22-xyoj5t.JPG?ixlib=rb-1.1.0&rect=0%2C62%2C2878%2C1805&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The Alberta government recently released a report on the effect of the previous NDP government's minimum wage increase.</span> <span class="attribution"><span class="source">THE CANADIAN PRESS/Jonathan Hayward</span></span></figcaption></figure><p>Alberta’s minimum wage expert panel report was recently released <a href="https://www.cbc.ca/news/canada/edmonton/alberta-government-releases-minimum-wage-report-more-than-3-years-after-it-was-submitted-1.6782946">three years after it was submitted</a> to the provincial government.</p>
<p>This panel was formed by the United Conservative Party of Alberta to study the impact of the gradual <a href="https://edmontonjournal.com/news/politics/ndp-promise-to-raise-minimum-wage-to-15-per-hour-takes-effect">minimum wage increase that was instituted by the previous NDP government</a> — from $10.20 per hour in 2015 to $15 in 2018. </p>
<p>The report arrives <a href="https://www.elections.ab.ca/elections/albertas-next-election/">just months before Alberta’s provincial election</a> on May 29. While it could be used by politicians to further their election strategy, it’s important to understand the context of the report.</p>
<p>No matter how airtight the report appears, it has been shaped by standard economics. In other words, it has been shaped by absolute faith in free markets, privatization, liberalization, deregulation, <a href="https://www.investopedia.com/ask/answers/12/austerity-measures.asp">austerity measures</a> and the removal of price controls like the minimum wage.</p>
<p>This single panel report on the supposed ills of the minimum wage should be viewed within the vast, diverse spectrum of economic literature, not just standard economics.</p>
<h2>Key findings</h2>
<p>The report shows a loss of about 25,000 jobs for 15- to 24-year-olds due to the shift to $15-an-hour minimum wage. Among older workers, <a href="https://calgaryherald.com/news/politics/alberta-government-minimum-wage-panel-report">the effects were found to be statistically insignificant</a>. </p>
<p>Brian Jean, Alberta’s minister of jobs, economy and northern development, said the main lesson from the report is to avoid “<a href="https://www.cbc.ca/news/canada/edmonton/alberta-government-releases-minimum-wage-report-more-than-3-years-after-it-was-submitted-1.6782946">large, unexpected changes to minimum wages</a>.”</p>
<p>The report recommends having a lower minimum wage for less experienced workers and those in rural areas, but there’s no sign of this happening anytime soon. Jean said <a href="https://calgary.citynews.ca/2023/03/17/alberta-minimum-wage/">there are no current plans to change Alberta’s existing minimum wage structure</a>.</p>
<figure class="align-center ">
<img alt="A white middle-aged man speaks to someone off camera" src="https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519117/original/file-20230403-18-8wwgvm.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">According to Brian Jean, Alberta’s minister of jobs, economy and northern development, the main takeaway from the minimum wage report is to avoid ‘large, unexpected changes to minimum wages.’</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Codie McLachlan</span></span>
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<p>The <a href="https://www.alberta.ca/minimum-wage-expert-panel.aspx">panel included at least three business interest representatives</a> but no representation from labour unions. This absence does not reflect neutrality or a level playing field where different interests are balanced. </p>
<p>The report is based on sophisticated statistical methods led by economics academics. Standard economics gives precedence to efficiency and provides a centre stage to utility and profit maximization. Any concerns about equity and sustainability are secondary. </p>
<p>Standard economics ignores dissident and diverse voices that <a href="https://doi.org/10.1080/00213624.2021.1874786">offer a more nuanced view about minimum wage</a>. It’s unsurprising that, when I looked into the economics literature to develop a <a href="https://libjournals.mtsu.edu/index.php/jfee/article/view/1902/1197">renewed perspective on teaching minimum wage</a>, I found so much conflict on the impact of minimum wage on employment. </p>
<h2>What the literature says</h2>
<p>One 2006 working paper <a href="https://doi.org/10.3386/w12663">that examined literature about the employment effects of global minimum wages</a> supports the argument that minimum wage has a negative impact on employment. It found that a 10 per cent increase in the minimum wage reduces teenage employment between one and three per cent.</p>
<p>On the other hand, <a href="https://www.ctdol.state.ct.us/lweab/Doucougliagos%20&%20Stanley%20Publication%20Selection%20Bias%20in%20Min%20Wage%20Research-A%20Metaregression%20Analysis.pdf">another paper that looked at 64 studies in the United States between 1972 and 2007</a> found there were zero employment effects of minimum wage.</p>
<p>In Canada, a more recent study by <a href="https://policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2014/10/Dispelling_Minimum_Wage_Mythology.pdf">economists at the Canadian Centre for Policy Alternatives</a> also found no connection between minimum wage and employment levels, based on minimum wage increases in 10 provinces from 1983 to 2012.</p>
<p>Such conflicting evidence cautions us to view studies based on statistical analysis very carefully. <a href="https://faculty.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn200e/summers_illusion.pdf">American economist and professor Lawrence Summers</a> once wrote that “formal econometric work has had little impact on the growth of economic knowledge.” He said it “creates an art form for others to admire and emulate but provides us with little new knowledge.” </p>
<h2>Support for minimum wage</h2>
<p>Conflicting evidence about the effects of minimum wage should not prevent us from taking a stand in support of the working poor. It should be noted that about <a href="https://www.progressive-economics.ca/2017/06/economists-support-15-minimum-wage-in-ontario/">53 economists endorsed a $15 minimum wage</a> for Ontario in 2017. </p>
<p>Similarly, <a href="https://www.epi.org/minimum-wage-statement/">more than 600 economics professors</a> in the U.S. signed a letter in 2014 concluding that increases in minimum wage have little to no negative effect on employment even during a weak labour market. This includes seven Nobel Prize winning economists who endorsed raising minimum wages by 40 per cent. </p>
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<img alt="A young woman speaks on the phone as she works behind a cash register in a fast-food restaurant" src="https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/519119/original/file-20230403-14-b7gn6q.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">The Alberta report recommends having a lower minimum wage for less experienced workers and those in rural areas, but there is no sign of this happening anytime soon.</span>
<span class="attribution"><span class="source">THE CANADIAN PRESS/Christopher Katsarov</span></span>
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<p><a href="https://eml.berkeley.edu/%7Esaez/lee-saezJpubE12minwage.pdf">Economists David Lee and Emmanuel Saez</a> argue that minimum wage is “desirable if the government values redistribution toward low-wage workers” and that “the unemployment induced by the minimum wage is efficient.” </p>
<p>This means that unemployment hits workers who are marginally attached to their jobs, not older essential workers. This is what the Alberta report found as well — there was no significant impact on the jobs of older workers who were not using minimum wage jobs as temporary stepping stones. </p>
<h2>Centring different perspectives</h2>
<p>Given standard economics and business interests, it was to be expected that a whole panel would be created to find faults with the gradual increase to the minimum wage, which rose by $4.80 per hour from 2015 to 2018. </p>
<p>In contrast, the UCP government <a href="https://www.alberta.ca/about-tax-levy-rates-prescribed-interest-rates.aspx#corporate">drastically dropped corporate taxes</a> to eight per cent from 12 per cent from 2019 to 2020. But there has been no panel questioning the <a href="https://www.oecd.org/naec/events/multidimensional-well-being/G_Zucman.pdf">efficacy of corporate tax cuts</a>.</p>
<p>Overall, the report is shaped by standard economics and gives precedence to business interests. It ignores labour interests and perspectives that centre equity over efficiency and contest the standard opinion about the minimum wage. </p>
<p>Instead of viewing the minimum wage as detrimental, dissident perspectives view the minimum wage as a tool to alleviate the plight of the working poor.</p>
<p>In the upcoming Alberta election, the public has a choice: go with the standard opinion that supports corporations or side with dissident voices that give voice to the working poor in a world marred by increasing inequality and shaped by free markets run amok.</p><img src="https://counter.theconversation.com/content/203106/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Junaid B. Jahangir is not affiliated with any organization. I have in the past done research assistance work for the Parkland Institute. </span></em></p>The Alberta government’s report on the supposed ills of the minimum wage should be viewed within the vast, diverse spectrum of economic literature, not just standard economics.Junaid B. Jahangir, Associate Professor, MacEwan UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1926192022-11-08T09:04:59Z2022-11-08T09:04:59ZA dumpsite is no place for a child: study shows Nigeria’s young waste pickers are at risk<figure><img src="https://images.theconversation.com/files/491263/original/file-20221024-1609-y8vdtg.jpg?ixlib=rb-1.1.0&rect=7%2C0%2C2588%2C1715&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Children are among waste pickers exposed to hazards while working at the Olusosun landfill. Photo by: Lionel Healing/AFP.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/people-sift-through-rubbish-at-a-dump-17-april-2007-in-news-photo/73905533?phrase=olusosun%20dumpsite%20Lagos&adppopup=true">from www,gettyimages.com</a></span></figcaption></figure><p>The Olusosun landfill sprawls across 100 acres (40ha) in Nigeria’s largest city, Lagos. Initially situated at the outskirts of the city, it is now at the city’s centre due to urban encroachment. Olusosun is often described as <a href="https://link.springer.com/article/10.1007/s12011-021-02758-3">Nigeria’s biggest landfill</a>; it receives over one million tonnes of <a href="https://owlcation.com/stem/15-of-the-Worlds-Largest-Landfills">waste</a> annually. Most of this is electronic waste (such as lamps, televisions and laptops), municipal solid waste and construction waste.</p>
<p>Access to the dumpsite is not restricted. Waste pickers can go in and look for recyclable materials that can be resold. In most Nigerian cities, waste picking represents a vital survival strategy for the <a href="https://www.ijern.com/journal/March-2014/26.pdf">poor</a>.</p>
<p>It’s not only adults who operate as waste pickers. As we outline in our recent <a href="https://thescipub.com/abstract/10.3844/ajessp.2022.69.80">study</a>, children are also working at Olusosun. </p>
<p>We surveyed 150 of these child waste pickers; most were boys aged between 13 and 17. More than half (58.7%) of the children were not attending school. They worked at the dumpsite daily for social and economic reasons and their labour was physically taxing. They reported being bitten by insects and snakes. They slipped and sometimes fell. Many suffered from chronic headaches. For this they earned between N500 (US$1.20) and N1,600 (US$3.85) a day. </p>
<p>The use of a child for forced or <a href="https://www.scirp.org/journal/paperinformation.aspx?paperid=64999">exploitative labour</a> under section 28 (1) (a) of the Child’s Rights Act is an offence punishable with a fine or imprisonment. But in the informal sector of urban areas, Nigeria’s government has not made serious efforts to enforce this law to protect children.</p>
<p>A concerted effort is needed by government, civil society, and international organisations to eradicate waste picking by children. Financial aid could be offered to the children’s families so that they don’t feel they have no option but to let children work. And free, compulsory primary and secondary education is key to keeping children in the classroom rather than working.</p>
<h2>Huge health and safety risks</h2>
<p>Access to Olusosun landfill is unregulated, but there are informal systems in place to manage who can and cannot engage in waste picking. Our <a href="https://doi.org/10.3844/ajessp.2022.69.80">survey</a> confirmed that before any person could pick waste on this site, they had to register with an association. Unregistered people were not allowed to work on the site and if they did without permission, there would be a quarrel. </p>
<p>An informal association formed by the operators oversees the registration process. It is funded by membership fees and only registers adults. But once they are registered, those adults can hire children to do the work for them. They do this, we were told, to keep their costs low because they could pay children less than they would pay adults.</p>
<p>Information we obtained showed that child waste pickers’ minimum daily income was N500 (US$1.20); the maximum was N1,600 (US$3.85). The average daily revenue was N1,180 (US$2.84) – more than N30,000 (about US$72.20) per month. Although this amount is higher than the <a href="https://doi.org/10.3844/ajessp.2022.69.80">national minimum monthly wage</a> (N30,000) in the public sector, the work and the environment are hazardous and detrimental to the children’s health.</p>
<p>Children usually sorted the waste manually, with no protective equipment like gloves and face masks. They operated in an unsheltered environment regardless of conditions like rain, hot sun and cold weather. These conditions had resulted in gastrointestinal illnesses, skin diseases, stings and bites from insects. Many talked about suffering regular headaches.</p>
<p>Child waste pickers were also at risk of being pricked by sharp objects such as syringes, needles, surgical blades and broken bottles.</p>
<p>Despite all these hazards, the children continued working at the landfill because of chronic poverty. Some of the children’s parents were waste
pickers themselves. Many came from areas without <a href="https://www.premiumtimesng.com/news/more-news/469581-less-than-40-of-lagos-residents-have-access-to-water-governor.html">potable water</a>, sanitation facilities or basic healthcare services. </p>
<h1>Recommendations</h1>
<p>In addressing the use of children for forced or exploitative labour, integrated approaches have
<a href="https://assets.publishing.service.gov.uk/media/5984577fe5274a1707000067/105-Interventions-on-Child-Labour-in-South-Asia.pdf">demonstrated</a> the most success in South Asian countries. (Afghanistan is an important exception.) These approaches can include, for example, conditional cash transfers combined with interventions such as providing education and healthcare services. </p>
<p>Thus, a pragmatic regulatory framework should be developed whereby different actors (government, civil society and international organisations) focus on eliminating the practice of waste picking by children. Such efforts require strong political backing and financial support. </p>
<p>Such a regulatory framework should also make provision for financial aid to the children’s parents through a direct assistance programme. </p>
<p>There is a need for a well-thought-out plan by the government to introduce free and compulsory primary and secondary education for every child. Making education compulsory, especially at the secondary level, is a way to keep children learning and, ideally, setting themselves up for safe, decently-paid future work.</p><img src="https://counter.theconversation.com/content/192619/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Amos Oluwole Taiwo does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Employing children as waste pickers lowers costs but exposes them to hazards.Amos Oluwole Taiwo, Lecturer, Department of Urban and Regional Planning, Olabisi Onabanjo University, Ago-Iwoye, Ogun State, Nigeria, Olabisi Onabanjo UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1852902022-06-17T03:08:38Z2022-06-17T03:08:38ZVIDEO: Albanese holds his first National Cabinet<p>University of Canberra Professorial Fellow Michelle Grattan and Director of the Institute for Governance & Policy Analysis Dr Lain Dare discuss the week in politics.</p>
<p>This week the pair discuss Australia’s escalating energy crisis - and how a lack of clear energy policy got us here. </p>
<p>They also canvass the Fair Work Commission’s decision this week that increased the minimum wage by 5.2% and its potential impact on the spiralling cost-of-living, as well as the Albanese government’s first National Cabinet meeting. </p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>University of Canberra Professorial Fellow Michelle Grattan and Director of the Institute for Governance & Policy Analysis, Dr Lain Dare discuss the week in politics.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1851192022-06-15T01:38:18Z2022-06-15T01:38:18ZFair Work Commission gives a 5.2% – $40 a week – increase in the minimum wage<p>The Fair Work Commission has announced a rise in the minimum wage of 5.2% or $40 a week, taking it to $812.60 a week or <a href="https://www.fwc.gov.au/hearings-decisions/major-cases/annual-wage-reviews/annual-wage-review-2021-22/decisions-statements">$21.38 an hour</a>. </p>
<p>The rise will take effect on July 1. </p>
<p>The increase is slightly above the increase the government had publicly supported for the minimum wage, which was 5.1%, the rate of inflation.</p>
<p>But award minimum wages will be increased by less – 4.6%, with a minimum rise of $40 a week. This means workers on award minimum wages above $869.60 per week will get a 4.6% rise, while those earning less will receive a $40 increase. The 4.6% will cut in at trade level. </p>
<p>Only the lowest paid 2% of workers are on the national minimum wage, while a further 23% receive the minimum award rates. </p>
<p>For workers generally the award increases will also take effect on July 1, except for those in aviation, hospitality, and tourism where the increases will take effect on October 1 because of what the commission describes as “exceptional circumstances” in these industries. </p>
<p>The 5.2% rise is above the latest inflation number of 5.1%. But workers face further substantial rises in inflation in coming months. </p>
<p>Reserve Bank Governor Philip Lowe said on Tuesday inflation is likely to increase to 7% by the end of the year. </p>
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<p>Employers argued for smaller increases, and the Master Grocers Association and Restaurant & Catering Australia argued for no increase, while the ACTU wanted a 5.5% increase. </p>
<p>The Albanese government said in its submission low income workers should not go backwards. In the election campaign, Albanese said he would “absolutely” support an increase for the lowest-paid to match the 5.1% inflation rate.</p>
<p>The commission said the most significant changes since last year’s decision had been the sharp increase in the cost of living and the labour market’s strengthening. “The sharp rise in inflation impacts business and workers,” it said.</p>
<p>“The low paid are particularly vulnerable in the context of rising inflation.”</p>
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<p>“The panel accepted the need for moderation in order to contain the inflationary pressures arising from our decision,” the commission said. </p>
<p>It acknowledged the increases would mean a real wage cut for some workers on awards and some, though minor, compression of relativities.</p>
<p>“The panel concluded that given the current strength of the labour market the increases it has decided to make will not have a significant adverse effect on ‘the performance and competitiveness of the national economy’”. </p>
<p>The Commission is required by the Fair Work Act to take into account “the performance and competitiveness of the national economy, including productivity, business competitiveness and viability, inflation and employment growth”.</p>
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Read more:
<a href="https://theconversation.com/lifting-the-minimum-wage-isnt-reckless-its-what-low-earners-need-183643">Lifting the minimum wage isn't reckless – it's what low earners need</a>
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<p>Reserve Bank Governor Lowe told the ABC that the 7% expected inflation was “a very high number and we need to be able to chart a course back to 2-3% inflation”. </p>
<p>On interest rates, Lowe said it would be “reasonable” for the cash rate to reach 2.5%. But how fast that was reached or indeed, if it were reached, would be “determined by events”. </p>
<p>He said inflation would peak in the December quarter and start to come off “by the first quarter next year”. </p>
<p>“By the time we get into the second half of next year, inflation will clearly be coming down. But in the first quarter, we’ll see lower rates of headline inflation.”</p>
<p>The ACTU welcomed the wage decision but said a better system was needed to deliver wage growth more generally. ACTU Secretary Sally McManus said: “This Annual Wage Review is one tool we have to generate wage growth, but it only affects one in four workers – we need wage growth across the economy.</p>
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<p>"Clearly the current system is failing. It is unable to deliver wage increases despite low unemployment, high productivity and high profits. Working people are feeling the serious consequences of nearly 10 years of inaction by the previous government.</p>
<p>"Our country needs to take a fresh look at this problem and address it. It is not acceptable that working Australians and their families continue to go backwards while big business does so well.”</p>
<p>But the Australian Chamber of Commerce and Industry, which argued for a 3% increase, said the rises were too large.</p>
<p>It said the decisions on the minimum and award wages “will hit those industries which have been hurt the most by COVID-19 restrictions and will cost Australian businesses $7.9 billion a year. </p>
<p>"Coupled with the 0.5% increase in the superannuation guarantee from July 1, this is a significant impost for small business.”</p>
<p>ACCI chief executive Andrew McKellar said: “While some businesses have rebounded strongly in recent months, the reality is we are experiencing a multi-speed economy. Many award reliant business were severely disrupted by the COVID-19 pandemic and are only just beginning to recover. Imposing unaffordable wage increases on these small businesses will put jobs at risk, not create them.”</p><img src="https://counter.theconversation.com/content/185119/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The Fair Work Commission has announced a rise in the minimum wage of 5.2% or $40 a week, taking it to $812.60 a week or $21.38 an hourMichelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1843192022-06-02T06:50:43Z2022-06-02T06:50:43ZPolitics with Michelle Grattan: Tony Burke advocates on wages and arts<p>Tony Burke is the minister for employment and workplace relations and minister for the arts, as well as the leader of the House of Representatives. </p>
<p>One of his first tasks is the government’s new submission for the minimum wage case, which will say these workers should not be left behind, as inflation has spiked. </p>
<p>If the Fair Work Commission gives a 5.1% rise, in line with inflation, is there a case for it not flowing through to awards, or all awards? </p>
<p>“I can’t imagine a situation where there was no flow-through at all. The commission always has the capacity to work out how the flow-through might happen.” He notes one option floated has been a flat dollar increase so the flow-through happened differently. </p>
<p>“The commission will work that through. But certainly there are many awards that are not far from the minimum wage. </p>
<p>"And when we talk about the heroes of the pandemic a lot of those people are on those awards. So while the focus has been specifically minimum wage, I tend to use the term low-paid workers.” </p>
<p>On reforming parliament, Burke says he is not trying to get rid of the anger. He doesn’t want to turn parliament into “a quiet, polite dinner party”. </p>
<p>“The debate is fierce and passionate and real. I think that matters and I think it’s good for democracy.”</p>
<p>Nor is he in favour of scrapping “dorothy dixers”, because the government needs the opportunity to tell the house what it is doing. </p>
<p>But there will be more questions for the larger crossbench, and he flags the government won’t so routinely shut down opposition moves for debates. </p>
<p>“Standing Orders say there’s one question from the crossbench. With a crossbench as large as what we’re now facing, that’s just not sustainable.”</p>
<p>Without changing that, “you’re effectively telling a very large number of Australians that because they didn’t vote for a major party, their voice is going to be heard less.”</p>
<p>Burke says he has a passion for the arts – he was briefly arts minister at the end of the last Labor government – and laments a lack of a cultural policy in recent years.</p>
<p>“In cultural terms, what the arts, events, entertainment sector do matters to who we are as Australians. And that affects your education policy, your health policy, your trade policy, your foreign affairs policy. Nor has there been any guidance that these are serious industries and these are serious jobs.”</p>
<p>The arts are really important in giving people a capacity to imagine and create, Burke says. They are “really important for us as a nation. I don’t think we’ve had an arts minister see it as a priority in that sense for a long time, and I really want to bring that back”.</p><img src="https://counter.theconversation.com/content/184319/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michelle Grattan speaks with Tony Burke the minister for employment and workplace relations and minister for the arts, as well as the leader of the House of Representatives.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1836432022-05-24T05:51:30Z2022-05-24T05:51:30ZLifting the minimum wage isn’t reckless – it’s what low earners need<figure><img src="https://images.theconversation.com/files/464954/original/file-20220524-21-zxcxnv.png?ixlib=rb-1.1.0&rect=83%2C604%2C2682%2C1562&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Stand by for something “<a href="https://www.theaustralian.com.au/nation/politics/federal-election-2022-scott-morrison-warns-of-anthony-albanese-economic-vandalism/news-story/1f07e255e278a466dd08a72084f68387">reckless and dangerous</a>”.</p>
<p>That’s what former prime minister Scott Morrison said Prime Minister Anthony Albanese would be if he asked the Fair Work Commission to grant a wage rise big enough to cover inflation. It would make Albanese a “<a href="https://www.abc.net.au/news/2022-05-11/morrison-accuses-albanese-of-being-a-loose-unit-on/13877512">loose unit</a>” on the economy.</p>
<p>Yet Albanese and his industrial relations spokesman Tony Burke are preparing to do just that ahead of the commission’s deadline of June 7, in time for the increase to take effect on July 1.</p>
<p>The increase would amount to a dollar an hour, lifting Australia’s minimum wage from A$20.33 an hour to A$21.36. New Zealand has just lifted its minimum from NZ$20.00 to <a href="https://www.employment.govt.nz/about/news-and-updates/minimum-wage-increasing-on-1-april/">NZ$21.20</a>.</p>
<p>Despite what Morrison and his team said about in the campaign about previous governments <a href="https://www.theguardian.com/australia-news/2022/may/10/election-2022-anthony-albanese-backs-51-minimum-wage-rise-to-keep-pace-with-inflation">avoiding</a> recommending specific recommendations, Morrison’s predecessors Fraser, Hawke and Howard <a href="https://www.afr.com/companies/riddle-of-the-12-pay-grenade-20030313-ka8he">did it for years</a>, and state governments are still doing it.</p>
<p>Back in March, when Australia’s official inflation rate was 3.5%, before it had climbed to 5.1%, Victoria recommended <a href="https://www.fwc.gov.au/documents/wage-reviews/2021-22/submissions/vicgov-sub-awr2122.pdf">3.5%</a>.</p>
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<a href="https://theconversation.com/inflation-hits-5-1-how-long-until-mortgage-rates-climb-181832">Inflation hits 5.1%. How long until mortgage rates climb?</a>
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<p>And the government of which Morrison was a part wasn’t shy about telling employers what to pay. </p>
<p>In 2014 its employment minister Eric Abetz counselled “weak-kneed” employers against “caving in” to union demands, setting off a “<a href="https://ministers.dese.gov.au/abetz/industrial-relations-after-thirty-years-war-address-sydney-institute">wages explosion</a>”.</p>
<p>Of course, there’s no guarantee that the Fair Work Commission will heed the new government’s push for a $1 an hour increase. </p>
<p>The commission is perfectly capable of determining what wage rises to grant, after taking into account all submissions. In all but one of the past ten years it has granted <a href="https://www.fwc.gov.au/documents/wage-reviews/2021-22/statisticalreportv5.pdf">more</a> than the prevailing rate of inflation at the time.</p>
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<p>Whether it will do that again remains to be seen next month. But to get ahead of that announcement, here’s how the commission explained its thinking in its most recent decision in <a href="https://www.fwc.gov.au/documents/decisionssigned/html/2021fwcfb3500.htm">June last year</a>.</p>
<h2>Most workers aren’t on awards</h2>
<p>In ruling on a minimum wage increase, what matters most to the commission is employers’ ability to pay (the profits share of national income had <a href="https://theconversation.com/are-real-wages-falling-heres-the-evidence-182171">climbed</a> during five years in which the wages share had shrunk) and the living standards of Australia’s lowest paid. </p>
<p>Only the lowest paid 2% of workers get the national minimum wage, and a further 23% get the minimum award rates the commission adjusts at the same time.</p>
<p>Last year, the commission found some households on the minimum wage had disposable incomes below the poverty line, and it was reluctant to see them fall further. </p>
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<p>It was also reluctant to grant a flat dollar increase that would boost the position of low earners relative to higher earners, saying past flat dollar increases “compressed award relativities and reduced the gains from skill acquisition”.</p>
<p>A percentage rather than a flat increase would particularly benefit women, because, at higher levels, women were “substantially more likely than men to be paid the minimum award rate” and less likely to be paid via contract or an enterprise bargain.</p>
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<p>In deciding what percentage increase to award, it gave considerable weight to the most recent increase in the consumer price index (CPI). Right now, that’s <a href="https://theconversation.com/inflation-hits-5-1-how-long-until-mortgage-rates-climb-181832">5.1%</a>.</p>
<p>The Commission dismissed suggestions, put forward <a href="https://www.theaustralian.com.au/commentary/hidden-danger-in-albanese-as-a-wage-setter/news-story/d9ea243d5f6a1a264d9f17257121d989">again</a> in the context of the latest 5.1% increase in the CPI, that it should use the separately calculated “<a href="https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/selected-living-cost-indexes-australia/latest-release">employee living cost</a>” index, which has come in at 3.8%.</p>
<p>The employee living cost index has been climbing by less than the CPI because it includes mortgage rates, which have been falling, whereas the CPI does not.</p>
<h2>Low earners aren’t mortgagees</h2>
<p>The commission made the point that low-paid workers were less likely to own a home than higher-paid workers, making the CPI a better measure for them.</p>
<p>But not a perfect measure. The Australian Bureau of Statistics has begun dividing the CPI into “<a href="https://theconversation.com/why-the-rba-should-go-easy-on-interest-rate-hikes-inflation-may-already-be-retreating-and-going-too-hard-risks-a-recession-182273">discretionary</a>” (non-essential) purchases and other, essential, purchases.</p>
<p>The commission says low income households spend more of their income on essentials than higher earning households, making “<a href="https://www.abs.gov.au/articles/measuring-non-discretionary-and-discretionary-inflation">non-discretionary</a>” inflation especially relevant. Non-discretionary inflation is running at 6.6%.</p>
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<p>The commission rejected suggestions the increase it proposed could push Australians out of work or make it harder for young Australians to find work.</p>
<p>Which isn’t to say that couldn’t happen. During the 1970s and 1980s high wage growth fed both high inflation and high unemployment, so-called <a href="https://www.investopedia.com/terms/s/stagflation.asp">stagflation</a>.</p>
<h2>Wages aren’t destroying jobs</h2>
<p>But back in the 1970s and 1980s, wages were climbing faster than the combination of price growth and productivity growth, making increases hard for employers to pay. Of late, the profits share of national income has been <a href="https://theconversation.com/are-real-wages-falling-heres-the-evidence-182171">climbing rather than falling</a>, giving employers an increasing ability to pay.</p>
<p>And whereas back then most workers were paid via the awards set by the commission, today most are paid via enterprise agreements negotiated firm by firm, meaning increases in awards only flow through to workers on agreements to the extent that they and employers are able to agree on them.</p>
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<p>And what the government is proposing is not an increase markedly greater than inflation, of the kind that fed stagflation though the 1970s and early 1980s, but an increase in line with prices – even though employers might be able to pay more.</p>
<p>If what the government is proposing strikes the commission as reckless or dangerous, it will reject it. The increases it has granted to date have added to neither unemployment nor (particularly) to overall wages growth.</p>
<h2>Low earners versus homeowners</h2>
<p>The commission will certainly reject any suggestion that it ignore the next increase in compulsory superannuation contributions, due to lift employers’ contributions from 10% of salary to 10.5% in July. </p>
<p>The contributions are a cost to employers and a benefit to employees. It has taken them into account in the past.</p>
<p>And it should reject, as repugnant, Morrison’s suggestion that it should clamp down on wage rises for Australia’s least paid, so homeowners can continue to enjoy historically unprecedented <a href="https://www.abc.net.au/news/2022-05-11/morrison-hits-back-on-labor-inflation-pay-rise-push/101055134">low mortgage rates</a>.</p>
<p>Homeowners, almost all of them, are much better off than Australia’s least paid.</p><img src="https://counter.theconversation.com/content/183643/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Peter Martin does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Low-wage earners are going backwards. Here’s why they deserve an increase in the minimum wage by $1 an hour from July 1.Peter Martin, Visiting Fellow, Crawford School of Public Policy, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1830222022-05-13T03:02:45Z2022-05-13T03:02:45ZVIDEO: The penultimate week: all about wages, debates and Deves<p>University of Canberra Professorial Fellow Michelle Grattan and Associate Professor Chris Wallace look at how the election battle stands as we enter the final campaign week. </p>
<p>They canvass the ever-present Katherine Deves, after Scott Morrison has once more come out in support of her, and the impact of the PM’s decision to run her in an apparent broader “dog whistle” tactic that’s backfired in Warringah and elsewhere. In the wake of two leaders’ debates this week – one shouty, the other more civil – Chris and Michelle also discuss whether these debates matter in campaigns. And they look at the explosion of the two-coffees-a-day wages argument, which will matter to low paid workers.</p>
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<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Michelle Grattan discusses the political week that was with Chris Wallace, Associate Professor at the University of Canberra.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1827812022-05-10T10:36:49Z2022-05-10T10:36:49ZView from The Hill: Albanese and Morrison caught on fly-papers of wages, gender<p>Both Anthony Albanese and Scott Morrison landed themselves onto the sticky paper on Tuesday, as they trudged through this campaign’s penultimate week. </p>
<p>The issues couldn’t have been more different. But each was an area of their respective vulnerabilities – economic numbers in Albanese’s case and social views in Morrison’s. </p>
<p>The opposition leader unwisely tied himself to a specific figure for what would be an appropriate rise in the minimum wage. The Prime Minister dug himself further in behind his controversial Warringah candidate, Katherine Deves, and in the process fell into factual error. </p>
<p>Labor is campaigning hard on the need for wages to rise. Higher wages have until recently had general support across the political spectrum. But the latest 5.1% inflation figure has complicated the debate, and business is warning of the potential for substantial wage rises to entrench high inflation. </p>
<p>In Sunday’s leaders’ debate, Albanese conceded a Labor government could not “guarantee” real wage increases. Rather, “our objective is to have real wage increases and we have practical plans to do that”. </p>
<p>This was a prudent statement. The power of governments to influence wages is limited. </p>
<p>Under questioning on Tuesday about the minimum wage – at present just $20.33 an hour – Albanese said it should at least keep up with the cost of living. “We think no-one should go backwards,” he said.</p>
<p>When he was asked whether this meant he would support a rise of 5.1%, he said , “absolutely”. He answered without hesitating, and probably without thinking through the implications. </p>
<p>For one thing, this inflation figure may not be the relevant number. </p>
<p>Shane Wright, economics writer at the Sydney Morning Herald, quickly pointed out in a tweet that the Fair Work Commission had to look at inflation for 2022-23, which the Reserve Bank was forecasting at 4.3%, rather than the 5.1% number, which was the year to March. </p>
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<p>Labor says it would replace the Morrison government’s submission to the current minimum wage case with one that argued for a rise. But it also says that submission might not nominate a figure. </p>
<p>Albanese points out the commission last time awarded a rise above inflation. On the other hand, critics argue the inflation spike creates special circumstances this time. </p>
<p>Albanese’s embrace of the 5.1% number again indicated he doesn’t always think through the detail. </p>
<p>But whether in this instance it will do him any harm is another matter. </p>
<p>The important message for many people will be that Labor will actively support a pay rise for the lowest earners, at a time when cost of living pressures are bearing down heavily on workers. </p>
<p>Albanese said on the ABC on Tuesday night that “the idea that people who are doing it really tough at the moment should have a further cut in their cost of living is, in my view, simply untenable”. Many voters mightn’t be too concerned about the fine print of the numbers. </p>
<p>On the other side of politics Deves, Morrison’s “captain’s pick”, has refuelled the furore around her by saying on Monday that when she had referred to trans children being surgically “mutilated”, this was “actually the correct medico-legal term”. </p>
<p>Deves has been widely condemned for this and other offensive (and now removed) tweets. But she insisted in an interview with Sky, “When you look at medical negligence cases that is the terminology that they use”.</p>
<p>Questioned at his Tuesday news conference Morrison said “the issues Katherine commented on yesterday, they’re incredibly sensitive. </p>
<p>"What we’re talking about here is gender reversal surgery for young adolescents. And we can’t pretend this is not a very significant, serious issue.</p>
<p>"And the issues that have to be considered first and foremost [are] the welfare of the adolescent child and their parents. We can’t pretend that this type of surgery is some minor procedure.</p>
<p>"Now I’m sure many other Australians are concerned. This is a concerning issue. It’s a troubling issue. And for us to pretend it’s a minor procedure – it’s not. It is extremely significant. And it changes that young adolescent child’s life forever.”</p>
<p>It was quickly pointed out to Morrison that the government’s own website said reassignment surgery couldn’t be undertaken by minors. </p>
<p>Regrouping, the PM said, “You will also understand that this process can begin in adolescence”. The surgical procedure could not take place then but discussions could commence, he said. </p>
<p>Morrison said he wouldn’t use Deves’ language of surgical mutilation. Asked whether he had spoken to her about her language, he said “I’m sure we’ll have the opportunity to talk”, but on terminology “I’m not a surgeon […] I’m not the Chief Medical Officer.”</p>
<p>One of Morrison’s motives in choosing Deves was that he judged her views against trans people competing in women’s and girls’ sport would resonate in outer suburban areas and seats with high numbers of voters from ethnic communities. </p>
<p>It’s notable that initially he highlighted her push on female sport but now has willingly moved on to the gender reassignment issue. </p>
<p>He hasn’t had much concern, it seems, for whatever fallout his defence of Deves might have where there are “teal” candidates running against Liberal incumbents. </p>
<p>He declared he had no regrets about choosing Deves. A lot of Liberals do, however.</p><img src="https://counter.theconversation.com/content/182781/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michelle Grattan does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Both Anthony Albanese and Scott Morrison landed themselves onto the sticky paper on Tuesday, as they trudged through this campaign’s penultimate week.Michelle Grattan, Professorial Fellow, University of CanberraLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1815452022-05-01T08:42:09Z2022-05-01T08:42:09ZA gloomy May Day awaits Nigerian workers<figure><img src="https://images.theconversation.com/files/458901/original/file-20220420-15105-ng3wci.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Minimum wage is no match for rising cost of living</span> <span class="attribution"><span class="source">Photo by Adekunle Ajayi/NurPhoto via Getty Images</span></span></figcaption></figure><p>Imagine you live alone and walk into a local food market in Lagos, the Nigerian commercial capital, to buy a week’s worth of basic food items. In less than 15 minutes, you would find that you’ve spent at least 10,000 Naira (or US$24 at the official exchange rate of US$1 = 416 Naira).</p>
<p>This may seem minuscule to privileged households but such expenditure is a heavy burden on Nigeria’s <a href="https://data.worldbank.org/indicator/SL.TLF.TOTL.IN?locations=NG">62 million workers</a>. </p>
<p>The majority of Nigerian workers have to make do with a monthly <a href="https://www.statista.com/statistics/1119133/monthly-minimum-wage-in-nigeria/">minimum wage</a> of 30,000 Naira (US$72). Only <a href="https://www.worldbank.org/en/news/press-release/2022/03/21/afw-deep-structural-reforms-guided-by-evidence-are-urgently-needed-to-lift-millions-of-nigerians-out-of-poverty">17 percent</a> of Nigerian workers hold jobs that pay enough to get them out of poverty.</p>
<p>After factoring in rent, transportation, medical expenses and electricity, among others, the average Nigerian worker can’t make ends meet. This has been made worse by the rising cost of living. For most Nigerians, the cost of living is about <a href="https://livingcost.org/cost/nigeria">5.3 times more</a> than the average salary.</p>
<p><a href="https://guardian.ng/business-services/nlc-laments-rising-cost-of-goods-cautions-against-increase-in-fuel-price/">Soaring food prices</a> are the major cause. Nigeria’s <a href="https://nigerianstat.gov.ng/elibrary/read/1241157">inflation rate</a> was 15.9 percent in March, 2022, and food prices rose by 17.2 percent, among the <a href="https://www.fxempire.com/macro/nigeria/food-inflation">highest</a> in Africa.</p>
<p>Much of Nigeria’s inflation is due to <a href="https://nigerianstat.gov.ng/elibrary/read/1241146">increases</a> in the prices of basic food items like bread, cereals, potatoes, yam, fish, meat, oils and fats. Food prices contributed about <a href="https://uk.news.yahoo.com/high-nigeria-food-costs-push-110149878.html">60 percent</a> to Nigeria’s inflation in 2021.</p>
<p>Those prices have been increasing for several reasons, including insecurity in the country’s food-producing areas, poor transportation and storage facilities, <a href="https://documents1.worldbank.org/curated/en/389281623682704986/pdf/Resilience-through-Reforms.pdf#page=22">removal</a> of some food items from the list of imports eligible for foreign exchange through the Central Bank of Nigeria’s official windows, <a href="https://punchng.com/experts-predict-further-depreciation-of-naira/">depreciation of the Naira</a>, which led to increases in the prices of imported food, and <a href="https://theconversation.com/nigeria-needs-a-competent-customs-and-immigration-service-not-border-closure-125836">border closures in 2019</a> that resulted in steep declines in food imports.</p>
<p>The <a href="https://www.bbc.com/news/world-60525350">war in Ukraine</a> has added further upward pressure on commodity and fuel prices. This will cause overall inflation and food prices to continue to increase well into 2023, a pointer that Nigerian workers are in for a very rough ride during the next several months.</p>
<p>The rising cost of living has left Nigerian workers with a stark choice. They either spend much of their income on food and forgo other essential needs, or drastically cutting back on food expenditures in order to afford essential services. This Hobbesian choice is worse for a one-income household with multiple people, where the minimum monthly wage has to be spread across members of the household. </p>
<p>It’s no wonder that Nigeria’s number of poor people is forecast to rise <a href="https://www.icirnigeria.org/number-of-poor-nigerians-to-increase-to-95-million-in-2022-report/">95 million</a> or about half the population in 2022.</p>
<p>Many of these poor Nigerians, including those in vulnerable employment, would see their living standards deteriorate precipitously. That’s because Nigerians spend <a href="https://www.weforum.org/agenda/2016/12/this-map-shows-how-much-each-country-spends-on-food/">the highest portion</a> of their income on food. An average Nigerian household spends about 56% of income on food. The other three high spenders on food are Kenya (46.7%), Cameroon (45.6%), and Algeria (42.5%).</p>
<p>To put things in context, in the US, UK, Canada and Australia average household expenditure on food accounts for 6.4%, 8.2%, 9.1%, and 9.8% of income respectively.</p>
<p>The more expensive food becomes, the poorer and more unhealthy Nigerians become. The fact that Nigerian workers have neither embarked on food riots, nor staged mass demonstrations to protest the unbearable increases in food prices, implies they must have found ways of coping with food inflation.</p>
<h2>Coping strategies</h2>
<p>To maintain a decent level of food consumption and avoid becoming one of the <a href="https://www.oxfam.org/en/nigeria-extreme-inequality-numbers">5 million</a> Nigerians that face hunger, households are reducing expenditures on essential services like health, electricity, and transportation. It has become customary for households to switch off electricity at night to reduce energy bills. Many now postpone or avoid unessential travels.</p>
<p>Workers are also doing additional work. These include operating Uber and other share riding cabs and trading in assorted goods. They are also offering services such as barbering, hair braiding, fashion design, tailoring, event planning, photography, commission sales, digital marketing, and exploring opportunities on the web. Some workers are even cutting back on time spent on their regular jobs to devote more time to other income generating activities.</p>
<p>In their attempts to cope with food inflation and rising cost of living, some Nigerian workers have fallen prey to predatory lenders, or what are widely known as “<a href="https://www.theguardian.com/world/2022/mar/09/their-weapon-is-your-shame-toxic-abuse-from-nigerias-loan-sharks">loan sharks</a>”.</p>
<p>Cashing in on workers’ desperation, these lenders charge exorbitant interest rates as high as <a href="https://www.dw.com/en/nigeria-cracks-down-on-digital-loan-sharks/a-61347733">60 percent</a>. Unable to repay their loans on time, many borrowers find themselves stuck with unsustainable debts.</p>
<p>Is there a role for government? Instead of the usual fanfares on May Day, government officials should focus on how to make food more affordable in Nigeria. A starting point is to learn how India successfully addressed its food shortages and rising food prices.</p>
<h2>Lessons from India</h2>
<p>Food shortages were so severe in the 1950s and 1960s that India became known as the “<a href="https://www.indiatoday.in/magazine/guest-column/story/20001127-a-tribute-to-the-spearhead-of-indias-green-revolution-778501-2000-11-27">begging-bowl</a>” nation.</p>
<p>Today, India is not only self-sufficient in food, but food is widely affordable. It has become a net exporter of food.</p>
<p>It turned the situation around through the <a href="https://www.indiatoday.in/magazine/guest-column/story/20001127-a-tribute-to-the-spearhead-of-indias-green-revolution-778501-2000-11-27">Green Revolution</a> initiated by Prime Minister Jawaharlal Nehru in the early 1960s.</p>
<p>This entailed massive investment in rural infrastructure, pro-agriculture economic policies, and land reform. India also invested in agricultural technology, including seedlings, modern machinery, fertiliser, and pesticides.</p>
<p>Land reform under the Green Revolution has enabled rural dwellers to have access to agricultural land, supported by government-provided irrigation systems, rainwater catchments, and extension officers. </p>
<p>India’s land reform placed a ceiling of 25 acres on land ownership per household. Absentee landowners with surplus land were forced to relinquish portions of their land for redistribution to landless farmers. </p>
<p>Contrary to the <a href="https://businessday.ng/agriculture/article/experts-see-small-scale-farming-as-panacea-to-nigerias-food-insecurity/">myth</a> that commercial agriculture is the panacea for Nigeria’s food crisis, India’s agriculture is dominated by small and medium farmers.</p>
<p>Perhaps the greatest boost to food production in India is the country’s extremely cheap and extensive transportation network. Villages are connected to major towns, cities and markets through paved roads and rail systems. </p>
<p>State-owned buses are very pervasive and ply the most isolated regions of the country. Because of easy access to inexpensive transportation, farmers can bring their products to the open market daily.</p>
<p>It’s been a win-win phenomenon for both farmers and workers. Farmers’ incomes have been on the <a href="https://www.pnas.org/doi/10.1073/pnas.0912953109">rise</a>, while workers have benefited from lower food prices. </p>
<p>Higher rural incomes have spurred demand for manufactured goods, and in many cases has led to the <a href="https://www.niti.gov.in/sites/default/files/2021-08/5_EPW_Article_Changes_in_Rural_Economy_of_India_1971_to_2012.pdf">location of factories</a> in rural communities, hence generating employment opportunities for rural dwellers.</p>
<h2>Small-scale farming is the solution</h2>
<p>The Indian case has shown that the key to food security lies with small producers, as opposed to Nigeria’s focus on large-scale agricultural <a href="https://telecoms.com/86802/nigerias-free-phones-for-farmers-plan-reveals-incoherence-of-rural-strategy/">projects</a> that either produce cash crops or turn out to be white elephants.</p>
<p>To ease food supply constraints and ultimately reduce the cost of food in Nigeria, government should focus on boosting the productive capacities of small-scale farmers. This can be done by granting them access to arable land, providing credit for the purchase of inputs, facilitating access to markets, provision of irrigation and storage facilities, as well as safety nets that insulate them from exogenous shocks.</p><img src="https://counter.theconversation.com/content/181545/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Stephen Onyeiwu does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>With a monthly minimum wage of 30,000 Naira (US$72), the average Nigerian worker is groaning under the weight of the rising cost of living.Stephen Onyeiwu, Andrew Wells Robertson Professor of Economics, Allegheny CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1820692022-05-01T08:41:50Z2022-05-01T08:41:50ZNigerian workers struggle as cost of living outstrips incomes<figure><img src="https://images.theconversation.com/files/460517/original/file-20220429-18-gdije7.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Bread sellers display at roadside in Lagos</span> <span class="attribution"><span class="source">Photo by Adekunle Ajayi/NurPhoto via Getty Images</span></span></figcaption></figure><p>Food inflation in Nigeria <a href="https://tradingeconomics.com/nigeria/consumer-price-index-cpi#:%7E:text">increased by 15%</a> during the 11 months from April 2021 to March 2022, adding pressure on the cost of living for salary earners whose incomes have not risen for close to <a href="https://guardian.ng/saturday-magazine/new-minimum-wage-of-n30-000-takes-effect/">three</a> years.</p>
<p>The alarming situation is that the 30,000 Naira (US$72) <a href="https://www.statista.com/statistics/1119133/monthly-minimum-wage-in-nigeria/">minimum wage</a> is insufficient to meet the value of basic foodstuffs for the healthy living of an adult in a month, let alone an entire family. </p>
<p>In January 2022, the price of essential foodstuff requirement for one adult stood at 40,980 Naira (US$98), which is about <a href="https://www.premiumtimesng.com/news/headlines/507087-nigerias-minimum-wage-grossly-inadequate-cant-meet-basic-nutritional-needs-of-an-adult-report.html">37% higher</a> than the minimum wage.</p>
<p><a href="https://www.thecable.ng/nlc-workers-in-7-states-to-embark-on-strike-over-non-implementation-of-minimum-wage">Seven states</a> are yet to implement the minimum wage, but state resources are <a href="https://www.vanguardngr.com/2021/05/minimum-wage-states-that-cant-pay-shouldnt-exist-oshiomhole/">vividly mismanaged</a> to the detriment of workers. </p>
<p>How then have salary earners survived?</p>
<p><a href="https://www.researchgate.net/publication/324905629_Effects_of_Food_Price_Spikes_on_Household_Welfare_in_Nigeria">Research on the impact of previous food price spikes</a> in Nigeria has found that the volatility of food prices influence household food consumption patterns. There are two pathways for this. Households reduce the amount of food purchased which will ultimately result in a drop in the total calorie intake. Households may also shift spending from expensive staples to cheaper ones, the so-called substitution effect.</p>
<p>Recent interviews and and focus group discussions with Nigerian workers confirm the findings of previous studies. These interviews and focus group discussions are part of my ongoing analysis of food price volatility in Nigeria.</p>
<p>The stories of change in diet, number of meals per day, and types of the meal provided in the home pervade the views summed during the interviews and focus group discussions. </p>
<p>Many salary earners have had to change the quality of foodstuff they buy and exchange the household food basket items to those they can afford.</p>
<p>Adding the pressure is the fact that the cost of transportation, energy, cooking fuel and rent are also rising. Even school fees and prices of school books are going up.</p>
<p>The net effect of all of these adjustments will ultimately be an increase in the consumption of food that has less nutrition.</p>
<h2>National minimum wage unpacked</h2>
<p>Most of the low-income earners we interacted with said they could only afford one meal a day. And they could afford it by either borrowing or begging from those they believed had better income, and doing additional jobs to make ends meet.</p>
<p>Savings is now a fallacy for salary earners, as they do not even have sufficient income to survive. Those that have been diligent with savings have had them eroded to meet up with the persistently increasing cost of food.</p>
<p>Workers who earn the minimum wage have been hit the worst. The minimum wage in Nigeria is prescribed by the <a href="https://placbillstrack.org/8th/upload/National%20Minimum%20Wage%20Act,%202019.pdf">National Minimum Wage Act</a>, 2019, with provisions for seamless review. However, in spite of the incessant rise in food prices, no review to the minimum wage is in sight. On top of this a number of <a href="https://tribuneonlineng.com/fg-threatens-to-sanction-national-assembly-others-over-breach-of-national-minimum-wage-act/">federal government agencies</a>, state, local government and private sector organisations are still erring in compliance.</p>
<p>Even the Nigeria Labour Congress, the umbrella body of labour unions, is yet to fully <a href="https://www.thecable.ng/nlc-yet-to-implement-minimum-wage-for-own-staff-2-years-after">implement</a> the minimum wage for its own staff.</p>
<p>No wonder that poverty has been increasing in Nigeria. </p>
<h2>The impact of inflation</h2>
<p>Based on a multidimensional measure of poverty, Nigeria’s poverty levels have been increasing since 2018 when the <a href="https://data.worldbank.org/country/NG">index</a> stood at 39.1%. <a href="https://theconversation.com/nigerias-poverty-profile-is-grim-its-time-to-move-beyond-handouts-163302#:%7E:text=">In 2020</a> it rose to 40% and in
<a href="https://www.vanguardngr.com/2022/01/91m-nigerians-fall-below-poverty-line-nesg/#:%7E:text=">2021</a> to 42.6%. <a href="https://www.premiumtimesng.com/business/business-news/520849-number-of-poor-people-in-nigeria-to-reach-95-million-in-2022-world-bank.html#">Estimates for 2022</a> are that it will hit 44%. </p>
<p>The poverty index pegs <a href="https://www.worldbank.org/en/topic/poverty#:%7E:text=Based%20on%20information%20about%20basic,poverty%20lines%20have%20been%20introduced">extreme poverty</a> at those living on less than US$1.90 a day. In Nigeria, the minimum wage currently amounts to about US$1.75 per day, showing how many Nigerian workers are perilously close to extreme poverty.</p>
<p>This demonstrates the relevance of American economist <a href="https://www.ssa.gov/policy/docs/ssb/v68n3/v68n3p79.html">Mollie Orshansky’s</a> 1965 proposal that the definition of poverty should be based on a family income below three times a subsistence food budget. Orshansky earned the name, <a href="https://www.ssa.gov/policy/docs/ssb/v68n3/v68n3p79.html">Ms Poverty</a>, because of her work on poverty and income inadequacy.</p>
<p>Orshansky’s definition was based on the fact that a typical low-income family spent a third of its income on food. But the picture of Nigeria is not even close, because a low-income family earns far below what can be used to provide food in the face of increasing food prices. </p>
<p>Also, low income families share a <a href="https://www.epi.org/publication/epi-comments-on-changing-the-consumer-price-index-used-to-update-the-poverty-threshold/">disproportionate</a> burden when it comes to inflation. This is because the assets of low-income earners are mostly held in cash which gets eroded faster in the face of incessant increases in prices.</p>
<p>High-income earners, on the other hand, can store assets in less liquid forms making them much more immune to the distress of inflation. </p>
<p>Inflation also has the effect of causing a decline in real salaries and wages. This happens when food prices go up while salaries remain stagnant. </p>
<p>The net effect of this is that income inequality worsens. </p>
<p>Wage earners faced with declining purchasing power engage in survival strategies. One tactic is commodity substitution. Another is <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/24226/Prices0for0poverty0analysis0in0Africa.pdf?sequence=1&isAllowed=y">outlet substitution</a> – workers change their supply outlets so that they can buy food at considerably lower prices. </p>
<h2>Clueless government</h2>
<p>The ongoing Russia-Ukraine war is exacerbating the situation. Global commodity and food price are rising. Grains alone have already gone up by <a href="https://www.aljazeera.com/economy/2022/4/8/food-prices-soar-to-record-levels-on-ukraine-war-disruptions#:%7E:text=">17.1%</a>. </p>
<p>The impact will hit food prices in Nigeria if the government does nothing to <a href="https://theconversation.com/why-the-cost-of-food-is-not-yielding-to-nigerias-government-policies-178684">alleviate the pressure.</a>. This will mean the a further deterioration for salary earners in the country. </p>
<p>On top of rising food prices and low income, Nigeria is also faced with endemic challenges of insurgency, poor institutional quality and ineffective governance. Nevertheless inaction to address poverty and hunger is not an option. The government should make tackling them a priority. Immediate steps should include increasing food supply by intensifying its engagement in agricultural production, and reducing food prices.</p><img src="https://counter.theconversation.com/content/182069/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Folasade Bosede Adegboye does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>In the face of rising food prices in Nigeria, many salary earners have had to change the quality of foodstuff they buy or opt for cheaper alternatives.Folasade Bosede Adegboye, Senior Lecturer in Finance, Covenant UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1802932022-04-04T12:29:42Z2022-04-04T12:29:42ZAmazon, Starbucks and the sparking of a new American union movement<figure><img src="https://images.theconversation.com/files/456103/original/file-20220404-19-yuez6j.jpg?ixlib=rb-1.1.0&rect=0%2C16%2C3594%2C2376&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The start of a movement or a moment?</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/Amazon-Union-Elections/cc69d97c3a4341ebad070944d2f4bbc8/photo?Query=staten%20island%20amazon&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=118&currentItemNo=4">AP Photo/Eduardo Munoz Alvarez</a></span></figcaption></figure><iframe id="noa-web-audio-player" style="border: none" src="https://embed-player.newsoveraudio.com/v4?key=x84olp&id=https://theconversation.com/amazon-starbucks-and-the-sparking-of-a-new-american-union-movement-180293&bgColor=F5F5F5&color=D8352A&playColor=D8352A" width="100%" height="110px"></iframe>
<p><em>You can listen to more narrated articles <a href="https://theconversation.com/topics/audio-narrated-99682">here</a>.</em></p>
<hr>
<p>April 1, 2022, may go down as a pivotal day in the history of American unions. </p>
<p>In a result that could reverberate in workplaces across the U.S., the independent <a href="https://www.amazonlaborunion.org/">Amazon Labor Union</a> – first <a href="https://www.washingtonpost.com/technology/2022/04/01/chris-smalls-amazon-union/">formed in 2020 by Chris Smalls</a>, an <a href="https://www.npr.org/2022/04/02/1090353185/amazon-union-chris-smalls-organizer-staten-island">Amazon worker fired</a> for protesting what he saw as inadequate COVID-19 safety precautions – got the better of the previously successful anti-union efforts of the online retailer. It means that Smalls’ warehouse in Staten Island, New York, will be <a href="https://www.vox.com/recode/23005336/amazon-union-new-york-warehouse">the first to have a unionized workforce</a>.</p>
<p>On the same day, <a href="https://sbworkersunited.org/">Starbucks Workers United</a> – an organization affiliated with Service Employees International Union – won yet another election, making it <a href="https://www.vox.com/recode/22993509/starbucks-successful-union-drive">10 out of 11 wins</a> for the union since <a href="https://apnews.com/article/starbucks-union-vote-buffalo-c7dc3c2ec8b838e9f4ed641f54fc9035">first succeeding in Buffalo</a> in December 2021. This time, it was the <a href="https://twitter.com/SBWorkersUnited/status/1510037854306590726/photo/1">chain’s flagship roastery</a> in New York City that opted to unionize. The organizing campaign <a href="https://nypost.com/2022/02/10/nyc-area-starbucks-locations-file-to-unionize-in-national-push/">has now spread</a> to over 170 Starbucks stores nationwide. Several more Starbucks elections will take place in the coming weeks.</p>
<p>Meanwhile, a re-run election at a Amazon factory in Bessemer, Alabama, will <a href="https://www.npr.org/2022/03/31/1090123017/do-over-union-election-at-amazons-bessemer-warehouse-is-too-close-to-call">depend on the outcome of several hundred contested ballots</a>. Even if Amazon wins, the Retail, Wholesale and Department Store Union has – at very least – came tantalizingly close in what was deemed a long-shot union vote. </p>
<p>Something is definitely happening in the labor movement. </p>
<h2>A different kind of organizing</h2>
<p>As a <a href="https://cob.sfsu.edu/directory/john-logan">scholar of the labor movement</a> who has observed union drives for two decades, what I find almost as striking as the victories is the unconventional nature of the organizing campaigns. Both the Starbucks and Amazon-Staten Island campaigns have been led by <a href="https://prospect.org/labor/generational-worker-revolt-hits-its-stride-amazon-union/">determined young workers</a>.</p>
<p>Inspired by pro-union sentiment in political movements, such as <a href="https://berniesanders.com/issues/workplace-democracy/">Bernie Sanders’ presidential bids</a>, <a href="https://www.theguardian.com/us-news/2018/feb/10/black-lives-matter-labor-unions-factory-workers-unite">Black Lives Matter</a> and the <a href="https://labor.dsausa.org/">Democratic Socialists of America</a>, these individuals are spearheading the efforts for workplace reform rather than professional union organizers. Indeed, one would be hard pressed to find many experienced organizers among the recent successful campaigns. </p>
<p>Instead, the campaigns have involved a significant degree of “self-organization” – that is, workers “talking union” to each other in the warehouse and coffee shops and reaching out to colleagues in other shops in the same city and across the nation. <a href="https://www.cornellpress.cornell.edu/book/9780801457227/building-more-effective-unions/#bookTabs=1">This marks a sea change</a> from the way the labor movement has traditionally operated, which has tended to be more centralized and led by seasoned union officials. </p>
<h2>A labor revival</h2>
<p>Perhaps more important than the victories at Starbucks and Amazon themselves are their potential for creating a sense of optimism and enthusiasm around union organizing, especially among younger workers. </p>
<p>The elections follow <a href="https://psmag.com/economics/what-caused-the-decline-of-unions-in-america">years of union decline in the U.S.</a> – both in terms of membership and influence.</p>
<p>Prior to the COVID-19 pandemic, these recent labor wins would probably have seemed unimaginable. Powerful, wealthy <a href="https://www.engadget.com/amazon-spent-43-million-on-anti-union-consultants-in-2021-alone-082051777.html">corporations like Amazon</a> <a href="https://www.theguardian.com/business/2021/nov/23/starbucks-aggressive-anti-union-effort-new-york-stores-organize">and Starbucks</a> appeared invincible then, at least in the context of <a href="https://www.nlrb.gov/">National Labor Relations Board</a> rules, which are stacked heavily <a href="https://www.epi.org/publication/unprecedented-the-trump-nlrbs-attack-on-workers-rights/">against pro-union workers</a>. Under NLRB rules, Amazon and Starbucks can – and do – force workers, on the threat of dismissal, to attend <a href="https://www.theguardian.com/business/2021/nov/23/starbucks-aggressive-anti-union-effort-new-york-stores-organize">anti-union sessions</a>, often led by <a href="https://www.engadget.com/amazon-spent-43-million-on-anti-union-consultants-in-2021-alone-082051777.html">highly paid external consultants</a>.</p>
<p>Starbucks <a href="https://www.bloomberg.com/news/articles/2022-03-15/starbucks-retaliated-against-pro-union-staff-nlrb-alleges">has said it has been</a> “consistent in denying any claims of anti-union activity. They are categorically false.” But in March 2022, the NLRB alleged that the coffee chain had coerced workers, placed union supporters under surveillance and retaliated against them. Similarly Amazon – which has in the past <a href="https://www.cnbc.com/2020/09/01/amazon-seeks-intelligence-analyst-to-track-labor-organizing-threats.html">advertised for analysts to monitor “labor organizing threats</a>” has said it <a href="https://www.cnbc.com/2020/10/24/how-amazon-prevents-unions-by-surveilling-employee-activism.html">respects workers’ rights to join or not join unions</a>.</p>
<p>The significance of the recent victories is not primarily about the <a href="https://www.npr.org/2022/04/01/1089318684/amazon-labor-union-staten-island-election-bessemer-alabama-warehouse-workers">8,000 new union members</a> at Amazon or a gradual flow of new union members at Starbucks. It is about instilling in workers the belief that if pro-union workers can win at Amazon and Starbucks, they can win anywhere.</p>
<p>Historic precedents show that labor mobilization can be infectious.</p>
<p>In 1936 and 1937, workers at the Flint plant of General Motors <a href="https://www.history.com/news/flint-sit-down-strike-general-motors-uaw">brought the powerful auto-marker to its knees</a> in a sit-down strike that <a href="https://labornotes.org/2009/07/once-started-sit-downs-spread-wildfire">quickly inspired similar action</a> elsewhere. In the reported words of a Chicago doctor, when explaining a subsequent sit-down strike by wet nurses in the city, “It’s just one of those funny things. They want to strike because everyone else is doing it.”</p>
<h2>Seizing the moment</h2>
<p>The <a href="https://www.npr.org/2021/10/17/1046850192/the-pandemic-could-be-leading-to-a-golden-age-for-unions">pandemic has created an opportunity for unions</a>.</p>
<p>After working on the front lines for over two years, many essential workers such as those at Amazon and Starbucks <a href="https://www.theguardian.com/business/2021/may/26/starbuck-employees-intense-work-customer-abuse-understaffing">believe they have not been adequately rewarded</a> for their service during the pandemic and have not been treated with respect by their employers. </p>
<p>This appears to have helped spur <a href="https://prospect.org/labor/generational-worker-revolt-hits-its-stride-amazon-union/">the popularity</a> of the Amazon Labor Union and Starbucks Workers United.</p>
<p>The homegrown nature of these campaigns deprives Amazon and Starbucks of employing a decades-old trope at the heart of corporate anti-union campaigns: that a <a href="https://one.starbucks.com/">union is an external “third party</a>” that doesn’t understand or care about the concerns of employees and is more interested in collecting dues.</p>
<figure class="align-center ">
<img alt="A pro-union poster is seen on a lamp pole says 'union busting is disgusting' over a Starbucks logo." src="https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/455938/original/file-20220403-23-b2ptyd.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Attempts to disparage outside unionizers are blunted when drives are led by company workers.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/pro-union-poster-is-seen-on-a-lamp-pole-outside-starbucks-news-photo/1239452047?adppopup=true">Toby Scott/SOPA Images/LightRocket via Getty Images</a></span>
</figcaption>
</figure>
<p>But those arguments mostly ring hollow <a href="https://labornotes.org/2022/04/amazon-workers-staten-island-clinch-historic-victory?fbclid=IwAR1pwcYb45xVPpvkuWV0JmkHb_1jwEwkUIwF56-aJFsT2B9O_AahdQj8Kdk">when the people doing the unionizing</a> are colleagues they work alongside day in and day out.</p>
<p>It has the effect of nullifying that central argument of anti-union campaigns despite the <a href="https://www.epi.org/publication/unlawful-employer-opposition-to-union-election-campaigns/">many millions of dollars</a> that companies often pumped into them.</p>
<h2>An unfavorable legal landscape</h2>
<p>This “self-organization” at Starbucks and Amazon is consistent with what was envisioned by the authors of the <a href="https://www.nlrb.gov/about-nlrb/who-we-are/our-history/1935-passage-of-the-wagner-act">1935 Wagner Act</a>, the statute that provides the foundation of today’s union representation procedures. </p>
<p>The National Labor Relations Board’s first chair, J. Warren Madden, understood that self-organization could be fatally undermined if corporations were allowed to engage in anti-union pressure tactics: </p>
<p>“Upon this fundamental principle – that an employer shall keep his hands off the self-organization of employees – the entire structure of the act rests,” <a href="https://digitalcommons.law.seattleu.edu/cgi/viewcontent.cgi?article=1631&context=sulr">he wrote</a>.“ Any compromise or weakening of that principle strikes at the root of the law.” </p>
<p>Over the past half century, anti-union corporations and their consultants and law firms – assisted by <a href="https://www.reuters.com/article/us-usa-labor-nlrb/unions-brace-for-big-changes-under-republican-led-u-s-labor-board-idUSKBN1HI328">Republican-controlled NLRBs</a> and right-wing judges – have <a href="https://www.latimes.com/opinion/op-ed/la-oe-greenhouse-janus-supreme-court-20180627-story.html">undermined that process</a> of worker self-organization by enabling union elections to become employer-dominated.</p>
<p>But for the long-term decline in union membership to be reversed, I believe pro-union workers will need stronger protections. Labor law reform is essential if the <a href="https://www.doi.org/10.1177/0019793918806250">almost 50% of non-union American workers</a> who say they want union representation are to have any chance of getting it. </p>
<h2>Dispelling fear, futility and apathy</h2>
<p>Lack of popular interest <a href="https://www.filesforprogress.org/memos/worker-power.pdf">has long been an obstacle</a> to labor law reform. </p>
<p>Meaningful labor law reform is unlikely to happen unless people are engaged with the issues, understand them and believe they have a stake in the outcome.</p>
<p>But <a href="https://theconversation.com/union-battles-at-amazon-and-starbucks-are-hot-news-which-can-only-be-good-for-the-labor-movement-172932">media interest in the campaigns at Starbucks and Amazon</a> suggests the American public may finally be paying attention.</p>
<p>It isn’t known where this latest labor movement – or moment – will lead. It could evaporate or it may just spark a wave of organizing across the low-wage service sector, stimulating a national debate over workers’ rights in the process. </p>
<p>The biggest weapons that anti-union corporations have in suppressing labor momentum are the fear of retaliation and a sense that unionization is futile. The recent successes show unionizing no longer seems so frightening or so futile. </p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://memberservices.theconversation.com/newsletters/?source=inline-youresmart">You can read us daily by subscribing to our newsletter</a>.]</p><img src="https://counter.theconversation.com/content/180293/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Logan does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Successful union drives at two of America’s biggest companies were led by committed individuals, rather than established unions.John Logan, Professor and Director of Labor and Employment Studies, San Francisco State UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1787492022-03-30T19:08:48Z2022-03-30T19:08:48ZInflation has already eroded tomorrow’s minimum wage rise – NZ’s low-income workers will need more support<figure><img src="https://images.theconversation.com/files/454862/original/file-20220328-23-1fq6ywz.jpg?ixlib=rb-1.1.0&rect=12%2C6%2C4144%2C2727&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>Tomorrow’s <a href="https://www.beehive.govt.nz/release/govt-increasing-wages-lowest-paid-workers">minimum wage increase</a> to NZ$21.20 an hour should help a significant number of New Zealand’s lowest paid workers and their families – 300,000 people, according to the government. </p>
<p>Just how <em>much</em> it will help, however, is less certain.</p>
<p>At 6%, the increase is in line with with the 5.9% annual rise in the consumer price index (CPI) in the December 2021 quarter. But inflation is <a href="https://www.interest.co.nz/business/114320/minimum-wage-rise-6-line-inflation-not-large-enough-jump-reach-living-wage-mbie-and">still rising</a>, with domestic and global pressures meaning it’s likely to keep rising for some time. </p>
<p>Those minimum wage gains, along with <a href="https://www.workandincome.govt.nz/products/benefit-rates/benefit-rates-april-2022.html#null">simultaneous increases</a> to other benefits and superannuation payments, are already eroding.</p>
<p>The food price index rose <a href="https://www.stats.govt.nz/news/fruit-and-vegetables-drive-up-annual-food-prices">6.8%</a> in February from the previous year. International <a href="https://www.ft.com/content/5753f4dd-1e8e-4159-a4e4-d232e4ad50ed">commodity</a> and <a href="https://oilprice.com/">oil</a> prices have soared since the Russian invasion of Ukraine. Some estimates suggest an annual CPI rise of <a href="https://www.newsroom.co.nz/soaring-energy-prices-could-spark-recession">between 7% and 8%</a> in this year’s March quarter.</p>
<p>It’s clear low-income households will continue to struggle to keep pace with the rising cost of living. For that reason, the minimum wage increase must be accompanied by other support measures, and not viewed as a solution in its own right.</p>
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<h2>Minimum wages and employment</h2>
<p>In fact, there are those who don’t see a minimum wage as being productive at all. One school of economic thought proposes that minimum wages actually <a href="https://www.vox.com/future-perfect/2019/3/19/18271276/alan-krueger-economist-death-minimum-wage-princeton">undermine job creation</a> by making employers avoid paying for more expensive labour at the same time as encouraging more workers into the job market.</p>
<p>This view was articulated by Nobel laureate economist <a href="https://www.nobelprize.org/prizes/economic-sciences/1982/summary/">George Stigler</a>, who <a href="https://www.jstor.org/stable/1056613">wrote in 1976</a>:</p>
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<p>One evidence of professional integrity of the economist is the fact that it is not possible to enlist good economists to defend protectionist programs or minimum wage laws.</p>
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<strong>
Read more:
<a href="https://theconversation.com/does-raising-the-minimum-wage-kill-jobs-economists-have-been-trying-to-answer-this-question-for-a-century-and-finally-starting-to-gather-data-157575">Does raising the minimum wage kill jobs? Economists have been trying to answer this question for a century – and finally starting to gather data</a>
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<p>But other economists have argued against this – for example, <a href="https://davidcard.berkeley.edu/">David Card</a> and <a href="https://economics.princeton.edu/alan-krueger/">Alan Krueger</a>, who published several controversial empirical works in the 1990s finding increasing the minimum wage doesn’t necessarily lead to fewer jobs.</p>
<p>Not everyone agrees with Card and Krueger, however. <a href="https://www.economics.uci.edu/%7Edneumark/">David Neumark</a> and <a href="https://www.federalreserve.gov/econres/william-l-wascher.htm">William Wascher</a> evaluated the evidence and argued minimum wages do <a href="https://mitpress.mit.edu/books/minimum-wages">reduce employment opportunities</a> for less skilled workers, “especially those who are most directly affected by minimum wage”.</p>
<p>So, there is no real academic consensus on minimum wages – and not even much agreement on <a href="https://www.nber.org/papers/w28388">what the research literature really says</a>.</p>
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<h2>Effects on poverty</h2>
<p>Given all this, perhaps the better question is whether minimum-wage policies reduce poverty overall. But again, the research has been contradictory.</p>
<p>In one <a href="https://onlinelibrary.wiley.com/toc/14754991/2012/58/4">New Zealand study</a> in 2012, researchers found minimum wages do not guarantee people will escape poverty. Another <a href="https://doi.org/10.1093/oep/gpaa048">study using Irish data</a> also concluded that minimum wages may be “a blunt instrument” for tackling poverty.</p>
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Read more:
<a href="https://theconversation.com/new-zealands-health-restructure-is-doomed-to-fall-short-unless-its-funding-model-is-tackled-first-179935">New Zealand's health restructure is doomed to fall short unless its funding model is tackled first</a>
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<p>On the other hand, a 2021 US study found significant <a href="https://irle.berkeley.edu/files/2019/05/Parental-Labor-Supply-Evidence-from-Minimum-Wage-Changes-1.pdf">positive employment effects</a> for single mothers with aged children five and under, suggesting minimum wages at least have potential as a policy instrument for reducing child poverty.</p>
<p>This is particularly relevant in New Zealand for two reasons: <a href="https://www.stats.govt.nz/news/child-poverty-statistics-show-all-measures-trending-downwards-over-the-last-three-years">one in five</a> Māori children and one in four Pasifika children meet the criteria for material hardship, and Pacific people and Māori <a href="https://www.mbie.govt.nz/dmsdocument/18690-minimum-wage-review-2021">represent 10%</a> and 20% of minimum wage earners, respectively.</p>
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<h2>Minimum wage just one tool</h2>
<p>What does seem clear is that minimum wage policies are most effective as part of a complementary income support bundle, as some overseas <a href="https://www.princeton.edu/%7Edavidlee/wp/Optmin.pdf">research has shown</a> and which was supported by <a href="https://motu-www.motu.org.nz/wpapers/21_03.pdf">a comprehensive review</a> of minimum wage policies in New Zealand.</p>
<p>Examining the effects on various economic outcomes since 2000, the authors argued that minimum wage policies should be “designed and evaluated in the context of other income support policies”.</p>
<p>Those <a href="https://www.msd.govt.nz/documents/about-msd-and-our-work/publications-resources/statistics/benefit/2021/benefit-fact-sheets-snapshot-december-2021.pdf">other supports</a> include the Families Package <a href="https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/evaluation/families-package-reports">introduced in 2018</a>, which included an increase to the accommodation supplement, designed to help low income earners with rent, board or mortgages (but is not available to those in public housing).</p>
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<em>
<strong>
Read more:
<a href="https://theconversation.com/no-silver-lining-for-climate-change-pain-at-the-petrol-pump-will-do-little-to-get-us-out-of-our-cars-179190">No silver lining for climate change: pain at the petrol pump will do little to get us out of our cars</a>
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<p>The same authors recently <a href="https://www.motu.nz/our-research/population-and-labour/individual-and-group-outcomes/impact-2018-families-package-accommodation-supplement-area-changes-housing-outcomes/">investigated</a> the impact of increases in the maximum accommodation supplement rates to see if these had simply been swallowed by rising accommodation costs.</p>
<p>Their findings were <a href="https://www.beehive.govt.nz/release/government%E2%80%99s-family-package-continues-deliver-new-zealanders">encouraging</a>: more than 90% of the increase in assistance was captured by the recipients as an increase in after-rent income. A minimum wage policy has a greater chance of success when coupled with successful support policies such as this.</p>
<p>But it’s important such complementary policies are synchronised, especially given only some other social policies, such as Working for Families, are <a href="https://www.newsroom.co.nz/ideasroom/children-shouldnt-pay-for-our-broken-system">inflation-adjusted</a>.</p>
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<strong>
Read more:
<a href="https://theconversation.com/the-pandemic-exposes-nzs-supply-chain-vulnerability-be-ready-for-more-inflation-in-the-year-ahead-176232">The pandemic exposes NZ’s supply chain vulnerability – be ready for more inflation in the year ahead</a>
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<h2>Getting the mix right</h2>
<p>Elsewhere, these policy combinations have been effective. In the United States, for example, the Earned Income Tax Credit (EITC) – as its title suggests, a <a href="https://www.epi.org/publication/eitc-and-minimum-wage-work-together/">refundable tax credit</a> similar to New Zealand’s Working for Families policy – has been <a href="https://drive.google.com/file/d/1Y4qowGOfV7Uw3SfuL3Cj0jfJj7Fwb2R3/view">shown to benefit</a> low-wage workers and families in combination with a modest increase in the minimum wage. </p>
<p>Again, the combination of policies works better than either in isolation, and <a href="https://www.epi.org/publication/eitc-and-minimum-wage-work-together/">some recent studies</a> suggest EITC expansions and minimum wage hikes should be thought of in tendem as complementary policies.</p>
<p>However, one of the big challenges of integrating minimum wage settings with other policies is that each tool affects many economic outcomes. What should be the <a href="https://voxeu.org/article/optimal-minimum-wages">optimal level</a> of minimum wages? How do minimum wage hikes interact with other supporting policies? </p>
<p>While there have been some official <a href="https://www.mbie.govt.nz/dmsdocument/18690-minimum-wage-review-2021">efforts to measure</a> the relationship between the minimum wage and other state interventions, this needs to go further in order to find the right policy mix – especially during a year that will see continued high inflation, low growth and economic uncertainty.</p><img src="https://counter.theconversation.com/content/178749/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Murat Ungor does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Opinion and evidence differ on minimum wage policies, but one thing seems clear – they need to be better integrated within a wider economic support strategy.Murat Ungor, Senior Lecturer in Economics, University of OtagoLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1662512021-11-10T13:39:40Z2021-11-10T13:39:40ZThe federal poverty line struggles to capture the economic hardship that half of Americans face<figure><img src="https://images.theconversation.com/files/429733/original/file-20211102-29191-p6bxrc.jpg?ixlib=rb-1.1.0&rect=251%2C242%2C2452%2C1302&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Low-wage workers march in Washington on Aug. 2, 2021.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/the-poor-peoples-campaign-rallied-and-marched-in-washington-news-photo/1234447749?adppopup=true">Michael Nigro/Pacific Press/LightRocket via Getty Images</a></span></figcaption></figure><p>Michael Chase works two jobs in southeast Ohio: one as a hotel night clerk and one as retail support – sorting through donations, setting new merchandise out, cleaning – at a nonprofit. </p>
<p>His schedule is not fixed in either job, and his hours are not guaranteed. Some weeks he works back-to-back eight-hour shifts. Some weeks he works fewer than 30 hours. Neither job offers sick leave, vacation time or health insurance. </p>
<p>Chase shares an apartment with three other people, something he finds stressful. And he is not always confident that he can make his portion of the rent. Between the two jobs, Chase earns less than US$16,000 a year. While it may not sound like a lot, that places him well above the federal <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines">poverty line for a single person</a>: $12,760. </p>
<p>As a <a href="https://cmpascale.org/">sociologist</a> concerned with inequality, I spent one year conducting field work and interviews across the country for <a href="https://www.researchgate.net/publication/351391040_Living_on_the_Edge_When_Hard_Times_Become_A_Way_of_Life">my recent book</a>, which examines how Americans cope with economic struggles amid stagnant wages and rising costs of living.</p>
<p>Nearly everyone I interviewed worked multiple service industry jobs. Yet I didn’t meet anyone who thought of themselves as poor. </p>
<p>More commonly they referred to themselves as the struggling class: They struggle economically and hold an often unfounded hope that things will get better. But you can’t work your way out of poverty in low-wage jobs.</p>
<p>Low-wage jobs in the 21st century are not only the lowest rung on a career ladder, they are often the only rung. </p>
<p>Across the country, <a href="https://www.cnbc.com/2021/03/02/the-7point25-minimum-wage-doesnt-help-families-pay-the-bills-in-any-state.html">millions of low-wage workers</a> like Chase struggle to pay their bills each month, despite holding multiple jobs. </p>
<h2>Defining poverty</h2>
<p>“I’m fine,” Chase told me. “I don’t consider myself poor … I guess I would say I am struggling a little bit. For me, people who don’t have food are poor. Or someone who can’t feed their kids, or you might not have running water or even electricity. You don’t have the right things you need to even survive.” </p>
<p>Chase was not unusual in his assessment of poverty. </p>
<p>The economic struggles of millions in the United States are erased by the federal definition of the poverty line and by outdated conceptions of low-wage work.</p>
<p><a href="https://www.brookings.edu/blog/the-avenue/2019/11/21/low-wage-work-is-more-pervasive-than-you-think-and-there-arent-enough-good-jobs-to-go-around/">A recent study</a> by the Brookings Institution defined low-wage work as a median hourly wage of $10.22, or $17,950 per year. By this measure, 44% of all workers in the U.S. are low-wage earners. </p>
<p>In 2021, according to the National Low Income Housing Coalition, a worker needs to earn <a href="https://reports.nlihc.org/oor">$20.40 per hour</a> to be able to afford a modest one-bedroom apartment anywhere in the country. That’s an annual salary of $40,800 – more than twice what Brookings refers to as the median wage for low-wage work. </p>
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<a href="https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="Low wage workers protest." src="https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=384&fit=crop&dpr=1 600w, https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=384&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=384&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=483&fit=crop&dpr=1 754w, https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=483&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/429734/original/file-20211102-54186-m0mg54.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=483&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
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<span class="caption">Low-wage workers and supporters protest for a $15 an hour minimum wage on Nov. 10, 2015 at Foley Square in New York City.</span>
<span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/low-wage-workers-and-supporters-protest-for-a-15-an-hour-news-photo/496587478?adppopup=true">Cem Ozdel/Anadolu Agency via Getty Images</a></span>
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<p>Federal data shows that roughly <a href="https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2019">51% or workers</a> live on less than $35,000 annually. Low wages, unreliable hours and a lack of benefits have come to dominate the U.S. economic landscape. </p>
<p>To understand the economic hardship that more than half of Americans face, it is critical that researchers shift their thinking away from an outdated federal measure of poverty. Instead, they should focus on measures of self-sufficiency. </p>
<h2>Economic self sufficiency</h2>
<p>Economic self-sufficiency is the ability to reliably meet basic needs, including food, housing, transportation, child care, medical expenses and other necessities.</p>
<p>The <a href="https://www.epi.org/about/">Economic Policy Institute</a>, a nonpartisan think tank, provides a <a href="https://www.epi.org/resources/budget/">Family Budget Calculator</a> that calculates measures of economic self-sufficiency across the country. </p>
<p>The organization provides a transparent estimate of what it costs to be economically self-sufficient. It is not a calculation of poverty. </p>
<p>The calculations are based on <a href="https://www.fns.usda.gov/cnpp/usda-food-plans-cost-food-reports">Department of Agriculture data</a> such as food costs and <a href="https://www.huduser.gov/portal/datasets/fmr.html">Fair Market Rent</a>, a measure developed by the Department of Housing and Urban Development to determine payments for housing assistance programs. </p>
<p>In southeast Ohio, the self-sufficiency budget for Chase provided by the Economic Policy Institute calculator is $34,545 – more than twice what he earns and nearly three times the federal poverty line. </p>
<p>If Chase lived in San Francisco, his economic self-sufficiency budget would be $69,072. Across the bay in Oakland, California, it would be $57,383. Keep in mind that the federal poverty line for a single person living anywhere in the U.S. is $12,760. </p>
<p>For families, the gap between the federal poverty line and economic self-sufficiency is even wider. Self-sufficiency for two adults with two children who live in San Francisco requires an annual income of $148,440, while the federal poverty line for this same <a href="https://aspe.hhs.gov/topics/poverty-economic-mobility/poverty-guidelines/prior-hhs-poverty-guidelines-federal-register-references/2020-poverty-guidelines/2020-poverty-guidelines-computations">family of four in 2020 was $25,701</a>.</p>
<p>[<em><a href="https://theconversation.com/us/newsletters/politics-weekly-74/?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=politics-important">Get The Conversation’s most important politics headlines, in our Politics Weekly newsletter</a>.</em>]</p>
<p>Self-sufficiency calculations vary by region. For example, self-sufficiency for this same family of four in Athens County, Ohio, would require an income of $72,284; in the Sioux City metro area of South Dakota, this family would need $78,935 to meet all of their basic needs.</p>
<p>Self-sufficiency measures are not perfect. </p>
<p>The Economic Policy Institute calculations do not consider debt, which can be significant. Further, the calculation relies on Fair Market Rent, which designates regional rents in the 40th percentile as fair market. This means that in any area, 60% of housing is more expensive than Fair Market Rent. </p>
<p>For Chase in Ohio, a livable one-bedroom apartment runs $800 to $1,300 a month, but Fair Market Rent allocates only $605 for rent.</p>
<p>Despite these problems, measures of self-sufficiency are more effective than the federal poverty line. By delineating the costs of basic expenses, they draw a far more accurate line of where poverty begins.</p>
<p>It might seem like a matter of common sense that the nation needs to calculate how much families actually need to spend on basic expenses in order to understand where poverty begins. But policymakers still rely on the federal poverty line for calculating economic safety nets. A measure of self-sufficiency would enable the nation to identify levels of economic need as they exist – and therefore to establish effective safety nets.</p><img src="https://counter.theconversation.com/content/166251/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Celine-Marie Pascale does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Millions of Americans struggle to pay their bills each month, despite earning wages well above the federal poverty line and holding multiple jobs.Celine-Marie Pascale, Professor of Sociology, American UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1712912021-11-05T05:21:53Z2021-11-05T05:21:53ZLoophole closed: the minimum wage for farm workers is long overdue<figure><img src="https://images.theconversation.com/files/430438/original/file-20211105-15-frqbze.jpg?ixlib=rb-1.1.0&rect=0%2C0%2C6000%2C3000&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The Fair Work Commission’s ruling that Australian farm workers paid piece rates to pick fruit and vegetables must now get a base wage of $25.41 an hour is long overdue and absolutely necessary.</p>
<p>In theory, anyone working in Australia should be paid a minimum wage. But piecework payments, by which workers are paid solely on what they produce with no guarantee of a minimum rate, have lingered on as a common practice in the agricultural sector. </p>
<p>As the commission’s <a href="https://www.fwc.gov.au/documents/documents/awardmod/variations/2020/am2020104-2021fwcfb5554summary-fwc-031121.pdf">ruling notes</a>: “A substantial proportion of the seasonal harvesting workforce are engaged on piece rates and more than half of the seasonal harvesting workforce are temporary migrant workers. These characteristics render the seasonal harvesting workforce vulnerable to exploitation.”</p>
<p>Piecework arrangements needn’t be exploitative. It depends on the rates – whether they’re enough to make a living in a bad season, when fruit is scarce. By law, they should be. In practice they haven’t been. The Fair Work Commission has acknowledged and sought to address this. It’s about time.</p>
<h2>Underpayment is an open secret</h2>
<p>The Horticulture Award, which covers farm fruit and vegetable pickers, does set minimum weekly and hourly rates. But it also permits full-time, part-time or casual employees to make a piece-rate agreement with their employee. </p>
<p>Such agreements must be entered into “without coercion or duress”, and the agreed rate is meant to “enable the average competent employee to earn at least 15% more per hour than the minimum hourly rate” set in the award. </p>
<p>This has not been the reality for many. </p>
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Read more:
<a href="https://theconversation.com/weve-let-wage-exploitation-become-the-default-experience-of-migrant-workers-113644">We've let wage exploitation become the default experience of migrant workers</a>
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<p>In 2017 the <a href="https://static1.squarespace.com/static/593f6d9fe4fcb5c458624206/t/5a11ff31ec212df525ad231d/1511128887089/Wage+theft+in+Australia+Report_final_web.pdf">National Temporary Migrant Work Survey</a> found wage theft common for migrant workers. Of 4,322 participants in the survey, 46% earned no more than $15 an hour, while 30% earned $12 a hour or less. Wage theft was prevalent across a range of industries, but the worst paid jobs were in farm work. Of the migrants working as fruit and vegetable pickers, 31% earned $10 per hour or less, while 15% earned $5 an hour or less. </p>
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<img alt="" src="https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=338&fit=crop&dpr=1 600w, https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=338&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=338&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=424&fit=crop&dpr=1 754w, https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=424&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/430442/original/file-20211105-13-1ktxmed.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=424&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Numerous studies have found wage theft rife in the horticultural sector, with piece rates being the most common means for underpay workers.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>A 2019 study by Unions NSW and the <a href="https://www.migrantworkers.org.au/">Migrant Worker Centre</a>
in Victoria found similarly grim results. Of 1,300 migrant workers surveyed, 78% reported being underpaid at some point, and 34% on piece rates had never signed an agreement. The lowest piece rates reported were from grape and zucchini farms, where respondents reported earning as little as $9 a day.</p>
<p>Just ask any backpacker working in the sector if they know anyone who has been ripped off. It’s not exactly a secret. I’ve picked fruit myself and experienced it firsthand. </p>
<h2>A particularly vulnerable workforce</h2>
<p>It is worth noting that not all migrant farm workers have been equally vulnerable.</p>
<p>The Seasonal Worker Program, for workers from nine Pacific nations and Timor Leste, has been more tightly regulated, and generally successful in avoiding the sort of exploitation described above. In 2019 this program offered about 12,000 visas. Stephen Howes of the <a href="https://devpolicy.crawford.anu.edu.au/">Development Policy Centre</a> has argued the program could be expanded to <a href="https://www.farmonline.com.au/story/6969723/seasonal-worker-program-could-be-increased-tenfold-but-not-in-asia/">more than 100,000 places</a>.</p>
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<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-closing-our-borders-to-foreign-workers-could-see-fruit-and-vegetable-prices-spike-134919">Why closing our borders to foreign workers could see fruit and vegetable prices spike</a>
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</em>
</p>
<hr>
<p>Far more vulnerable to exploitation have been those on the more laissez-faire Working Holiday Maker Scheme – better known as the backpackers’ visa. This visa requires 88 days of farm work to stay in Australia for a year, and a further 180 days to stay for a second year. The evidence is that many accept being underpaid for those periods as a cost of staying in Australia. </p>
<p>Newly arrived Australian residents, particularly refugees, are also at risk, due to unfamiliarity with working rights and entitlements.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/why-australian-unions-should-welcome-the-new-agricultural-visa-169837">Why Australian unions should welcome the new Agricultural Visa</a>
</strong>
</em>
</p>
<hr>
<h2>Closing a loophole</h2>
<p>If piece rates are set at a fair level, and the agreement is truly voluntary, such payment can be win-win – good for the farmer and an opportunity for a motivated worker to earn better money than just working for a flat minimum rate. </p>
<p>A lot of my career has involved working abroad in places where the poor and unconnected have no hope of getting ahead. Researching on Australian agriculture I’ve often been touched by the stories I’ve heard of experienced pickers, who plan to keep picking to save enough money to buy land of their own. They tend to be fierce and hard-working. You don’t want to get between them and the good fruit.</p>
<figure class="align-center ">
<img alt="Picking apples from apple tree." src="https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/430443/original/file-20211105-17-a4qz4z.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Earning more than the Horticulture Award’s minimum rates through a piece-rate agreement does happen, but it is the exception rather than the norm.</span>
<span class="attribution"><span class="source">Shutterstock</span></span>
</figcaption>
</figure>
<p>But not everyone is an experienced picker able to look out for their own interests. That is why a base rate is essential.</p>
<p>The problem with the piecemeal rate provisions in the the Horticulture Award was that clause 15.2(i) stated: </p>
<blockquote>
<p>Nothing in this award guarantees an employee on a piecework rate will earn at least the minimum ordinary time weekly rate or hourly rate in this award for the type of employment and the classification level of the employee, as the employee’s earnings are contingent on their productivity.</p>
</blockquote>
<p>The Australian Workers Union applied in December 2020 to have this clause struck out and replaced with a provision setting a minimum hourly rate for piecework. This application was supported by the United Workers’ Union, the Australian Council of Social Service, and the state governments of Queensland, Victoria and Western Australia. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-migrant-workers-are-critical-to-the-future-of-australias-agricultural-industry-66422">How migrant workers are critical to the future of Australia's agricultural industry</a>
</strong>
</em>
</p>
<hr>
<p>The application was opposed by the Australian Fresh Produce Alliance, the Australian Industry Group and the National Farmer’s Federation.</p>
<p>In its decision <a href="https://www.fwc.gov.au/documents/documents/awardmod/variations/2020/am2020104-2021fwcfb5554summary-fwc-031121.pdf">on October 3</a>, the Fair Work Commission said while some pieceworkers earn significantly more than the target rate for the “average competent employee”, the totality of the evidence “presents a picture of significant underpayment of pieceworkers”.</p>
<p>The best way to look at this is the Fair Work Commission closing a loophole.</p>
<p>It was already the responsibility of employers to pay piece rates high enough to allow competent workers make 15% more the minimum wage. Rather than thinking of this ruling as imposing an “extra cost” on farmers, it should been seen as putting in place a mechanism to ensure compliance with law. </p>
<p>A base rate takes the prospect of vulnerable workers getting paid $3 an hour off the table. That’s not asking for a lot.</p><img src="https://counter.theconversation.com/content/171291/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Michael Rose's research has been undertaken with support from the Pacific Research Program, funded by the Department of Foreign Affairs and Trade. The views are those of the author only.</span></em></p>Australia’s Fair Work Commission has struck out a legal loophole allowing employers to pay farm workers exploitative piecemeal rates.Michael Rose, Research fellow, Australian National UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1575752021-10-18T12:19:51Z2021-10-18T12:19:51ZDoes raising the minimum wage kill jobs? Economists have been trying to answer this question for a century – and finally starting to gather data<figure><img src="https://images.theconversation.com/files/426800/original/file-20211017-7324-14t3jlc.jpg?ixlib=rb-1.1.0&rect=119%2C87%2C5209%2C3459&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The fight over the minimum wage continues.</span> <span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/MinimumWageProtest/590686ec283c4099b9bbe98af4d14942/photo?Query=minimum%20wage%20protest&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=533&currentItemNo=0">AP Photo/John Raoux</a></span></figcaption></figure><p>California’s new fast food law <a href="https://www.cnn.com/2022/09/05/business/fast-food-council-california/index.html">is expected to lead</a> to a higher minimum wage for the industry in the state – as high as US$22 in 2023, up from $15 as of September 2022.</p>
<p>While backers say the <a href="https://www.upi.com/Top_News/US/2022/09/05/california-governor-Gavin-Newsom-signed-fast-food-accountability-bill-law-workers-higher-pay/6731662413619/">law is necessary</a> to ensure fair wages and treatment in California’s fast food industry, restaurant owners argue it will raise costs by $3 billion, resulting in higher prices and lost jobs. </p>
<p>Are they right – does raising the minimum wage kill jobs?</p>
<h2>Conventional wisdom</h2>
<p>For decades it was conventional wisdom in the field of economics that a <a href="https://www.doi.org/10.1111/j.1467-8543.2009.00723.x">higher minimum wage results in fewer jobs</a>. </p>
<p>In part, that’s because it’s based on the <a href="https://www.investopedia.com/terms/l/law-of-supply-demand.asp">law of supply and demand</a>, one of the most well-known ideas in economics. Despite it being called a “law,” it’s actually two theories that suggest if the price of something goes up – wages, for example – demand will fall – in this case, for workers. Meanwhile, their supply will rise. Thus an introduction of a high minimum wage would cause the supply of labor to exceed demand, resulting in unemployment. </p>
<p>But these are just theories with many built-in assumptions.</p>
<p>Then, in 1994, David Card, an economist at the University of California, Berkeley, and <a href="https://theconversation.com/introducing-david-card-the-2021-nobel-prize-in-economics-winner-who-made-the-minimum-wage-respectable-169715">one of 2021’s Nobel winners</a>, and the <a href="https://www.vox.com/future-perfect/2019/3/19/18271276/alan-krueger-economist-death-minimum-wage-princeton">late Alan Krueger</a> <a href="https://davidcard.berkeley.edu/papers/njmin-aer.pdf">used a natural experiment to show that</a>, in the real world, this doesn’t actually happen. In 1992, New Jersey increased its minimum wage while neighboring Pennsylvania did not. Yet there was little change in employment. </p>
<p>When I discuss their work in my economics classes, however, I don’t portray it as an example of economists providing a definitive answer to the question of whether minimum wage hikes kill jobs. Instead, <a href="http://veronika-dolar.sunycreate.cloud/oer-econ/the-minimum-wage/">I challenge my students</a> to think about all the ways one could answer this question, which clearly cannot be settled based on our beliefs. But rather, the answer requires data – which in economics, can be hard to come by.</p>
<h2>Using models to study behavior</h2>
<p>Economics studies the production, distribution and consumption of goods and services. And so, like other social sciences, economics is fundamentally <a href="https://corporatefinanceinstitute.com/resources/knowledge/economics/what-is-economics/">interested in human behavior</a>. </p>
<p>But humans behave in a wide variety of often hard-to-predict ways, with countless complications. As a result, economists rely on <a href="https://www.doi.org/10.1016/S1514-0326%2811%2960002-0">abstraction and theory</a> to <a href="https://www.imf.org/external/pubs/ft/fandd/2011/06/basics.htm">create models</a> in hopes of representing and explaining the complex world that they are studying. This emphasis on complicated mathematical models, theory and abstraction has made economics a lot less accessible to the general public than other social sciences, such as psychology or sociology. </p>
<p>Economists also use these models to answer important questions, such as, “<a href="https://review.chicagobooth.edu/blog/2015/september/what-economists-think-about-a-15-minimum-wage">Does a minimum wage cause unemployment</a>?” In fact, this is one of the <a href="https://cepr.net/documents/publications/min-wage-2013-02.pdf">most studied questions</a> in all of economics <a href="https://www.doi.org/10.1086/252125">since at least 1912</a>, when Massachusetts became the first state to create a minimum wage. The federal wage floor came in 1938 with the passage of the <a href="https://www.dol.gov/sites/dolgov/files/WHD/legacy/files/FairLaborStandAct.pdf">Fair Labor Standards Act</a>. </p>
<p>And it’s been controversial ever since. <a href="https://www.washingtonpost.com/outlook/2021/02/24/minimum-wage-economic-research-job-loss/">Proponents argue</a> that a higher minimum wage helps <a href="https://www.americanprogress.org/issues/economy/reports/2021/02/25/496355/small-businesses-get-boost-15-minimum-wage/">create jobs</a>, <a href="https://www.businessforafairminimumwage.org/news/001757/florida-business-owners-say-minimum-wage-increase-will-boost-consumer-spending-economy">grow the economy</a>, fight poverty and reduce wage inequality. </p>
<p>Critics stress that minimum wages <a href="https://www.cato.org/commentary/let-data-speak-truth-behind-minimum-wage-laws">cause unemployment</a>, <a href="https://www.forbes.com/sites/adammillsap/2018/09/28/how-higher-minimum-wages-impact-employment/?sh=48a3937c1e7d">hurt the economy</a> and actually <a href="https://www.doi.org/10.1111/j.1465-7287.2006.00045.x">harm the low-income people</a> that were supposed to be helped.</p>
<h2>A tale of two theories</h2>
<p>Most students in my introductory microeconomics class can easily show, using the <a href="https://saylordotorg.github.io/text_microeconomics-theory-through-applications/s14-02-the-effects-of-a-minimum-wage.html">standard supply and demand model</a>, that an increase in the minimum wage above the level that the market sets on its own should drive up unemployment. In fact, this is one of <a href="https://ideas.repec.org/a/taf/fosoec/v49y2020i1p51-74.html">the most commonly used examples</a> in introductory economics textbooks. </p>
<p>However, <a href="https://www.doi.org/10.1504/IJPEE.2013.055446">this result assumes</a> a perfectly competitive labor market in which workers and employers are abundant and employees can change jobs with ease. This is rarely the case in the <a href="https://obamawhitehouse.archives.gov/sites/default/files/page/files/20161025_monopsony_labor_mrkt_cea.pdf">real world</a>, where a <a href="https://www.economicsonline.co.uk/Business_economics/Monopsony.html">few companies frequently dominate</a> in what are known as monopsonies. </p>
<p>And so <a href="https://www.jstor.org/stable/1801842">others theorized</a> that because these monopsonistic companies had the power to set wages artificially low, a higher minimum wage could, perhaps counterintuitively, <a href="https://www.cbo.gov/system/files/2019-12/CBO-55410-MinimumWage-Monopsony.pdf">prompt companies</a> to hire more workers in order to recover some of their lost profitability as a result of the increased labor costs. </p>
<p>How can economists tell which of these two theories may be right? They need data. </p>
<figure class="align-center ">
<img alt="David Card laughs as he leans against a balcony on campus in Berkeley, California." src="https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426813/original/file-20211017-13-16uhiq9.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">David Card won the Nobel in economics in 2021 for his work on the minimum wage.</span>
<span class="attribution"><a class="source" href="https://newsroom.ap.org/detail/NobelEconomicsPrize/f4d05bf80cf8427f8e3de6fd64ad8617/photo?Query=David%20card&mediaType=photo&sortBy=arrivaldatetime:desc&dateRange=Anytime&totalCount=1490&currentItemNo=4">AP Photo/Noah Berger</a></span>
</figcaption>
</figure>
<h2>Data trumps theory</h2>
<p>Studying the real world is difficult, and it’s constantly changing, so it is not easy to obtain all the relevant evidence. </p>
<p>Unlike in medicine or other sciences, economists cannot conduct <a href="https://www.sciencedirect.com/topics/medicine-and-dentistry/controlled-clinical-trial">rigidly controlled clinical trials</a>, a method vaccinologists <a href="https://clinicaltrials.gov/ct2/show/NCT04904471">used to test the efficacy of COVID-19 vaccines</a>. Due to financial, ethical or practical constraints, we cannot easily split people into treatment or control groups – as is common in psychology. And we cannot randomly assign a higher minimum wage to some and not others and observe what will happen, which is how a biomedical scientist might study the impact of various treatments on human health. </p>
<p>And in studying the minimum wage, we cannot simply look at past times when it was increased and check what happened to unemployment a few weeks or months later. There are many other factors that affect the labor market, such as outsourcing and immigration, and it’s virtually impossible to isolate and pin down one factor such as a minimum wage hike as the cause. </p>
<p>This is where the pioneering work of natural experiments like the ones Card and Krueger <a href="https://scholar.google.com/citations?user=lqmGJIkAAAAJ&hl=en&oi=ao">used over the years</a> to study the effects of raising the minimum wage and other policy changes comes in. It began with their 1994 paper, but <a href="https://books.google.com/books?hl=en&lr=&id=CC_FCgAAQBAJ&oi=fnd&pg=PP1&dq=info:o9hZ4ezUXKsJ:scholar.google.com&ots=bOEtgn8gRq&sig=s18P740j2naHGn7BIQOAAB-UWss#v=onepage&q&f=false">they replicated the findings</a> with other studies that have deepened the amount of data that shows the original theory about the minimum wage causing job losses is likely wrong. </p>
<p>Their approach isn’t without flaws – mostly technical ones – and, in fact, economists <a href="https://www.epi.org/publication/importance-study-design-minimum-wage-debate/">still don’t have a clear answer</a> to the question about the minimum wage that I posed earlier in this article. But because of Card, Krueger and their research, the debate over the minimum wage has gotten a lot less theoretical and much more empirical.</p>
<p>Only by studying how humans actually behave can economics hope to make meaningful predictions about how a policy change like increasing the minimum wage is likely to affect the behavior of the economy and the people living in it.</p>
<p><em>This is an updated version of an article originally published on Oct. 18, 2021.</em></p><img src="https://counter.theconversation.com/content/157575/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Veronika Dolar does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Opponents of a new California law that may lift the minimum wage for fast food workers claim it’ll cost jobs. How raising it affects employment is among the most studied issues in all of economics.Veronika Dolar, Assistant Professor of Economics, SUNY Old WestburyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1697682021-10-14T19:35:53Z2021-10-14T19:35:53ZNobel winner David Card shows immigrants don’t reduce the wages of native-born workers<figure><img src="https://images.theconversation.com/files/426445/original/file-20211014-17-lo1wrl.jpg?ixlib=rb-1.1.0&rect=0%2C1077%2C6048%2C2924&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Canadian David Card, winner of the 2021 Nobel Prize in economics, stands for a portrait in Berkeley, Calif. Card, a professor at the University of California, Berkeley, received the award for his research on minimum wages and immigration. </span> <span class="attribution"><span class="source"> (AP Photo/Noah Berger)</span></span></figcaption></figure><p>Applied economists spend a large fraction of their time trying to squeeze meaningful answers — <a href="https://www.ft.com/content/c2128178-d509-11e7-8c9a-d9c0a5c8d5c9">causal effects</a> — out of observational data. </p>
<p>Unlike the natural sciences, we can’t run experiments in order to answer the big questions in our field. If we want to know, for example, how raising the minimum wage affects unemployment, we must rely on real-world data generated by employers and their workers and customers. </p>
<p>But it’s not as easy as simply comparing unemployment rates in two jurisdictions with different minimum wage policies. <a href="https://worldpopulationreview.com/country-rankings/minimum-wage-by-country">Minimum wage legislation is a policy choice</a>, and these choices are a function of a range of economic and political forces that also likely explain unemployment rates. That means our ability to learn anything about the effect of minimum wage hikes from a simple “apples and oranges” comparison of this nature is very limited. </p>
<p>Canadian economist David Card received a share of this year’s Nobel prize in economics largely for developing credible methods for teasing causal effects from this type of observational data. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/introducing-david-card-the-2021-nobel-prize-in-economics-winner-who-made-the-minimum-wage-respectable-169715">Introducing David Card, the 2021 Nobel Prize in Economics winner who made the minimum wage respectable</a>
</strong>
</em>
</p>
<hr>
<p>While the native of Guelph, Ont., has written too many high-impact papers to mention here, economists often associate his name with two landmark, highly influential studies, which we all learn in graduate school.</p>
<p>The first, <a href="http://sims.princeton.edu/yftp/emet04/ck/CardKruegerMinWage.pdf">which examines the effect of minimum wages on unemployment</a>, has received much attention in the wake of the Nobel announcement. So let’s focus on the second, in which Card <a href="https://doi.org/10.1177/001979399004300205">combined a clever technique with data generated by a unique historical event to credibly answer how large-scale immigration from a poor country affects the wages of native-born citizens</a>.</p>
<h2>The Mariel Boatlift</h2>
<p>Between April and October of 1980, about <a href="https://www.history.com/news/mariel-boatlift-castro-carter-cold-war">125,000 people escaped Cuba from the Port of Mariel, landing as refugees in Miami</a>. What became known as the Mariel Boatlift suddenly and dramatically increased Miami’s local labour force by about seven per cent.</p>
<p>This is a prime example of a “<a href="https://www.britannica.com/science/natural-experiment">natural experiment</a>,” which social scientists are much better able to recognize and exploit today due in part to Card’s trail-blazing early work. </p>
<p>Though it would be impossible to study the effect of mass immigration on native employment and wages in a true laboratory setting, Card realized that the Mariel Boatlift was the next best thing as the city of Miami experienced an unexpected major immigration shock for reasons that had little, if anything, to do with wages or employment in the community. </p>
<figure class="align-center ">
<img alt="A U.S. Marine in uniform helps a Cuban toddler dressed only in a diaper off a boat." src="https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=373&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=373&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=373&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=469&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=469&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426467/original/file-20211014-20-19bfzdw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=469&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">In this 1980 photo, a U.S. Marine helps a young Cuban child off a refugee boat in Key West, Fla.</span>
<span class="attribution"><span class="source">(AP Photo/Fernando Yovera)</span></span>
</figcaption>
</figure>
<p>The method he used is a classic example of what has become a standard tool in the applied economist’s toolkit, known as “<a href="https://www.sciencedirect.com/topics/economics-econometrics-and-finance/difference-in-differences">difference in differences</a>.” By comparing the difference in Miami wages from before and after the boatlift to the same difference over time in a group of U.S. control cities, Card was able to credibly estimate the causal effect of large-scale immigration of low-skill workers in the local labour market.</p>
<p>Card found a “null” effect — not only were native wages and unemployment unaffected by the seven per cent increase in the labour force in Miami, there was specifically no effect on native-born low-skill workers, defined as those with at most a high school degree. These findings were at odds with a lot of <a href="https://www.brookings.edu/blog/brookings-now/2017/08/24/do-immigrants-steal-jobs-from-american-workers/">anti-immigration sentiment</a> in both the U.S. and Canada.</p>
<h2>Testing Economics 101</h2>
<p>Card’s finding challenged the conventional wisdom of the time and ultimately forced economists to rethink the <a href="https://www.bloomberg.com/opinion/articles/2019-09-19/econ-101-is-about-basic-economic-ideas-what-if-they-re-wrong">Economics 101</a> model of immigration and wage settings in the labour market. In the dominant thinking of the time, mass immigration represents a major increase in labour supply, which should lead to a decrease in the price of labour — in other words, lower wages and less work for native-born citizens. </p>
<p>Why would a massive influx of workers to a city fail to assert downward pressure on native wages and employment? More than 30 years after Card’s paper was published, immigration and labour economists are <a href="https://www.theatlantic.com/politics/archive/2016/01/the-great-immigration-data-debate/424230/">still reckoning</a> with his key findings, and a whole new set of theories and empirical studies are on the table. </p>
<p><a href="https://doi.org/10.1257/app.1.3.135">One theory</a> with some supporting evidence is that foreign workers and native workers can be “<a href="https://www.nber.org/papers/w12956">imperfect substitutes</a>” in production. In other words, foreign workers and native workers can specialize in different tasks, and a major influx of immigrants might cause native-born workers to reallocate their labour to their comparative advantage.</p>
<p>For example, native workers have an advantage in jobs that require strong local language skills, and part of the reason the Miami economy was able to absorb the large influx of workers so easily is that native-born workers reallocated their labour to jobs that require strong English-language communication skills. </p>
<figure class="align-center ">
<img alt="People celebrate at a festival and wave Cuban and American flags." src="https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=442&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=442&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=442&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=555&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=555&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426460/original/file-20211014-21-1r98hpg.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=555&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">People wave American and Cuban flags as they dance to music at the Calle Ocho Festival, the largest Hispanic festival in the U.S. that attracts thousands to the Little Havana neighbourhood of Miami every year.</span>
<span class="attribution"><span class="source">(AP Photo/Wilfredo Lee)</span></span>
</figcaption>
</figure>
<p>But the case is far from closed on this issue, and part of Card’s legacy is the continued attempt to rigorously understand the relationship between immigration and the labour market. </p>
<h2>Card’s profound influence on economics</h2>
<p>There is a nice parallel here with Card’s other landmark paper on the minimum wage. It also involved an early application of the difference-in-differences methodology to a couple of American states, one that upped its minimum wage and another that didn’t. </p>
<p>There too, Card found a null effect — a modest increase in the minimum wage had no effect on worker unemployment. This finding also sent labour economists back to the drawing board, as it effectively refuted the accepted wisdom at the time that government-imposed wage increases should reduce demand for workers and lead to higher unemployment. The result has been continued careful study on <a href="https://doi.org/10.1093/qje/qjz014">how the minimum wage affects unemployment</a>. </p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="A man in a blue jacket sits at his desk with a laptop in front of him." src="https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=399&fit=crop&dpr=1 600w, https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=399&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=399&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=502&fit=crop&dpr=1 754w, https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=502&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/426465/original/file-20211014-25-vwkli3.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=502&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Card sits in his office at the University of California, Berkeley.</span>
<span class="attribution"><span class="source">(AP Photo/Noah Berger)</span></span>
</figcaption>
</figure>
<p>It’s remarkable that, in a field that disproportionately rewards the discovery of large causal effects, Card has been recognized for helping revolutionize the practice of applied economics by writing two papers that showed null effects.</p>
<p>The impact Card has had on economics is hard to overstate. He is rightfully considered one of the engineers of the so-called “<a href="https://www.economist.com/finance-and-economics/2021/10/11/the-nobel-prize-in-economics-celebrates-an-empirical-revolution">credibility revolution</a>” in economics, which has made empirical economics the area of choice for the vast majority of graduate students in the past 20 years. </p>
<p>Every cohort of graduate or upper-year undergraduate students is taught about the concept of difference in differences through the lens of Card’s famous work, and it is hard to imagine that changing any time soon.</p><img src="https://counter.theconversation.com/content/169768/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Arvind Magesan receives funding from the Social Sciences and Humanities Research Council (SSHRC)</span></em></p>Canadian economist David Card won the Nobel Prize in economics for demonstrating that large-scale immigration has no effect on the wages of native-born workers. In doing so, he’s challenged Economics 101.Arvind Magesan, Professor of Economics, University of CalgaryLicensed as Creative Commons – attribution, no derivatives.