The Case Against The 'Living Wage' (1931)

From the March 1931 issue of the Socialist Standard

Maxton's Curious Mixture.

On February 6th, Mr. Maxton, on behalf of the Independent Labour Party, introduced into the House of Commons a Living Wage Bill. -

The Living Wage, as defined in the Bill, "means a wage at least sufficient to meet the normal needs of the average worker regarded as a human being living in a civilised community, including the satisfaction of reasonable minimum requirements of health and efficiency and of cultural life and the provision of reasonable rest and recreation."

The amount of this living wage is to be determined by a Committee, appointed by the Board of Trade, "and which shall include among its members at least three working housewives, three representatives of trade unions, and three representatives of co-operative societies.”

The Committee is to take into account "actual retail prices and other costs of living,” in addition to various other factors, and is to review the wage at least once a year. 

The wage is then to be made obligatory on Government departments, local authorities, Government contractors, and finally on all industries. That is to say, no industry may pay less than this minimum. Should any industry not be able to afford the wage, a body called the "National Industrial Reorganisation Commission” is to have power to re-organise the industry.

The I.L.P.'s Main Plank.

Mr. Maxton explained in his House of Commons speech that the living wage proposals are the basis upon which the whole programme of the I.L.P. is built up. The programme includes many items, from increased pensions and increased unemployment pay, to nationalisation of the banks and the principal industries, and State control of the import and export trade; but "this proposal for a living wage is a pivotal proposal round which all the others are arranged.”

Miss Jennie Lee, M.P., whose name also appears on the Bill, went further and admitted that the "pivotal proposal” cannot be applied without the other proposals also being applied. She said :—

  I do not pretend that this Bill could be carried into effect without great stress and great difficulties in the country. I believe that it would mean that we should have to go in for controlled prices, and once we got on to controlled prices we shall have to control the banking system.

Let us now examine the theory behind the Living Wage Bill and ask ourselves whether its effects will be worth the time and trouble necessary to apply it. Is it worth the "great stress and great difficulties,” together with all the further measures which Miss Lee admits are necessary?

What is a Living Wage?

The backers of the Bill claim to have defined a living wage. But have they? What are "normal needs”? What is an "average worker regarded as a human being”? What are the "reasonable requirements of a civilised community”? What amount of rest and recreation are "reasonable”?

The employers regard as "reasonable” any wage which makes the worker an efficient producer of profits. Hundreds of thousands of workers in the cotton mills, on the railways, in the Civil Service and Post Office, on the land and in the mines, are getting well under 40s. for a full week's work. Miss Dorothy Evans, Secretary of the Association of Women Clerks, is reported in the Daily Herald(February 19th) as stating that women clerks in the Civil Service, 21 years of age, are paid as little as 24s. 7d. in the provinces and 31s. in London. The Daily Herald on February 17th reported that the pay of farm workers in Suffolk had just been reduced from 30s. to 28s. a week.

This last case is of special interest because agricultural workers already have their “living wage” fixed by law! The Agricultural Wages Act, 1924, passed by the Labour Government (which the I.L.P. claimed was an essentially I.L.P. Government) lays it down that the minimum wage paid to an able-bodied agricultural worker shall be

   adequate to promote efficiency and to enable a man in an ordinary case to maintain himself and his family in accordance with such standard of comfort as may be reasonable in relation to the nature of his occupation:

Translated into hard cash, this means 28s. or 30s. a week!

All Mr. Maxton proposes to do, in effect, is to substitute his nebulous phrase for the nebulous phrase in the above Act, and apply it all round.

Employers To Fix The Wage.

The Bill provides that the wage shall be fixed by a Committee including working women, trade unionists and co-operative society representatives.

The Bill does not say how many persons the Committee shall consist of, nor does it say what other interests are to be represented. It is, however, to include employers.

When the seconder, Mr. Kirkwood, M.P., was asked if employers are to be excluded, he replied, “They are not excluded ” (Hansard, February 6th, col. 2297).

So we have this extraordinary position put up by a so-called working-class party, the I.L.P., that they want the employing class to have a hand in fixing what is a living wage for the workers whom they exploit!

It will be noticed, also, that the co-operative societies are expressly brought in. Why? Does it need legislation to allow the co-operative societies to pay their own employees a living wage? The co-operative societies constantly have strikes and lockouts in their concerns, and have on several occasions been charged by their employees with paying less even than the standard rates of pay. Within the past few months there has been a strike of co-operative employees—the insurance agents. Yet the I.L.P. wants the co-operative societies, with their characteristic petty employer's outlook, to sit,with other employers on the Living Wage Committee. The extent to which the co-operative societies exploit the workers in their employ is shown by the amount of wages, and the amount of profits. The retail distributive societies in 1929 (see New Leader, February 6th) paid an average amount of £130 during the year to its wage-earning and salaried staff. The surplus left after meeting all trading expenses was over £22 million pounds, equal to a further £148 per head of the staff of 176,000. They could double the wages of their workers and still have a surplus. Why does not Mr. Maxton start his living wage campaign among his friends, the co-operators?

Another important point emerges from the composition of the Living Wage Committee. It is usual on committees of this kind for the Government to appoint equal numbers of workers’ and employers’ representatives, together with some so-called "neutral” members representing the Government. Seeing that the Labour Government during their present term of office have appointed at least two wage committees which have recommended lower wages, it certainly cannot be assumed that Labour Government representatives on a Living Wage Committee would press for a wage higher than present wages. On the other hand, the co-operators who would be there to look after their own interests as employers are regarded by Mr. Maxton as being on the workers’ side. So that in fact the Living Wage Committee will be dominated by employers.

Living Wage or Lower Wage?

How much will the minimum wage be? We are given some indication that it will actually be lower than the present average wage of industrial workers.

Miss Eleanor Rathbone, M.P., the enthusiast for lower wages by means of family allowances, gave her conditional blessing to the Bill, but wanted to be assured that the wage would not be enough to keep a family, but only enough to keep a man and wife. Miss Jennie Lee, M.P., gave the desired assurance (Hansard, February 6th, col. 2313). The effect of this is obvious, and it is the effect which Miss Rathbone makes no secret of desiring. It would mean that all unmarried and childless workers would be paid less than the standard rate of wages—to the benefit of the employing class, who would get a supply of cheaper labour. In view of the composition of the Committee, the “living wage” might well be below the present average wage of industrial workers.

The Australian Model.

A memorandum attached to the Bill refers to the Australian attempts to fix and apply a “living wage.” The reference is interesting, because it gives a practical illustration of the futility of the whole scheme. In Australia a “living wage” was fixed before the war, and the scheme has had a run of about twenty years.

Mr. Maxton claims for the living wage proposal that it would permanently raise the standard of living of the workers, and be a definite step towards Socialism. Australian experience shows that it does neither.

In the Australian Senate, on November 14th, 1930, Senator Daly, for the Government, gave the information that, after allowing for the increase in unemployment and the increase in prices, the average real wage in 1929-30 was almost exactly the same as it was in 1911-12. Then in January of this year the Arbitration Court ordered a reduction of 10 per cent. in the basic wage (see Daily Telegraph, January 23rd). This reduction is quite separate from the regular adjustments for alterations in the cost of living. So that after twenty years of “living wageism” the Australian workers are now 10 per cent. worse off than when they started, and are not one iota nearer to Socialism than they were then. That is how capitalism has worked havoc with all the pretty but false theories of the Australian reformers of capitalism. Capitalism here would quickly falsify every one of the flashy. promises of the I.L.P.

Capitalism and Wages.

The living wage scheme is as full of holes as a sieve. Every attempt to fix a statutory wage has run up against the snag of unemployment. If the living wage is not higher than the existing one, it is useless. If it is higher, it will give the employers an added inducement to instal labour-saving machinery and thus increase unemployment. This tendency to instal machines operates in agriculture to-day, in spite of the low level of wages fixed by the Wages Committees.

How is the living wage to be enforced? Anyone who has seen at close hand the operation of the Agricultural Wages Act knows that in many districts the minimum rates are largely ignored. The men prefer to take less than the minimum rather than lose their employment. What remedy has the I.L.P. to offer for that? What will it do with the older men and, those not up to the average standard of fitness who will be sacked to make way for young and fit workers?

It is no answer to say that the I.L.P. also proposes to nationalise various industries. State capitalism, as applied in the Post Office, leaves the worker subject to practically all of the forces which face him in private capitalist concerns. The process of selection and throwing out the less fit men and women goes on in the Post Office as on the land and in the mines and elsewhere, although in the Post Office the method of securing the same end is slightly different. The workers in State industries suffer the additional disadvantage that they cannot seek similar employment with a different employer.

Patching Up Capitalism.

And what justification can the I.L.P. offer for a proposal which in effect is patching up the capitalist system? Mr. Maxton expected that criticism and tried to forestall it. In an interview given to the New Leader (February 6th) he said :—

  I admit that the old method of approaching the living wage problem would be correctly described as patching up capitalism. . . . Our approach is fundamentally different.

This, incidentally, is an admission that the I.L.P. ’s past policy for most of the period of the party’s existence has been a policy of patching up capitalism, as indeed was avowed by Mr. Wheatley in reference to the Housing Act he introduced as Minister of Health in the 1924 Labour Government.

The only difference Mr. Maxton could point to was that the present scheme is not based on what any particular industry can afford to pay, but on what the “nation” can afford. This is a distinction without a difference. The two schemes have precisely the same fundamental defect that they leave the capitalist system intact, and leave the capitalist class in ownership and control of the means of life. Does Mr. Maxton think that the capitalist class as a body will show a different attitude towards the wages question because they are approached nationally instead of industrially? He gives his own answer when he quotes Civil Servants as being people who are already “guaranteed a minimum wage” and whose good fortune he wishes to extend to other workers. Thousands of Civil Servants—adults working a full week —receive less than 40s. Yet influential bodies of employers constantly complain that the levels of pay in the Civil Service are too high and should be reduced. A demand has just been made to the Government by an employers' association, that Civil Service wages should be reduced to the level of the depressed export trades (see Times, February 20th). A postman, aged 32, charged with theft at Kingston, on February 21st, was receiving 49s. Id. per week. Out of this he had to keep a wife and two children and was paying 27s. 6d. a week rent (Evening News, February 21st). Mr. Maxton is a supporter of State capitalism as it exists in the Post Office, and wants to solve the workers' problems by extending that system.

Socialism The Only Remedy.

The only solution for the economic problems of the workers is Socialism. Chasing after the endless revivals of old fallacies evolved by the perverted ingenuity of the I.L.P. has brought them no lasting advantage. It has diverted their attention from things that really matter and has left them as far as ever from achieving Socialism.

Even as regards making the best of capitalism, the living wage scheme is an illusion. It is no substitute for trade unionism—Mr. Maxton admits that—it is not an improvement on trade unionism, and it is open to serious objections from which the former is free. In Australia the 10 per cent. reduction in the basic wage, referred to above, has taken place in spite of a Labour Federal Government. Resistance to the award of the Arbitration Court set up by the Australian Maxtons devolves upon the trade unions.

A measure of the irresponsibility of the I.L.P. is provided by the speech of Mr. David Kirkwood, seconding the Bill. He was asked from what source any higher wage would come. Instead of replying that an increase in the wages of the workers would be at the expense of the employers' profits, he informed an amused House of Commons that wealth can be created without limit merely by printing more bank notes.

It does not seem to have occurred to Messrs. Maxton and Kirkwood that if their money theory is sound, it is a sheer waste of time and trouble to print bank notes at all. Why not issue free blanks to the workers and let them write their own bank notes? Or, better still, solve the street litter problem by presenting used-up bus tickets over the counter in payment for goods ?

It was a curious but appropriate coincidence that on the day of Mr. Kirkwood's speech a very similar purveyor of quack nostrums—a German who collected money on the strength of a claim that he knew how to create gold out of base metals— was sentenced to a longish term of imprisonment. Political quacks who trade on the ignorance and trustfulness of the working class suffer no such penalties.

Edgar Hardcastle