Anyone who wants to make a convincing argument for the $15 an hour minimum wage needs to grapple with indexation. Indexation is the amount that a worker’s hourly wage will regularly increase while they’re working for their employer. Our hourly wages can be indexed in a number of ways.
- Average personal income
- Rate of worker productivity
If workers accept a fixed minimum wage of $15 an hour that doesn’t increase year after year, we will continue to fall further and further behind in paying for our basic needs not to mention having enough money to avoid entering an endless cycle of financing our lives through taking on debt.
In other words, a clear understanding of types of indexation will help us convince our co-workers, our union executives, and other potential allies across campus that $15 an hour is viable and justifiable. It will also help us to argue against our employers who will inevitably try to dominate the debate with fear tactics such as potential cuts in jobs and work hours for McGill University workers.
Indexing wages to the Cost of Living means that wages increase at the same rate as prices for food, clothes, and other consumer goods increase. Essentially Cost-of-Living indexation gives workers a minimal yearly wage increase that theoretically will give them enough money to somehow keep pace with the steadily rising prices of everything they need to buy to live.
Average Personal Income:
Indexing wages to average personal income means that wages would be set according to the average personal income of all workers.
Mark Gomez of the Leap Forward Project in the U.S. summarizes his argument in favour of API indexation this way: "We need an index that will move ahead faster than inflation, but not necessarily as fast as the overall economy." According to Gomez, the minimum wage would be $15 in the U.S. now if API indexation was the standard rather than cost of living. In referring to the pace of growth of the "overall economy", Gomez is talking about the next indexation method for consideration, namely, Rate of Worker Productivity.
Rate of Worker Productivity:
Indexing wages according to rate of worker productivity means that wages increase according to the overall yearly growth of the economy.
Economists Dean Baker & Nicholas Buffie explore Rate of Worker Productivity indexation by looking at the purchasing power of the minimum wage over the past fifty years. The peak of its purchasing power was in 1968 and since then has stagnated, mainly because wages have not increased at the same rate as prices of food, clothes, and other consumer goods have. If the minimum wage had increased according to the growth of the economy since the end of the ‘60s, Baker & Buffie conclude that workers in the U.S. would be earning $18.42 an hour today. In other words, this minimum wage would be a more accurate reflection of how much workers contribute to economic growth and how much they should be paid for their work.
Turning information into effective arguments
So now that we have a bit of information about indexation, we can use it to our advantage when we talk to our co-workers and potential allies on campus about the need for $15 an hour as a minimum wage to be indexed. We can emphasize how it’s not enough for workers to accept $15 an hour as a flat minimum wage with no indexation. A stagnant minimum wage for the next 40 years will be as bad for workers as the past 40 years of a stagnant minimum wage have been. We can emphasize why Cost-of-Living wage indexation is not enough, and offer the examples of Average Personal Income & and Rate of Worker Productivity as alternatives which more accurately and fairly represent the contributions that workers make to McGill University daily.
Finally, we can also use this bit of information about indexation as a starting point to develop our knowledge base and refine our arguments to confront our opponents on campus as well. If we can support our calls for economic justice and fairness with clear and persuasive data about the positive effects of indexation, then we’ll have a foundation for countering the propaganda that there isn’t enough money for workers to be paid a wage of $15 an hour.
This blog is an initiative of the 15 and Fair McGill Coalition. Curated by MM and MB. This post was written by guest-blogger Tim G.