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Atlanta Living Wage

Fair Wages - Do Labor Unions help?

Unions in Australia Ensure Workers Get a Fairer Share of the Pie Than in North America

America's recent history has been one of a widening financial gulf between people at the top and at the bottom of the salary scale.

In 2004 Jack Rasmus wrote "How would you like to be making $200,000 a year today after 25 years on the job? Well, if you started with the pay of an average worker 25 years ago that's what you'd be making today --- if you got the same kind of raises that CEOs of American companies got for the past 25 years!"

A few years later, things haven't gotten any better. In fact things are even worse.

Not only do America's poorer paid workers need to scrape a living for themselves, they also need to find tax money to donate to financial speculators, to keep them in the extravagant lifestyles they now feel are entitled to, regardless of the economic climate.

America's tax payers contributed billions of dollars to the bailout of finance corporations only to find that Goldman Sachs, a beneficiary of bailout funds, announced in 2009 it had earmarked $11.4 billion so far to compensate its workers. At that rate, Goldman workers could, on average, earn roughly $770,000 each this year - or nearly what they did at the height of the boom.

Of course, the $770,000 won't be distributed equally. People working in the higher echelons of Goldman Sachs are likely to receive bonuses measured in tens of millions of dollars. Some it is rumored may receive 9 figure bonuses.

In 1965, CEOs in major companies earned 24 times more than an average worker; this ratio grew to 35 in 1978 and to 71 in 1989, then hit 300 at the end of the recovery in 2000. The fall in the stock market reduced CEO stock-related pay (e.g., options) causing CEO pay to moderate to 143 times that of an average worker in 2002. By 2005 the average CEO was paid $10,982,000 a year, or 262 times that of an average worker ($41,861). PBS made the point that this means the average CEO of a company with at least $1 billion in annual revenue made about $400 more in one day in 2005 than the average worker made in a year.

In 2008 compensation for CEOs declined 6 percent from $11.07 million in 2007 to $10.4 million in 2008. Of course, these average workers include all workers - including people working in management. If we consider CEO pay compared to non-management workers, the pay disparity is even larger. In 2004, the ratio of average CEO pay to the average pay of a production (i.e., non-management) worker was 431-to-1, up from 301-to-1 in 2003, according to "Executive Excess," an annual report released Tuesday by the liberal research groups United for a Fair Economy and the Institute for Policy Studies.

The situation in North America seems to be particularly bad. In 2007, Canada's top 50 CEOs earned 398 times more than the average worker compared with 85 times in 1995.

In Australia, however, CEOs now earn about 65 times more than an average worker. Interestingly, Australia - a country with many cultural similarities with the USA and Canada - is a more attractive country for workers. The GDP per person in Canada and Australia are almost identical but Australian workers earn about 10 percent more - Australian workers get a bigger cut of the economy than their North American counterparts.

The major difference between North America and Australia is the strength of Labor Unions in Australia. Australia's labor organizations have campaigned relentlessly on behalf of their members' pay and conditions with the result that these normal, everyday workers get a fairer share of the economy than they could hope to North America. In 2009, the federal minimum wage in Australia was (Aust) $14.31 per hour. That's about (US) $12.00 per hour!

Okay, opponents of fairer wages will say, Australia must be a horrible place to live with very high taxes. Wrong on both counts! International surveys invariably find Australia's cities are more pleasant places to live than most of their North American rivals. Tax freedom day 2009 in the USA is April 13, in Canada it's June 14 and in Australia it's April 23.

Median weekly earnings of America's 100.1 million full-time wage and salary workers were $734 in the second quarter of 2009, according to the Bureau of Labor Statistics of the U.S. Department of Labor. The average full-time male wage in Australia is A$1,264 (US$1062) per week, while full-time women average A$1,049 (US$881) per week.

Adding insult to injury for America's unfairly paid workers, a 2009 joint report funded by the Ford Foundation, the Haynes Foundation, the Joyce Foundation and the Russell Sage Foundation has found that America's lowest paid workers don't even receive the pay they are entitled to.

A study of 4,387 workers in low-wage industries in the three largest U.S. cities-Chicago, Los Angeles, and New York City exposed a world of work in which the core protections that many Americans take for granted-the right to be paid at least the minimum wage, the right to be paid for overtime hours, the right to take meal breaks, access to workers' compensation when injured, and the right to advocate for better working conditions-are failing significant numbers of workers. The sheer breadth of the problem, spanning key industries in the economy, as well as its profound impact on workers, entailing significant economic hardship, demands urgent attention.

* Fully 26 percent of workers in the sample were paid less than the legally required minimum wage in the previous work week. These minimum wage violations were not trivial in magnitude: 60 percent of workers were underpaid by more than $1 per hour.

* Over a quarter of respondents worked more than 40 hours during the previous week. Of those, 76 percent were not paid the legally required overtime rate by their employers. Like minimum wage violations, overtime violations were of substantial magnitude. The average worker with a violation had put in 11 hours of overtime-hours that were either underpaid or not paid at all.

* Employers are generally not permitted to take deductions from a worker's pay for damage or loss, work-related tools or materials or transportation. But 41 percent of respondents who reported deductions from their pay in the previous work week were subjected to these types of illegal deductions.

* Of the tipped workers in the sample, 30 percent were not paid the tipped worker minimum wage (which in Illinois and New York is lower than the regular state minimum wage). In addition, 12 percent of tipped workers experienced tip stealing by their employer or supervisor, which is illegal.

*Minimum wage violation rates were most common in apparel and textile manufacturing, personal and repair services, and in private households (all of which had violation rates in excess of 40 percent). Violation rates were substantially lower in residential construction, social assistance and education, and home health care (at 12 to 13 percent). Industries such as restaurants, retail and grocery stores, and warehousing fell into the middle of the range, with about 20 to 25 percent of their workers experiencing a minimum wage violation.

* Violation rates also varied significantly by occupation. For example, childcare workers had very high minimum wage (66 percent) and overtime (90 percent) violation rates. More representative were occupations such as cashiers, who had a minimum wage violation rate of 21 percent and an overtime violation rate of 59 percent.

* Workers who were paid a flat weekly rate or paid in cash had much higher violation rates than those paid a standard hourly rate or by company check.

At the end of 2010 the average wage in Australia had reached US$68,370. In America it was just US$44,980.

References and Further Reading:

Wages for Jobs in Australia vs USA, UK, Germany
http://www.jobsabroadplus.com/very-high-wages-in-australia/
Canada vs Australia
Goldman Sachs bonus bonanza
Australia Wages
The Rich Get Richer and the Rest Get Less
Boss vs worker pay
CEO Pay
Non-management workers' pay
CEOs paid more in a day than workers in a year
CEO Pay in Canada
Better work? Low pay, trade unions and regulation in the United States and Australia
Tax freedom day Australia
Tax freedom day Canada
Tax freedom day USA
Median Weekly Wage Australia
Median Weekly Wage USA
pdf document: Broken laws, unprotected workers

http://www.atlantalivingwage.org/

link for each "Reference" inside .. bottom line higher wages guarantee more demand in the economy ..