A submission to the B.C. Poverty Reduction Strategy
March 23. 2018
“What makes one poor is not the lack of means. The poor person, sociologically speaking, is the individual who receives assistance because of the lack of means.” – Georg Simmel
“A tight labor market is important for all workers, but especially for historically disadvantaged groups.” – Janelle Jones, Economic Policy Institute
Forty percent of the 678,000 British Columbians living below the poverty line are working adults. This submission focuses on the reduction of poverty among employed adults.
“What do you think are the best ways to reduce poverty in British Columbia?” (p. 3)
Poverty is not simply a problem of insufficient wherewithal but more fundamentally a problem of disparities of political and social power grounded in grossly disproportionate wealth. Reduction of the hours of work is an economic solidarity strategy whose greatest benefit is the enhancement of the collective bargaining strength of employees relative to that of employers.
An unsound economic theory of “leisure choice” has obscured the crucial role that work time reduction plays in mitigating social, economic and political inequality. Although this theory has been systematically refuted, it continues to dominate economic thinking and consequently public policy through sheer institutional and intellectual inertia. This obstacle to social justice must be repudiated.
“What can we do as a province, a community or as individuals to reduce poverty and contribute to economic and social inclusion?” (p. 6)
Historically, reductions in working time have resulted from mass popular movements and collective action, not from well-meaning administrative fiat. What the provincial government can do, though, is to promote cultural change and collective action by setting an example in its own employment practices, sponsoring research, data collection and education, and by directly challenging the economic malpractice that promotes social inequality in the name of “choice.”
“What does success look like in a BC Poverty Reduction Strategy?” (p. 6)
An analysis is presented based on S. J. Chapman’s authoritative theory of the hours of labour. Hours of work that aim at maximizing total output are shown to be detrimental to workers’ welfare. This analysis estimates that a 25% reduction in standard, full-time hours would result in a net benefit to the worker of 23%, when the value of leisure, increased productivity and decreased physical and psychological “wear and tear” are taken into account. A reduction in the standard work week of 10 hours a week would, conservatively, yield an estimated 2.5 to 3.3 hours of new employment.
“What if a poverty reduction strategy could also, incidentally, reduce greenhouse gas emissions and thus constitute a climate change mitigation strategy?” (p. 12)
Prosperity without Growth, the 2009 report of the U.K. Sustainable Development Commission, featured “sharing the available work and improving the work-life balance” as one of its “12 steps to a sustainable economy.” The Commission argued that work time reduction was essential “to achieve macro-economic stability” and “to protect people’s jobs and livelihoods” in a non-growing economy. To date there have been only a few empirical studies done but these suggest that a reduction of working time by 1% is associated with a reduction of carbon emissions of between 0.8% and 1.3%.
Download a .PDF file of the full submission (17 pages): The Unsolved Riddle of Poverty Reduction
But how will we punish the poor for their moral laxness?
“This analysis estimates that a 25% reduction in standard, full-time hours would result in a net benefit to the worker of 23%, when the value of leisure, increased productivity and decreased physical and psychological ‘wear and tear’ are taken into account. A reduction in the standard work week of 10 hours a week would, conservatively, yield an estimated 2.5 to 3.3 hours of new employment.”
What is the upside to this for the employer? What is the theoretical gain in productivity for business to compensate for the lost hours from one individual?
I am assuming going from 40 to 30 hours. If we cut hours by 10, why only a yield of 2.5 to 3.5 hours for a new worker?
At one time you said it would be more costly to do this. I suspect it is not in wages paid for direct labor input; but, the cost increase could be attributed to Overhead associated with one additional worker. Yes?
I will read the pdf .
Bargaining power aside, the reduction in working time would improve technical efficiency of the production process, when social costs are taken into consideration. But the epochal shift in bargaining power suggests that employers would see little or no “upside” from this. It would become incumbent on employers to persuade their employees of the value of the essential managerial and entrepreneurial services they provide. Given such a realignment of bargaining power, one can begin to see why employers would be opposed.
Just from my own background and experience, reductions in the work day typically result in a boost in output as Labor is more rested and willing to work more effectively with fewer mistakes incurred, nonproductive time incurred, etc. The cost of Direct Labor sans the burden laid upon it via accounting practices is ridiculously small in comparison to the Overhead and Materials. Delphi’s Miller was doing a nice charade in casting Labor at $75/hour as the issue. On TV, I watched Gettelfinger tell Congress how little the percentage of Labor is in automobiles during the bailout. Of course, it is Labor’s fault. Labor is not the issue.
But what to do as Labor input becomes smaller and smaller and productivity keeps increasing?
In the micro-sense with relation to the company, there is and would be opposition. Labor is evil and wasteful. In the macro-sense, corporations do benefit from a productive society with everyone working. I understand the argument; but, it appears they choose not to acknowledge an overwhelming benefit? If robotics and AI completely replaces Labor or a majority of it; then, how does Labor survive but by the taxes on the companies employing robotics and AI? My own process improvements with throughput analysis, process change, and machinery improvements in manufacturing has done much to eliminate Labor, reduce the Overhead associated with Labor, and improve the flow of Materials. The later is plain technology and the former social needs of people or Labor.
I touched upon this at Loyola Univ. Chicago with my former Econ. Prof. and the Supply Chain people there (not the social-economical impact). It is a dilemma; but, it will be resolved in the end. The discussion has to be had and not just by Employees (Labor) and Employers.