This essay, on the ‘working poor’, was my Observer column this week. (The column included also a short piece on hypocrisy and the Church of England). It was published in the Observer, 16 September 2018, under the headline ‘Welfare was meant to help the poor, not subsidise exploitative employers’.
It will mean fewer jobs. That was the chorus from many on the right, from Tej Parikh of the Institute of Directors to the chancellor, Philip Hammond, in response to proposals from the shadow chancellor, John McDonnell, to improve conditions for gig economy workers. Such workers, he insisted, should be given similar rights to those in permanent work, including eligibility for sick pay, maternity pay and similar benefits. He promised to ban zero-hours contracts and introduce a ‘real living wage’ of £10 an hour.
So what does it mean for Parikh and Hammond to insist that if gig workers are given decent benefits, jobs will be lost? Unpacked, what that suggests is that employers are willing, or able, to provide jobs only if workers accept low pay and poor conditions.
Put like that, few people would accept the moral logic of the argument. But it is rarely put like that. We take for granted that businesses create jobs and so have the right to dictate on what conditions jobs are created.
This is one reason that we have come to accept, with little political debate or fury, the existence of the ‘working poor’. Almost 60 per cent of the poor now live in households where at least one person has a job, a figure more than 20 per cent higher than in 1995. Few are stereotypical gig economy workers such as Uber drivers or fruit pickers. They are cleaners and call centre workers, waiters and shelf stackers, childminders and rubbish collectors, workers whose labour is essential to society but whose pay and conditions push them to the margins.
Poverty is often seen as a problem of worklessness. Today, though, it is a problem of being in work. The American sociologist Matthew Desmond recently wrote of the job market in the US: ‘The question is not: can I land a job? (The answer is almost certainly: yes, you can.) Instead, the question is: what kinds of jobs are available to people without much education? By and large, the answer is: jobs that do not pay enough to live on.’ Much the same is true of Britain.
There has been a growing casualisation of work in recent years. According to some figures, almost a third of British workers comprise a ‘precariat’ – workers lacking job security and benefits, often shifting from one short-term position to another. ‘Flexibility’, a word much touted by critics of McDonnell’s proposals, may be valuable for those who don’t want the restrictions of full-time work, or who need to juggle commitments, but it has also become a euphemism for jobs with little certainty and for workers forced to inhabit the margins of the labour market.
While the nature of jobs has changed, real wages have fallen. An IFS report showed that median real earnings are still 3 per cent below where they were in 2008; for those in their 30s, they are down by 7 per cent. Nor is it just work and pay that are the issue. The changing of the structure of the housing market has also exacerbated in-work poverty – those in the private rented sector are far more likely to be in the working poor. As are those with fewer educational qualifications.
From the mid-1990s, governments have tried to offset rising in-work poverty through the benefit system. Tax credits have risen, from £7bn a year in the mid-1990s to a peak of £32bn in 2011. Since then, they have been cut as part of the austerity programme. The impact of these cuts, together with the rolling out of universal credit, could be devastating for the working poor.
Tax credits may be essential for allowing many in work to keep their heads above water. They also expose the reality of the benefits system. Welfare is largely discussed from the perspective of the recipient. For most on the left, it’s a necessity for those who require social support. For many on the right, it is a reward for fecklessness and a means of establishing a ‘dependency culture’.
In reality, the welfare system is an acknowledgement and an indictment of the inadequacies of the market system. Nothing reveals this more forcefully than the existence of the working poor and the creation of a welfare system to support them. The state is, in effect, subsidising employers so as to allow them to get away with paying indecent wages and unacceptable benefits. When business leaders and Tory politicians insist that better pay or conditions mean fewer jobs, what they are demanding is the right to provide jobs that are insufficient to live on and for the state to pick up the tab. There’s the real culture of dependency.
The photo is via Wikimedia Commons.
As someone who employs a (small) number of people part-time, I congratulate you on your self-righteous ignorance. My business has very limited choice in the rates we offer. If we pay too little, we don’t get decent people. If we pay too much, we go out of business. Most employers are small business folk and are in precisely that situation. If you want to know why there are so many working poor (under first world notions of poverty) then look to global markets (which are massively reducing third world poverty but not without implications for first world labour) and local tax and regulatory regimes. For example, importing migrants mean lots of non-citizen housing market entrants which makes it easier to regulate land supply to reduce the supply of land to housing (driving up property and other taxes and making incumbent home owners happy) which drives up rents and house prices. Intellectuals have been despising commerce and commercial folk for 2,500 years at least and counting to boost their sense of status (apart from a brief interlude in NW Europe from c.1600 to c.1840), I don’t suppose it will stop any time soon, but it is so very, very tedious.