Does Global Poverty Make Minimum Wage Struggles Trivial?

In his July 2015 budget, George Osborne, the British Chancellor of the Exchequer, unveiled a new National Living Wage for the UK to replace the current minimum wage. The Living Wage would pay more than the current minimum wage (7.20GBP rising to 9GBP/hr, compared to the current 6.50GBP/hr), but, notably, would not apply to persons under the age of 25.

I’m reflexively troubled by the exemption of persons under 25 from the new Living Wage for a number of reasons. Firstly, if Justinian is right that justice requires that “each get his due,” then these persons under 25 are due the higher wage for their work, irrespective of their age. So, to deny a Living Wage to under 25s would be unjust. Linked to this, secondly, the feminist movement and politicians (like President Obama) have had success fighting the gender pay gap with the mantra “equal pay for equal work.” And with good reason. If two persons are doing the same work, why should one be paid less? That seems either to be unfair, or agist in the same way that paying women less is sexist. 

Finally, persons under 25 also need a wage they can live on. I imagine that the common image of an early 20s worker is of a student with a part-time job, or a young person living with her parents needing some pocket money to go out on the weekend. Indeed, one of the most (politically) effective arguments against the the ‘fight for 15[$ per hour]’  in the US fast food industry has been the argument that most fast-food workers are summer workers putting themselves through school, and that these jobs instead “provide opportunities to lots of young people with few skills and limited experience.”  The push back against these images has involved dispelling this myth by drawing attention to the fact that “the average age of fast-food workers is 29. Forty percent are 25 or older; 31 percent have at least attempted college; more than 26 percent are parents raising children.” Turning back to the UK, what percentage of people under 25 are raising children? Using these data from the Office of National Statistics, in 2013 there were 699,000 births of which 149,000 were to mothers under the age of 25. That’s just over a fifth (21%) of the total number of women having children. To be sure, tax credits help, although, they’re being cut - see below. But, even with these (which people over 25 are also eligible for), the fact is that people under 25 are living their lives by, for example, having children and building families. So, if these people are living their lives why should these people be exempt from a living wage?

Of course, producing a budget for some 60 million people is a matter of expedience as much as of principle, and, consequently, some morally sub-optimal decisions usually have to be made. Moreover, there are some benefits to reducing the costs of labor for under 25s. After all, persons under 25 tend to have fewer skills and less training than older persons who have been on the job for longer, so the under 25 exemption is a somewhat ham-fisted way to match wages to economic value. In addition to this, by lowering the cost of under 25 year old workers, the new Living Wage plan incentivizes employers to employ younger people and thereby curb youth unemployment. But, as the point has been made at Stumbling and Mumbling the budget actually reduces tax credits by a greater amount than the new Living Wage replaces, and harms labor demand by 60-250 thousand jobs; in light of considerations, Mark Littlewood at the Institute of Economic Affairs has described the changes as “intellectually bankrupt.” Consequently, I’m inclined to think that the exemption of under 25s is likely to be due to intellectual dishonesty or intellectual dereliction, rather than any sincere balancing of competing considerations.  

One thing that interested me during this discussion was the flippant remark of a friend that this whole discussion is merely a “storm in a teacup,” between “rich Europeans [over] who should be marginally more or less rich...” On his viewing of the matter, this whole debate is a moot point until we achieve a “global fiscal union.” 

Now, I’m not sure that a global fiscal union is desirable, even if it might one day be practicable. The fact is that different countries have different economic strengths and weaknesses, and so more local autonomy (such as the ability to devalue currencies and boost fiscal stimulus) are likely to be valuable even if union is possible. Moreover, we’re seeing in Europe how poorly constructed monetary and fiscal unions can be damaging to their members, and can be coopted by economic and political elites. The main thrust of the claim, as I understand it, is that what is of more urgent concern is the plight of the billions of others of the global poor who are in far worse conditions. But, even wholly conceding this point, we might nonetheless be able to resolve these problems of global inequality without a fiscal union, such as massive wealth transfers combined with regional autonomy or traditional national and fiscal sovereignty within state borders.

I take the point that, when viewed from the outside - especially from the perspective of, say, a poor displaced a Syrian refugee - the objections here look like a trivial storm in a teacup. But, if you’re in the teacup, the fact that there’s a storm brewing is of significant concern. Changes to one's circumstances can significantly alter one's life-chances, and, indeed, we make life plans and choices (such as whether to have a child) based upon reasonable expectations and certain beliefs about stability based upon previous experience. Should the central government make changes to these stable expectations, then this provides reason for people affected by them to air their grievances and agitate for redress, even if the changes look trivial from another perspective. 

Another point is that one type of moral wrong is not obviated or dispelled by the existence of a moral wrong elsewhere. So, if it is the case that paying women less than men is wrong when the two do the same type of work, and the analogy holds such that it’s also wrong for under 25s to be paid less than over 25s for the same work, then this is wrong irrespective of what happens elsewhere in the world or in the state. Does, for example, the racial injustice against African-Americans diminish because women are also subject to social injustices? Of course not. The two might warrant different responses, and one may be more exigent than other, but the existence of another kind of moral wrong does not make the first moral wrong less morally significant. Returning to our current case, it is morally wrong to treat under 25s unfairly, and it would be precisely this wrong to treat under 25s this unfairly whether or not there were greater global equality, or whether or not there were, say, several million poor Syrian refugees. (It’s worth noting that, if the claim is that the wealth of the rich Europeans caused the poverty of other nations, such that all Britons, including the under 25s, are massively benefiting from the impoverishment of the rest of the world - in other words, that the injustice of unfair pay for under 25s in Britain only occurs because of the larger injustice Britons cause by impoverishing others - then that would change the moral calculation above.)

Finally, I’m inclined to believe in social and political practice inequality is a relative concept. Let me emphatically say that this is distinct from the idea that moral concepts and values are relative. I’m not saying here that equality only matters in some countries and cultures, but not in others. Instead, the claim that inequality is relative in social and political practice goes back to Adam Smith’s remark in The Wealth of Nations (Bk 5, Ch 2) that although a linen shirt isn’t strictly speaking a necessity for life, it’s a necessity for social life in 18th Century Scotland. To go without a linen shirt would “denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct.” Importantly, it is the denoting that is important here. The fact is that social norms and expectations vary over time and in different places, and so, the cost of successfully functioning within society change making some places more expensive to live in than others. 

A large part of this idea of relative equality is linked to the fact that, at any one time, society is a zero-sum game. Of course, the great insight of Smith is the repudiation of mercantilism and the popularization of the view that economies can be non-zero sum (on this see Samuel Fleischacker’s, Very Short History of Distributive Justice, HUP). However, when someone applies for that job, or loan, or to a prestigious university, etc. they’re always competing against other people and need to distinguish themselves from them. People do this by legitimate means, such as gaining skills and experience, producing a sound and well-researched business plan, and by studying fastidiously. They can also do it by less legitimate but often effective means, such as dressing impeccably well by contemporary standards, and by availing themselves of middle-class prerogatives, such as straight and white teeth from years of extensive dental care and braces. Other people might also use illegitimate means such as extortion or nepotism. Importantly, however, in just about each case, getting a leg up on the competition is expensive, requiring a greater investment of time and money, thereby setting off an upward spiral of costs, thereby increasing the cost of fully entering into and participating in society. 

What does all this mean for the discussion at hand? If what we care about, is how people’s lives go, and, in addition to this, the costs of living in some countries is much higher than others, then we might need to accept some level of inequality between nations. America might be a richer nation than, say, India, but it costs much more to function at the same relative level in society in America than it does in India. So the mere fact of global inequality isn’t sufficient on its own to be morally objectionable. Of course, if the quality of life is many times worse in India than America, then that gives a reason (on at least Utilitarian theory) to transfer wealth to India and thereby lower the average standard of living of Americans. (On this point, America ranks 15th and India 117th on the Word Happiness Index.) With that qualification in mind, the foregoing is another way to say that, whether-or-not you have a linen shirt might look like a storm in a tea cup from the outside, but this might be nonetheless a morally significant teacup storm that deserves real moral consideration due to the relative costs and requirements of functioning within different societies.

Beyond these considerations, however, I think there is a real kernel of wisdom in the claim that the discussion about the National Living Wage is a squabble between rich persons "over who should be marginally more or less richer,” and it cuts to the heart of a lot of political theory. In making the points above I’ve leaned upon putatively universal moral values like equality, justice, and fairness. And these ideals have been at the heart of cosmopolitan political thinking that goes from Kant and the Enlightenment through to contemporary political thinkers such as Kwame Anthony Appiah. Although there is an international and universalist bent to the concepts used in the discussion above, much political thinking, especially that which follows on from the work of John Rawls, is focused upon arguing for political institutions for nations that look a lot like America and Britain. Of course, there are those focused on more global questions, such as international justice theorists, like Thomas Pogge. And there are a diversity of different approaches to political theory, such as the Frankfurt School and Cambridge School, etc.. But many political theorists dedicate their time to arguing for political theories that are consciously or otherwise aimed at some variant of contemporary western democracies, that we might add, are likely to be wealthy. 

Why is this? Perhaps it’s attributable to Rawls’ approach to political thinking; what G. A. Cohen calls in Rescuing Justice and Equality the ‘Harvard approach’  (p. 3-6). But, a more satisfying point might be that political thinking requires certain minimal conditions in order to ‘get off the ground’. As David Hume discusses in Bk 3, Pt 2, Sct 2 of a Treatise of Human Nature, societies, property, and others artifices of the social world can only occur when people come together and cooperate to bring them into being. If a place is too inhospitable, then people will fight or disperse; if too hospitable, they will sate themselves through the natural bounty of the world with no need to come together and cooperate. Britain and America are rather developed polities by the standards of political development as they have pretty robust and transparent systems of law, courts, patents, political accountability, etc., in addition to being wealthy. Consequently, these nations exhibit the conditions both for cooperation are are particularly apt for effective politics and political thinking. Because countries like the UK and US operate within a system of law and political accountability, then it’s possible to (in theory) propose principled arguments for improved and more just political systems that have a chance of being implemented. 

But, as was said above, ideals like justice are universal in nature. (At the very least they’re held to be so by many political thinkers working in these areas.) Consequently, to limit thinking about justice primarily to the US and other similarly developed nations fails to fully think through the demands of justice and other associated ideals. To be sure, one might say that the ideal of justice (when not constrained by practical limits such as cost and implementability) requires certain political institutions - like a minimum wage that applies to all citizens, including those under 25 - and conclude that the nations that are least constrained by practical limits are those like the UK and US. Ultimately, then, one might conclude that it’s most appropriate to address theories of justice to these nations. But, as David Estlund cogently argues in ‘Utopophobia,’ Philosophy and Public Affairs, 2014, 42,2 pp. 113-134, it is also appropriate to do ‘aspirational’ political theory that “defends standards [such as justice] even though they will not be met, and even if we know this for sure” (p. 118). So, although it might be the case that countries like the US and UK are most likely to be capable of implementing these theories of justice, this issue of capability shouldn’t constrain us. There mightn’t be a central power or a fiscal union to direct cash flows and ensure a level of distributive justice across the globe as there is in a nation state, but this shouldn’t stop us from thinking about and engaging with these questions.

Finally, although I argued against dismissing the importance of internal political debate as a storm in a teacup, one wonders whether the devotion of intellectual resources to discerning the minutia of these issues on a national level prevents or slows progress on border questions such as global justice. Indeed, if I - perhaps more-so than anyone else - spent more time studying these global problems of justice, rather than national questions of justice, I’d be able to offer more robust reasons why exempting under 25s from the National Living Wage is, or is not, a storm in a teacup.