What do you earn?

Helen Kelly linked to an advice column in the Herald which suggests that while it’s perfectly okay to ask people how much they paid for their house, it’s a no-no to ask about their income.

It’s a great collision between two myths which reinforce a lot of terrible ideas we’re told about people, and value, and solidarity.

Of course you can ask people – with proper etiquette – what they paid for their house. House-buyingness is next to godliness. Buy a house young and you’re an entrepreneur. Own multiple properties and preach the virtues of “treat ’em mean, keep ’em keen” and you get headlines. There’s no shame in owning one house, five houses, or making millions of dollars literally being subsidized by a state which won’t provide decent housing for people in need.

But there’s plenty of shame in asking people what they earn. That’s private information, after all, and you’re an individual standing on your own two feet and by god, if other people (who aren’t as good and productive as you) find out what you get, they’ll try to steal it!

Or as advice columnist Lee Suckling put it:

Asking somebody about his or her salary is far less permissible. This is purely because it’s none of your business.

The only people that need to know how much you earn are your boss and your spouse.

It’s the gospel of self-interest. You’re an individual. You’re think as an individual. You function as a good little rational economic unit working purely for its own gain.

One of the terrible aspects of our current system is how it unnaturally pits us against each other. You certainly shouldn’t look at the other people working around you and think “we’re in this together. We’re in the same situation! We should be treated fairly and given the same pay for doing the same work.” They’re not comrades. They’re competition!

We’re meant to take it on faith that each of us – the “you” who has to protect your good deal from the avarice of your fellow labourers – is getting the best deal. And we’re meant to see this as a good thing, because the boss wants us to sit at his table in the cafeteria, not them.

We’re meant to trust that the boss is properly sharing his or her profits with the people who created them. Unfortunately, a lot of them aren’t.

That’s what a lot of people working at Google discovered when Erica Baker created a shared spreadsheet of the salaries of people working at the company. Surprise surprise – they found people weren’t being paid equally for their work. And apparently managers at Google didn’t like this. Erica Baker isn’t working there any more.

The defensiveness is kind of understandable, but also shows the benefits of transparency for everyone involved. We know about unconscious bias. Most people don’t twirl their moustaches and announce “I’m going to pay women less because I hate them”. They don’t realise they’re doing it until it’s all laid out in front of them. And if they think of themselves as good people who aren’t sexist or racist, etc, it can be a shock to discover you were being sexist or racist, etc, in practice.

(In the same way, I doubt Lee Suckling sat down at his keyboard and thought “Haha! How can I reinforce a cult of individual self-interest today? Muahahahaha!”)

A final point: if you’re in a unionised workplace with a collective agreement – and I acknowledge they’re the minority – you do see what your coworkers are earning. You know that the same job is paid at the same rate, or that everyone in your team sits in the same pay band. It doesn’t ruin morale.

What do we see when the people in a workplace or industry are in the union? Higher wages, better conditions, and fairer pay for men and women.

the incredibles coincidence

So I’m sorry, but I’m going to keep on being impolite. Because “politeness” is capitalism’s way of tricking us into not comparing notes and realising just how much we’re all getting exploited.

The lie about productivity and wages

The Productivity Commission has a new report out which looks at changes in the labour income share, or LIS, from 1978 to 2010.

The labour income share is described in the report’s summary as:

The labour income share (LIS) measures the split of national income between workers who supply labour and the owners of capital.

To a non-economist like me, that’s pretty much “how much the workers are getting out of their work and how much is going to the boss.”

The media release is pretty cheery about our labour income share:

“Even though the LIS has fallen overall in the measured sector of the New Zealand economy, the evidence is that the real wages firms pay their workers increase more rapidly when productivity growth is strong”, says Paul Conway, Director of Economics and Research.

“Over time, growth in real wages paid by firms in the measured sector was strongest during New Zealand’s period of high productivity growth from the mid-1980s to 2000 and much weaker when productivity growth was lower. Higher real-wage increases are also more likely in high-productivity-growth industries.

It sounds great, superficially. When productivity growth is high, we get the “strongest” wage increases. It makes perfect sense: obviously employers – being pure rational economic actors – pay people commensurate to their productivity. If you work harder, you get paid more.

But take another look at that first clause:

Even though the LIS has fallen overall in the measured sector of the New Zealand economy

And look at this, from the summary linked to above:

The LIS has recently been the focus of considerable international concern that growth in real wages has fallen behind growth in labour productivity. When this occurs, the LIS falls as the share of national income going to labour decreases and capital receives a bigger slice.

That is to say: even though workers are more “productive”, their income hasn’t increased in proportion to their productivity.

They’re working harder, but not getting paid more in return for it.

But the Productivity Commission urges you not to jump to any hasty conclusions:

While this work is mainly about the split of the income “pie” across labour and capital, it is also important to keep in mind the growth of the pie as a whole. For example, if productivity growth is fast enough, real wages could still be rising at a reasonable pace even when the LIS is falling. To the extent that income has an important bearing on wellbeing, this may be preferable to an economy in which the LIS is constant because real wages and productivity are both stagnating.

Ah, yes. Grow the pie. Ignore the fact your slice of it is shrinking in comparison to the bosses’.

There’s a bizarre implied threat there. Hey, workers, don’t get too antsy about the fact you’re not being fairly recompensed for producing more work, because you could be living in a dystopia where you get a fairer share but the owners are making less money!

So, what are the reasons for the globally-observed fall in LIS?

This fall in the LIS has been attributed to a number of influences, including new technology, globalisation and reductions in worker bargaining power.

New technology isn’t the problem – of course when you put Ellen Ripley in a power loader she shifts more stuff for the same effort – but “globalisation” and “reductions in worker bargaining power” are pretty telling. That means: we’re making more money exploiting labour in the developed world. That means: we smashed the unions so you have to settle for what your employer deigns to offer.

The Productivity Commission opines that this report “underline[s] the need for New Zealand to have a resilient and flexible economy which can adjust to new technology and help workers adapt to new jobs. The emphasis needs to be on adapting to change, rather than resisting it.”

But who else talks about making the economy more “flexible”? The National government, while pushing through law changes which undermine worker bargaining power.

I’m going to go with the PSA, which takes a different view:

Report confirms workers need a pay rise.

Repost: A rightwing fairytale about Labour Day

(Originally posted at On The Left.)

I was casting about for something to write today, and that’s when the Internet gave me a gift: a column from Rodney Hide, conveniently timed, which decries the role of unions and even the very history of Labour Day:

Tomorrow is Labour Day. Once again we will endure the annual claptrap that unions are great and won for us the eight-hour day. Without unions we would be working 24/7. It’s nonsense.

He cites the story of Samuel Parnell, considered the father of the eight-hour working day. Conventional history will tell you that, in a terribly union-y fashion, Parnell organised his fellow tradesmen in Wellington to refuse to work more than an eight-hour day. Rodney tells it a little differently:

Hence was born the eight-hour day. The practice caught on. For more than 100 years we have celebrated the eight-hour day as a victory for trade unionism. We know it as Labour Day which, on the fourth Monday of every October, is a public holiday.

It’s a myth. The so-called victory had nothing to do with unions. It was simple supply and demand. The demand for skilled labour was high in the new and growing settlement. The supply was low.

Parnell could have negotiated more pay. But he chose fewer hours. That was his choice. That was the free market.

The myths are actually all on Rodney’s side. The myth that good business practices just “catch on”, like a fashion trend – when the reality is that unions almost always lead the way in securing better wages and conditions for workers, which non-unionised businesses then have to keep up with – unless of course you’ve spent a few decades dismantling workers’ rights and entrenching the power of employers, so they can do things like refuse to offer frontline workers a basic guaranteed number of hours while your CEO earns $11,000 a day.

The myth that the concept of unionism can’t have been involved in Parnell’s victory, because “it was just about supply and demand”. Yes, this was a unique circumstance – in 1840 Wellington there were literally three carpenters. You couldn’t hire one from London and pop them on the next plane over.

But that doesn’t change the fact that the eight-hour victory came down to collective action. If Parnell had said “nope, only working eight hours, soz” and the other two carpenters had said “sweet, we’ll take the job” there would be no history to remember on Labour Day.

The difference is that today, very few workers are in a position to say “well there’s only three of us you can hire, so you have to take our terms.” These days, thousands of people will queue for 150 supermarket jobs. People are living in cars. They don’t have the luxury of leveraging their specialised skills in a remote corner of the world.

And thirdly, the myth that unions have never achieved anything, ever. It’s a standard rightwing line. It relies on people taking a lot of things for granted – like equal pay for women, having four weeks’ annual leave, getting sick leave, having basic health and safety protocols in the workplace.

The greatest achievement is this, though: if you’re in a union, the chances are your pay is keeping up with, or even staying ahead of, inflation. This is an old graph from a 2012 post at The Standard, but it makes the point pretty clearly:

wages graph

In the year to June 2014, 98% of workers on a collective agreement got a payrise – compared to only 48% of workers on individual agreements.

I think that’s an achievement which a lot of workers can feel pretty happy about. Because they stood together. Because they leveraged their collective power into getting real gains for themselves and their fellow workers.

One important thing to note is this. It’s easy to roll your eyes at Hide’s bizarre re-writing of history. It’s easy to insult his intelligence or imply he’s out of touch with reality. But Rodney Hide isn’t a stupid man. Rodney Hide isn’t unable to see the ridiculousness of his words.

This is why the rightwing narrative has dominated NZ political discussion for years: because they decide what story they want to tell and they push it through every avenue they have. They drown out dissent and academic arguments about what really happened or how the economy really works in practice.

Let’s not read Rodney Hide’s column as a ludicrous piece of near-satire. Let’s take it for what it is: a cynical, deliberate attempt to erase the importance of unionism from New Zealand history and perpetuate the fantasy that workers and employers are on a level playing field.

And let’s celebrate Labour Day, and the power of our unions.