A wages crisis is causing widespread poverty – but who (or what) is to blame?
Panorama produced a generally laudable programme on the poverty facing working people – workers – in contemporary Britain. Broadcast on 6th November the show looked at four different stories – two families, a couple and a single man. It was marked how in the past these issues would have been addressed by trade unions and the Labour Party. The anguished misunderstanding of one couple as to why they were working but not earning enough was meat-and-potatoes for the pre-70s leftists.
The issues the programme identified were nothing unusual to those who take an interest in these issues. Insecure employment in the form of zero hours contracts left one man unable to carpet his own flat or plan effectively in any way. Expensive childcare put pay to one mother’s ambition to earn enough to contribute to the family effort to pay bills. Simple low pay (hi Tesco!) was identified as a problem, and the benefits trap preventing one man from earning significantly more to earn his way out of poverty. It is for these people that the minimum wage needs to become a living wage. The effect of rising inflation eating away at purchasing power, whilst wages stagnated was aired and discussed. Again, none of this is really news.
The main point the programme was trying to make was that if it wasn’t for the state – chiefly in the form of tax credits – these people would sink. Where I part company with the producer’s line is the way this issue was framed, and where blame lies for the problem.
Firstly, the government’s money was presented as a subsidy for wages that goes to workers, whereas in reality it’s a subsidy for industry that keeps wages low. That’s before you even get to the idea that it’s not the ‘government’s’ money at all – it is just being redistributed from general taxation.
Secondly, the problem was presented as essentially intractable. The question was asked: ‘Where to draw the line?’ If the amount of money given to people is too little, they starve, if it’s too much they get trapped in poverty and society (apparently) resents them. In truth, the current model of stopping people from starving is creating an underclass. The money thrown at the problem doesn’t end up helping those it’s being lobbed at – it suppresses wages and subsidies businesses’ profits. This is either directly (by keeping wages low) or indirectly (by supporting inflated prices, especially for food and fuel). The only answer to this is to pull the rug on the whole system and introduce a Citizen’s Basic Income. This would stop the distortion of the labour market to the benefit of employers, prevent the creation of an underclass and lost generations, undercut the easy divide-and-rule tactics of the right and stop the left from having to apologise for not letting people become existing in desperate poverty.
It’s an idea whose time has come.