Tuesday, 29 April 2014

Are low wages the problem?

I haven't updated this in a while so I thought I should, just with a short entry. There seems to be a lot of noise made around what is a fair wage these days and you could certainly argue that what I earn (minimum wage - £6.31 an hour) for a stressful job in a pub in Central London is not enough. It's got me thinking: where I work a pint of beer runs at about three-quarters of my hourly wage and we sell several as the pub is extremely busy. According to this article it costs about 90p to produce one pint of beer, or since it was written in 2011, 93p adjusted for inflation. Anyone with a basic grasp of maths would start wondering about those figures - surely those tight motherfuckers I work for can afford to pay me more than the minimum wage?! Staff morale would certainly be higher and they wouldn't have to hold recruitment days all the time (a person quits like every week). But then, I was thinking, rent in Soho must be extortionate; perhaps they genuinely can't afford to pay me more (and why should they with a steady stream of jobseekers?) Who does this rent go to and do they really deserve it all?

The above paragraph was just a flimsy pretext for a quote I want to share with you stolen from some guy named Lindy Davies on a Facebook group which calls for a Land Value Tax on the basis that property owners receive a windfall unfairly and should be taxed on it to even things out -

"The elements of production can be divided into three mutually exclusive factors: Labor, Capital and Land. The objective of production is the satisfaction of human desires. The most basic of these desires are material — food, clothing and shelter — but once people have these basics, they desire many more satisfactions, of which some are material, and some are not (the satisfaction of a non-material desire is called a service). Human desires are satisfied by labor (human exertion) acting upon land (natural opportunities). The process of production is greatly aided by the use of capital (physical products of labor which are used in the production process, such as tools, livestock or merchandise). Land is fixed in supply. (They're not making any more of it!) Some sites are better than others for various kinds of production, and every site is unique. This means that the price for land sites will be bid up to whatever people are willing to pay to use them. Because land is needed for all production, everything that enhances productivity makes people willing to pay more for land. As society advances, people tend to hold land out of use, expecting its value to increase. This lowers the supply of available land, raising its price, but without adding to production. Meanwhile, in order to pay for public infrastructure and services (which increase production, and therefore raise land values), societies place tax penalties on productive activities — while land values, which were created by the entire community, are collected by private landowners. This has two basic effects: it drastically lowers the economy's productive efficiency, and it allows unproductive holders of privilege to collect and consolidate unearned wealth."

Of course, I'm not letting my employer off scot-free , I'm sure they could afford to pay me more, but it is worth noting that perhaps if everyone was paid a little bit more by their employers, rents would probably increase in line with these new wages as the rational landlord charges as much as he can get away with.