Have we forgotten the working poor?
Damon Rusden looks at how New Zealand can adapt to modern class struggles and shed its anti-tax mentality
When we discuss poverty, the two extremes seem to fall in two categories: beneficiaries and the uber rich. The "middle class" seems to be an amorphous blob which fills the gap between the two, and (according to the law of post-90s politics) is the demographic which politicians have to appeal to for votes.
There is no denying the existence of the class structure. It is not as clear as Karl Marx once made it. The use of credit cards, collection of private debt, mass consumption, asset-rich and cash poor typecasts have blurred the lines between working class and the bourgeois. But the foundation is still there. The "precariat" is a classification I find myself using more, as it more accurately describes the vestiges of the traditional working class. The precariat are those in employment but who are still struggling to climb the social strata — and are statistically unlikely to. The dice have not been rolled in their favour, and structural impediments make it substantially more difficult than those with different life circumstances or capacity to achieve a satisfying life.
In New Zealand we don't have an official poverty line, but there are government indicators such as the median household income. According to this measurement in 2013, 39 percent of households had one or more adults working full-time but were still in poverty. It's worse now according to many respected social providers, such as the Salvation Army.
Other international organisations condemn our child poverty rates — nearly 20 percent of children live their entire childhood in poverty. That's with working families.
New Zealand is experiencing rampant poverty and a homelessness epidemic which is the worst in the OECD. The evidence for wealth going to the top is indisputable. And if this does not indicate a growing working poor, I don't know what does.
The conclusion of a growing precariat where the value of their production and services are consolidating in the hands of the few has historically been revolution.
The biggest problems facing the precariat (and frankly everyone) in New Zealand and abroad is how we don't tax wealth, enable a corporate culture divorced from responsibility, and how we distribute benefits.
In a changing workforce, we need to adapt to modern class struggles. This means picking the battles and being productive in how we change them.
One constructive way of dealing with unfair wealth acquisition and conglomeration is a "Tobin Tax". It is the modern idea that manual labour does not produce, manufacture or even make things as it once did, so we need to stop taxing labour and start taxing capital (the financial value of production) itself. Why should we tax a minimum wage checkout operator who is about to lose their job due to automation in a few years, and instead tax those who have large investments which gain more money for effectively doing nothing.
Wealth begets wealth. While the minimum wage worker most likely has a form of secondary tax on another job they need to survive, many investment portfolios garner more value simple because they have money. It's inequitable. The new Labour government here is intending to wipe the secondary tax, which has its own problems but ultimately is the fair thing to do.
Untaxed capital and speculation is one of the problems with housing; 70 percent of New Zealand's wealth is tied up in the property market, while home ownership rates are plummeting, with many people on low incomes paying more than 55 percent of their wage on rent. If you have the money, it's a great place and market to invest. New Zealand was even recently considered a tax haven due to our lack of disclosure laws. Google, Apple and Uber don't pay tax here because of our lack of enforcement on capital gains and shady business practices like profit shifting.
Ideally, the Labour government in New Zealand will at least make waves in the property market, with crack-downs on negative gearing and a capital gains tax on speculation.
When we rely on business to create and sustain jobs, there is the assumption they have a responsibility to workers also, through an unspoken social contract. However, increasingly precarious work and a lack of corporate responsibility to provide decent, sustainable work exacerbates a class division. "The grind" isn't a term used to describe intense physical work anymore, it's now interchangeable with persistently low wages and a seemingly endless road before you feel you have stepped up in life.
It can't be helped that bosses, or competition, use cheap labour to produce cheap goods to cheapen the competition. Which then forces redundancy and increased hours on the remaining people. Labour is making great progress by bringing back industry standards to crate a stopgap in the race to bottom we have now, and it seems that is the shift in Britain's Labour too.
What we can also do is utilise the labour itself to create an industry standard — and a union in London is doing that by allowing "joint employer" conditions in collective agreements. This concept is going through the courts now in tribunals in London. Workers who are out-sourced (and to a lesser extent contractors) are often paid less than employees, have fewer rights (like annual/holiday leave and pension contributions) while the company profiting from their labour doesn't need to take responsibility at all. Usually they are tossed around in a bureaucratic game of whack-a-mole when something goes wrong, and nobody but unions take account or provide solutions for their work conditions.
Being an absolutist radical will not bring these to manifest as we need unity behind principles, not division on minor issues.
Creating good employment means laying ground rules. You get 'x' hours, and you get paid 'x' amount. You get a decent contract and livable wages with leave and entitlements. I understand the need for flexibility, but government bending over backwards for flexibility has slowly eroded workers values and rights. It has left us in situations where bank CEOs get 15 percent increases while workers have to strike for a three percent increase. Where we have stagnant wages while food prices outstrip our purchasing power by three percent. Where we as workers are contributing to a growing economy as the producer of material things or services, but the money goes to the top in the form of unproductive capitol. This global institutional failure combined with automation and outsourcing has left workers fighting over crumbs.
In a changing workforce, we need to adapt to modern class struggles. This means picking the battles and being productive in how we change them. Railing against globalisation or the free market will not help, because it has become almost a part of existence to acknowledge these things as a 'modern economy'. And in many ways, the principle of a free market works. What needs to be done is to curb the gross excess that it produces, and provide equity by breaking corporations that have monopolies on sectors.
Bring the concept of the 'commons' back into our governance, and shed this individualistic anti-tax mentality. Being an absolutist radical will not bring these to manifest as we need unity behind principles, not division on minor issues. There is an agreement behind the basics we need to do; creating polices and legislation on fairness and practicality instead of lobbied interests or political expediency is one, and yet it seems so eternally difficult to find consensus because social issues seem to always come to the fore. Not that this is a bad thing, as there are many societal ills we need to deal with. But it does not need to be one or the other, and we are able to bring both social justice and economic justice.
For example, benefits in New Zealand. I discovered a person the other day who declined a pay increase to the living wage, because her entitlements (such as a accommodation supplement) would have been reduced to the point where her budgeting advisers said she would have actually lost money. That doesn't reflect an indulgence in benefits, it represents terrible targeting and thresholds.
There is no doubt our welfare system needs reform, and a massive one at that. The epitome of the precariat is someone who has no certainty in their job (or hours) but works hard, improves their lives only incrementally and yet is still reliant on state benefits which only serve to subidise low-wage employers which keep wages artificially low. That's what many government benefits are — subsidies for private individuals or companies who do not protest the fact the government is deflating their expenditure. Surely we can do better than a catch-22. There is little doubt a universal income would streamline much of this and create a more equal platform, and I am excited at the countries that show positive results in their experiments so far.
When we discuss class division and the growing gap of have and have-nots in New Zealand today, it's not as clear as simply the workers and the owners of production. You don't need to own production to generate wealth anymore, and management can't be considered class traitors. The middle class is being left behind.
So if politicians are looking for votes, it's becoming clear that the 'middle class' is becoming a misnomer. In a world of abundance, where 60 percent of the waste we throw away is edible and children are starving, we need to change the narrative. We need to talk about the growing class division — not the means of production — between the precariat and those who have excessive amounts of capital. The world is changing; and if we make it a better place we need to make changes that keep pace.