Living Wage Movements: Global Perspectives

Living Wage Movements: Global Perspectives

Living Wage Movements: Global Perspectives

Living Wage Movements: Global Perspectives

Synopsis

Upon reviewing the empirical evidence, the contributors to this volume make strong cases both for and against living wage activism. The combination of historical, contemporary and global perspectives facilitates the evaluation of how we can address low pay at the organizational and macroeconomic levels.

Excerpt

Wage policies in industrialized countries have exemplified tensions between impersonal markets and very personal needs. Neoclassical economic theory, for example, views wage setting as impersonal and workers as a means of production. Marginal productivity theory concludes that competitive labor markets generate wages that are directly linked to productivity, or the actual job that is being performed. This wage is considered fair because of the equality of the exchange (commutative justice). If the worker considers the wage inadequate, he or she is free to search for a better bargain. Any attempts to raise wages above market-determined levels would generate inefficiencies such as unemployment. Yet there is another view of the wage-setting process. In this view, wages are also based upon workers' needs, or a socially defined level of subsistence. Human beings must have access to the goods and services necessary to support and sustain themselves and their dependants. Within social economics and other schools of heterodox economic thought, there is a rich literature on the subject of adequate living standards, how they reflect cultural norms, and how they should be defined. These approaches question the necessary efficiency of market processes. Classical economists such as Adam Smith maintained that supply and demand fluctuations in wages were short-term phenomena, but that subsistence-level wages were fundamental to viable economic growth. Karl Marx's version of the labor theory of value based wages on the necessary living standards of workers, determined through class struggle (see Figart et al. 2002: Chapter 3). As living wage movements gained momentum in the late nineteenth century, theoretical formulations based on classical political economy vied with the emerging neoclassical paradigm. Socialists, most notably Sidney and Beatrice Webb (1897), argued that capitalism was an inefficient system, wherein short-sighted employers with disproportionate bargaining power would treat individual workers as disposable commodities. Labor supply and labor demand did not enter the market on equal terms. The resulting low wages were a disincentive to technological innovation and therefore discouraged the efficient use of resources. Other living wage activists cited Pope Leo XIII, who issued an 1891 encyclical Rerum . . .
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