$19 an hour full time is about $38,000 a year. That's high? In 2004 we would outrage at someone earning $38,000 a year? That's not enough to qualify for a mortgage on an average priced home in Edmonton right now. But, your average Edmontonian earns about $33,000 a year, so I guess in that light, it's pretty good.
What I have seen in many firms is a large gap in what people earn, regardless of their importance in the organization. I have consulted with companies that tried to solve high turnover rates. When I would enter the firm, I would find that people were often underpaid relative to other firms, but the real culprits were things like poor morale and inflexibility, fostered by management. Creating a change in internal culture was difficult without changing management. Take a firm where the receptionist barely earned more than minimum wage and was treated in a poor manner by management. Well, the job had a very high turnover rate, but the real problem went deeper. This particular business relied on the front desk to greet all clients, regardless of importance. The biggest customers had their intial point of contact with that receptionist. No one realized that this job was a key point in the sales process of the firm? Wake up!
Al Olsen is a busniess person that I met some years ago. He was one of the founding partners in Stuart Olsen Construction and moved into many other ventures. Sitting on his desk was a sign that read:
Quality
Service
Price
*Pick any two of the three*
He was right, and the principle still exists. Firms have been subject to the Wal-Mart onslaught of low prices along with low wages, low service and dubious quality. Wal-Mart cares not a lick about the quality of the products on their shelves, but instead in the number of turns and average margin per unit.
By shopping at Wal-Mart we, of the middle and upper-middle class, access low prices subsidized by the low income employees of Wal-Mart. Wal-Mart offers these low prices by using leverage against it's suppliers (and often suppliers must reduce their workforce and/or wage levels to meet Wal-Marts demands) and by keeping it's own employee's earnings low.
Well, wait a minute! If we're at "full employment" shouldn't the gap between supply and demand cause a rise in wages? It should, but 8% is NOT full employment. Also, Wal-Mart introduces friction in the labour market, making it difficult for employees to change firms to seek a higher wage. How? Wage withholding is one major obstacle. You have to wait for weeks after you quit for your "final" paycheque and vacation pay. Meanwhile, your new employer has a withholding period on your initial cheque, meaning a serious gap in earnings. This can be disastrous for a low income earner. I know, I lived this reality at one time. What else? Drug testing. You're required to travel to a lab location (many low wage earners don't have a car) and take time from your existing job. That's very difficult. Also, why on EARTH can an employer require a drug test when the POLICE can't ask for one without probable cause? Do I give a rat's ass if my greeter at Wal-Mart is stoned out of their mind? Hell, more power to them if they are, at least it might make that crappy job tolerable.
Wal-Mart and other large low wage employers have policies deisnged to introduce friction into the labour market and depress wages regardless of unemployment levels. They don't rely on their lobby efforts to keep the "jobless recovery" going.
What about the idea of low unemployment? Gov't's don't talk it much anymore, do they? Instead they talk about GDP growth and low inflation. The trick to fiscal policy is to manage the relationship between inflation and unemployment. Well, inflation has become the sole target now, and that suits an elite group of people just fine.
Suppose you're one of the wealthy elite in Canada. You are not an income earner. You're an asset holder. Asset value is eroded by inflation. You want fairly high unemployment (low wages) and super low inflation to keep from eroding the asset base which makes up your wealth.
What about taxes? Dividend income and capital gains are barely taxed. Income is taxed like mad. Here's why that is so funny it's TERRIBLE:
**If you didn't work hard for your income, you pay little or no taxes. If you had to work your fingers to the bone everyday, then you pay taxes on every cent.**
Does this make ANY sense?
What about taxing the crap out of the income on investments, but give me a break on my earned income tax. Does this make sense to 95% of Canadians? Sure, but we're not part of the Paul Martin Club (he's worth millions...) and 99.99% of us will never be. However, the policy would OUTRAGE the richest folks, and well, dollars = votes, right? Huh? It seems to.
