Stabile, D. (2008). Ciscel (2000), on the other hand, argues for social subsidies that are not means-tested and are available for all families, as part of the social contract that work-based societies have with their families. Adams, S., & Neumark, D. (2005a). Snarr, C. M. (2011). Thus they are going beyond the use of one ideal household type. Groom, B., & Kuchler, H. (2012). Minimum wage. Reaganomics and Thatcherism have also led to a decline in union density and power (Pollin and Luce 1998; Grimshaw 2004). Understanding the theoretical and philosophical foundations of the LW as proposed by key thinkers in the fieldas our analysis has shownis a vital step towards developing a research agenda that will satisfy individuals needs as well as corporate interests and societal objectives towards social equality, fairness and poverty alleviation. Many states also have minimum wage laws. National and global effects. These relate to sustainability, capability and externality. There is one rate for the whole country with no allowance for the higher costs of living in the capital. 115116; Waltman 2004, p. 89). van Parijs, P. (1992). (2009). Critical Social Policy, SSEs commitment covers a whole range of direct employees, from sales staff, to metre readers, to office workers. Indeed, effective communication about a companys LW status appears to be crucial for gaining reputational benefits and competitive advantage. Ithaca, NY: Cornell University Press. Minimum wage and inflation: These two charts show how much - CNN Bijl, R. (2011). Journal of Business Ethics, Pennycook, M. (2012). Greek Philosophers like Plato and Aristotle grounded their arguments for an income based on needs in the context of the common good, that is, the notion that the acquisition of wealth needed to be moderated by concern for the communal good (Stabile 2008, p. 12). In his review of moral economic thought, Stabile highlights three themessustainability, capability, externalityaround which he constructs his arguments for the LW. Ciscel (2004) provides an overview of the differences and commonalities of the different budget calculations done in the US, and some of the challenges involved in calculating these budgets. Money earned by an employee in one year. Wages are part of the expenses that are involved in running a business. Furthermore, the decline of a comprehensive and generous welfare system casts government in a different relationship to both businesses and wider society, and hands them a different remit with regards to ensuring that citizens do not have to live in poverty (Living Wage Commission 2014). What is a Living Wage? - Global Living Wage Coalition Scholars are not in agreement, however, as to whether Smith would have favoured state-enforced policies (ibid.) Capital (Vol. As an idea, the LW has, in fact, been presented in the works of ancient Greek philosophers and medieval scholars. Capital & Class, By contrast, IKEA, who pays voluntarily a LW in the US, calculates its regional LW rates based on the needs of a single worker without children. 25, 527. Retrieved October 20, 2014, from http://www.homecare.co.uk/news/article.cfm/id/1561473/london-living-wage-increases-effective-immediately-penrose-care. More radical suggestions in this area have included the idea of granting every citizen a basic income, no matter whether they work or not (e.g. Learner, S. (2013). Pollin, R., & Luce, S. (1998). Working Paper. A Living Wage is: The remuneration received for a standard workweek by a worker in a particular place sufficient to afford a decent standard of living for the worker and her or his family. In contrast to the NMW, the LW relates to peoples subsistence and needs and is, therefore, far more controversial and emotive. London: Resolution Foundation. New York: Random House. Work itself may be considered as aiding the development of peoples capabilities. Article Also note-worthy is that incentive structures between employers themselves are beginning to emerge. To understand the set of key tensions between the hand of the state, on the one hand, and those of private interests and obligations, on the other, we now turn to three more contemporary accounts of the LW. In the UK, politicians have begun to look into offering tax rebates to those employers paying the LW (BBC 2013), even though these proposals are met with some scepticism by others, particularly in view of practical difficulties of implementing these tax incentives (Lawton and Pennycook 2013). The living wage, low pay and in work poverty: Rethinking the relationships. Some observers, however, are critical ofcalls demanding that governments address the problem of low pay and in-work poverty solely through the payment of benefits, rather than through seeking to increase incomes through higher wages, particularly in view of past experiences of negative effects on the economy and society.Footnote 12 Grimshaw (2004, p. 116) argues that todays wage subsidies such as tax credits, housing benefit and others reject the duty of employers to pay for the social costs of maintaining their workforce and thereby intensify pressures towards commodification of work. This approach may be considered a challenge in environments where organized labour is discouraged and workers are not equipped to engage with the concept of the LW. Webb, S., & Webb B. However, companies have not been direct targets of LW campaigns in the US. Journal of Public Health, This might be considered a relatively small sum for a FTSE100 corporation, but SSEs commitment to make the LW a requirement for on-site contractors as well as their 2bn pound supply chain might carry further financial obligations for the company (although it is not known how much exactly this will cost them or they are able to pass costs on to others). August 7, 2018 For most U.S. workers, real wages have barely budged in decades By Drew DeSilver On the face of it, these should be heady times for American workers. It also means that the LW rate is susceptible to change if government policies on welfare change. Cambridge Journal of Regions, Economy and Society, Keynesian economists make a strong case for wage-led economic recoveries (Onaran and Galanis 2012), in which ensuring that people are paid at least a LW could play an important part. Hirsch, D. (2010). For some businesses, this may raise questions of viability, whilst for other business organizations the challenge will lie in explaining to their shareholders why they intend to spend more money than legally required on their staff. Referring to the notion of productivity, Ryan argues that on account of ignorance, immobility, or failure to assert themselves a number of workers are paid much less than the value of the groups marginal product and that wages also tend to equal that of its least productive members (ibid., pp. Retrieved October 20, 2014, from http://www.ethicaltrade.org/sites/default/files/resources/ETI%20living%20wage%20guidance_0.pdf. American Journal of Economics and Sociology, Soundings, New York: Benziger Bros. Aristotle (1999). As a result, workers had no incentive to work hard or to bargain for higher pay, as income was the same whatever the level of pay (given that most employers paid less than the scale). Robeyns, I. Perhaps because of this, both the US and the UK have some of the largest proportions of low wage workers in developed economies.Footnote 2. About 910,000 workers had wages below the federal minimum. So the LW tips the balance of responsibility for basic living standards further away from state support and towards wages but it does not completely free people from dependence on the state (Lawton and Pennycook 2013). access to the internet) (Stabile 2008, p. 6); things they may have reason to value. In D. Figart (Ed. The minimum wage was designed to create a minimum standard of living to protect the health and well-being of employees. The costs and benefits of the London living wage. In 2021, 76.1 million workers age 16 and older in the United States were paid at hourly rates, representing 55.8 percent of all wage and salary workers. Only a few articles in business ethics journals make passing references to the LW (Karnes 2009; Bowie 1998; McMahon 1985), particularly in the context of sweatshop labour and supply chains (Arnold and Bowie 2003, 2007; Preiss 2014). Even if in the long-term it may be desirable to have the LW as a mandatory minimum wage (Waltman 2004), something that would also make economic sense from a post-Keynesian perspective (Onaran and Galanis 2012), there are transitional costs to the economy and society to consider, and the ethical issue arises whether this will be a price worth paying. Thus, the right to ownership comes must be exercised in a way which is consistent with the rights of others (ibid., p. 104). Wages & Salary Review Flashcards | Quizlet To date, business ethicists, corporate social responsibility scholars as well as management theorists have been slow to provide a comprehensive and critical scrutiny of the Living Wage concept. Retrieved October 10, 2014, from http://www.theguardian.com/society/2013/dec/15/top-football-clubs-attacked-for-low-pay-of-ground-staff. What we have aimed to do in our paper is to establish the ground work for key ethical, as well as business, issues that confront organizations thinking of engaging with the LW in a practical, cost-effective way that also makes a meaningful intervention in the lives and welfare of their employees and society at large. Accessed 10 October 2014. World Bank (2013). These accounts reflect a plurality of what people value as individuals, and they show to their employers and others that a LW does make a difference and helps employees live better lives and enjoy more freedom. Review of Social Economy, So far, we have set out the range of theoretical arguments to be made both for, and against, the LW. Benefits, Clary (2009, p. 1065), for instance, has defined the LW as a wage equivalent to the poverty line for a family of four, or the amount of income generated by such a wage that would allow such a family to secure the food, shelter, clothing, health care, transportation, and other necessities of living in modern society.. In fact, in the view of very weak or absent welfare systems and labour regulations, the adoption of a voluntary LW wage, by indigenous businesses and, importantly, multinational corporations in their operations in these countries and in their supply chains, will be of even more significance, although the challenges of implementing a LW will also be greater (see ETI 2014a). Another issue relates to the fact that in a number of national contexts (including the UK and US) LWs are won by the effort of others (i.e. Bennett, F. (2012). 45, 35). Economic Policy Institute | Family Budget Calculator It should pay for cost of living in any location, and should be adjusted to compensate for inflation. Living Wage, Individual: $20.80. Both countries have minimum wage legislation, but it is considered weak as it has no automatic indexing (Grover 2005; Grimshaw 2004). The headline at the top of our paper comes against the backdrop of a growing debate around the living wage (LW) concept in the UK. Waltman (2004) provides a review of basic income guarantee and similar approaches in his book. or the free market (as opposed to mercantilist systems that protected the interests of employers) (Stabile 2008, p. 18). Living Wage Commission (2014). What did the Omaha Platform want? The LW as conceptualized and promoted today in the UK may not meet the idea(l)s of a perfect LW rate, if indeed such a thing exists, and may not be the only way to achieve a fairer and more equal society. Sweatshops and respect for persons. At the same time, they may still find it important to make reference to the business case, to justify to themselves and others that paying a LW makes good business sense. Penrose Care, for example, states on its website that a LW leads to improved morale, lower turnover of staff, reduced absenteeism, increased productivity and improved customer service. The companys offer of a high quality service, so the managing director states, has enabled them to win contracts despite charging more than their competitors (Allen 2014). 102, 157168. 13, 221242. ), Living wage movements: Global perspectives (pp. accreditation.) The contributions of religious traditions to business ethics. Business Ethics Quarterly, Triggle, N. (2013). Wills, J., & Linneker, B. Accountancy Live, 12 September 2014. Another area for further research is a more thorough investigation of the effects of the LW on workers. 78). Eskow, R. (2014). The minimum wage is the lowest legal pay rate that a company can offer its employees. Religion at work: The role of faith-based organizations in the London living wage campaign. In Sens framework, commodities are seen to be relative to the context in which a person finds herself (ibid.). SSEs Managing Director, for example, expresses his hope that SSEs LW accreditation will also encourage other large companies to do the same. Waltman (2004) adds job shortages during recessions, a large number of business failures among smaller firms, inflation and an increase in illegal workers (undocumented immigrants) to this list. Whether a mandatory or voluntary approach is pursued, the main obstacle for the adoption of a LW from a business perspective is that higher wages carry risks (Muilenburg and Singh 2007; Waltman 2004; Pollin 2005). 127148). 26, 3165. It is about the costs that being a LW employer brings to an organization. Another interesting proposal comes from pro-LW think tanks, who recommend that government should require stock-market listed corporations to report how many employees they pay less than the LW rate, through new provisions in the soft-law UK Corporate Governance Code (ibid.). The living wage standard. For example, which incentive mechanisms provided by the government may be the most effective drivers for employers to adopt the LW? There are differences in how the LW is framed and implemented in different national contexts. Entitlements such as housing benefits and tax credits are included in the calculation of the rate, otherwise the rate would need to be much higher. (2009). Amount of money paid for each hour of work. There are also difficulties involved in rewarding employees at the higher end of the pay scale if employers have to spend more money on those at the bottom end. Chicago: Quadrangle Books. Beyond the bottom line: The challenges and opportunities of a living wage. The article also recommends avenues for a research agenda into the LW for business ethicists, CSR and management researchers in contexts such as the UK, where a voluntary, rather than mandatory, approach to the implementation of the LW is adopted. The externality argument requires one to consider explicitly the role of the state/government in their role to ensure that all their citizens enjoy a level of income that enables them to make ends meet. It is inarguable that higher incomes enable people to have better access to higher quality goods (e.g. The Observer, 3 November 2013, p. 8. volume137,pages 433447 (2016)Cite this article. The inflation rate in 2019 was 1.76%. ETI (2014a). He assigned the state (and thereby the more wealthy members of the community) the responsibility to provide the poor with means to earn an income that would enable them to earn a sustainable livelihood (Aristotle1999, Book 6, Part V). Basing a living wage on a minimum income standard. 3 and 87). Penrose Care posts the Living Wage Employer logo on its homepage for all who visit its website and consider doing business with them to see. Social Indicators Research, Marketplace, 5 August 2014. Ciscel, D. (2000). Some of these costs would include the overall pay for employees (see Pennycook 2012; Wills and Linneker 2012) and additional costs in time and labour associated with adapting recruitment policies, negotiation with contractors, employee and strategic communications, public relations and so on. Living wage campaigns as social movements: Experiences from nine cities. Anyone you share the following link with will be able to read this content: Sorry, a shareable link is not currently available for this article. A living wage is a socially acceptable level of income that provides adequate coverage for basic necessities such as food, shelter, child services, and healthcare. Even though paid employment was not the rule in the ancient Greek city state, Aristotle regarded proper earned income as essential to establishing self-reliance among all members of society (Stabile 2008, p. 15). London: IPPR & Resolution Foundation. 19, 324. Why has the British national minimum wage had little or no impact on employment? CEP Discussion Paper No. US campaigns have used, for example, the Economic Policy Institutes research on family budgets and self-sufficiency standards (Ciscel 2004).Footnote 8 The UK campaign uses the basic living costs calculations by the Greater London Authority for the London LW, and Loughborough Universitys Minimum Income Standard for the LW outside London (Lawton and Pennycook 2013). It poses challenges as to how governments and other societal stakeholders can encourage employers to adopt the LW. ), Living wage movements: Global perspectives (pp. (2006). 44, 1431. answer choices public transportation foot luxury automobile private jet Question 3 30 seconds Q. The LW may be a small, yet an important, contribution to social cohesion and sustainability. The Guardian, 4 December 2013. The Guardian, 15 December 2013. (2005). Similarly, what are incentives mechanisms and dynamics emerging between employers that may encourage and support the adoption of the LW? Ryan regards the ability to earn a decent livelihood as a right and duty, which is grounded in the intrinsic dignity and worth of the person (1912, pp. 17, 10831092. We begin by defining and scoping the concept of the LW, noting the differences between national contexts for comparative purposes. The living wage refers to the income level required to sustain a decent standard of living based on the family size and the location. Discovering new and potentially unexpected benefits, to employers from offering the LW in their organizations would be an important benefit of further research. In the Discussion section of our paper, we present two short examplesScottish and Southern Energy (SSE) and Penrose Careto illustrate the managerial implications of the LW for businesses. Just as a just price was the outcome of a combination of fair bargaining and informed consent, a just wage was the outcome if both employer and employee knowingly and voluntarily agreed to the wage (Waltman 2004, p. 33). 32, 423440. A minimum income standard for the UK in 2014. (2012). This approach has especially been utilized in US and UK campaigns. Meet the woman behind Ikeas living wage calculator. Countering the argument that higher wages pose additional costs to businesses they cannot bear, Waltman (2004, p. 133) and Pollin (2005) refer to efficiency and productivity gains that businesses may enjoy, for example, through reduced absenteeism and turnover and a subsequent reduction in recruitment, training and supervision costs, as well as a better motivated, and thus more productive, workforce. Nominal Wage vs. Real Wage: What's the Difference? - Indeed As mentioned previously, these include reputational benefits, increased morale among employees and increased social capital. An important distinction is to be made between the national minimum wage (NMW) and the LW. An important avenue for further research also includes the symbolic function LW accreditation will carry for firms, both in relation to their own legitimacy, and in relation to its effect on other companies who are not yet LW employers. It should be noted that hourly LW rates usually presume that the worker is in full-time employment. This approach has been discussed by the US-based Economic Policy Institute (Bernstein et al. In the case of SSE, according to their 2014 Annual Report their adoption of the LW entailed that 148 of their 20,000 employees were paid higher wages, roughly costing them an additional 1,000 per employee. 2014), but the capability perspective, looking at the effects for individuals as well as for their families, organizations, communities and the economy, may provide a fruitful lens for further investigations. McMahon, T. (1985). In fact, it is often women who work in occupations such as cleaning, catering, childcare, care for the elderly and the sick, and routine office jobs and who are affected by low pay (Figart 2004, p. 3), and a LW would be particularly important if those women are single parents (Ciscel 2000). Marx, K. (1977). Pennycook, M. (2013). Wages and hoursHistorical and contemporary linkages. Waltman (2004, p. 38) argues that such approach would create a level playing field among businesses and that it would be collectively in the interest of business as higher wages would increase overall purchasing power (ibid., p. 136).
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