The Living Wage Project: Questions and complications

If you’re here because you saw a sign up at the Quarry shopping centre, go HERE to find out how much per month you should pay so your domestic worker can take home a living wage. If you’re interested to see some answers to questions and feedback we’ve received, keep reading. Again, to contact the authors, email ann.ebert.oneill(at)gmail.com or steph.ebert17(at)gmail.com or comment at the end here.

South-African-football-fa-001First, thanks everyone for the great feedback on the living wage project! If nothing else, we hope that this has helped you at least think about what you pay people, and base this on real information. Hopefully, too, you’ve been challenged to think about how to be an employer that strives to really help people break out of the cycle of poverty as well as help our country.

Here’s some questions with some (kind of) answers that might just spark more questions—but let’s keep talking about this! We’d love to get more feedback and hear your thoughts and ideas.

How can I afford this? Of course, it depends on what you had been paying, but let’s say you’d been paying R2 000 a month. You now have to find an extra R1 600 in your monthly budget, and you don’t know where to find it:

  • You might have to sacrifice a bit. There are a lot of us out there that do have room in our budget, if we want to find it. We pay for things like gym memberships, a meal out at Spur, pocket money for our kids, coffee out with friends, and dog food every month. If we knew our money was going towards breaking someone out of the cycle of poverty, I think we could be okay giving up some of those things. If doing justice was easy, everyone would do it—there’s got to be sacrifice sometimes.
  •  Think outside the box: A lot of money we spend because of social pressure (our cars, our clothes… those excessive party packs at children’s birthday parties)—things we don’t really want to do, but we do because that’s what everyone does. Daycare is one of those things. We pay R1 500 per child to send children to day care or preschool in Hilton every month. What if you hired someone to do this job for you, paid them a living wage and then also paid for them to take courses through Caversham to get skilled in Early Childhood Education? If you have more than one child (or if you and a neighbor went in together) you could not only upskill someone, but provide a better early childhood foundation and more adult-to-child attention for your children than if you sent them to day care and break even or even save money.
  • Only demand the amount of work hours you can pay for: If you really can only afford to pay R 2000 a month, then have your domestic worker come less days of the month. Therefore they are working fewer hours, but getting the same pay, which might allow them to find another part-time job to “make up the difference.”

You should cut the living wage number in half, because you’re assuming only one employed adult in the home, rather than two. We based the living wage on the average family in Sweetwaters. The average family in Sweetwaters is not a two-parent home, so we felt to be fair, we needed to have one person supporting three kids.

I am literally only employing someone because it’s so cheap to do so. I don’t even pay the “nice person” wage, I pay minimum wage. If I had to pay this person more, I just wouldn’t employ them. This is something I often think about as well. As this article argues, domestic workers are a luxury item. (When the petrol attendant strike was happening part of me was in sympathy and the other part was like, “You crazy people, don’t strike or people will realize they actually can pump their own petrol and don’t need to pay people to do it for them!) A surprisingly high number of people are in the domestic labor sector (about 1.5 million) in our economy. While most of us in Hilton are in the privileged position to be able to pay a living wage, there are some in South Africa who don’t have that ability. The last thing the living wage project wants to do is cut people out of their jobs entirely, since so many people depend on that for their income. That’s why this isn’t an argument to raise legal minimum wage. We’re just arguing that as moral people we have an obligation (if you’re Christian, you have an even stronger obligation) to be fair employers. That’s something that many, many of us actually have the means to do. If you literally don’t have the means to do that, then it’s up to you to figure out before God what the best decision would be, whether that’s having someone work less hours for the same pay or something else.

Just because unemployment is so high, and there are thousands of unskilled people in Sweetwaters looking for work doesn’t make is right to pay someone as little as possible, even if straight supply and demand says you can. In the Bible we often see God coming out on the side of the poor because they have no one to defend them. As employers, the whole system is in our favor. There are so many unskilled people we could pretty much pay whatever we want, because we know there is someone more desperate waiting right behind them to snap up the job (any job is better than no job). That hopefully strikes you as a bit unfair. If we can, I think we should pay a living wage. I’m not a macro-economist, I can’t speak to the larger labor issues in South Africa, but in our own sphere of influence we can attempt to do justice. This isn’t about communism or socialism or any other -ism. I’m not arguing for a revamp of our entire economy, so don’t get scared off! 🙂 I’m just asking us to consider how we can act in a moral, just way with what we have.

I don’t pay a ‘living wage’ but I do pay for my domestic worker’s child’s school fees which is an extra R2000 a month, on top of the R2000 I already pay. Is that okay? What should I do? The two key aspects about a living wage is that it gives people freedom to make choices for themselves, and it has the potential to help them break out of the cycle of poverty.

One reason why we provided the break-down of the categories showing what the money in the living wage is allocated towards is so that as an employer you’re able to get the information you need to make wise decisions about what you pay your workers. If you look at the breakdown and you are paying your domestic worker enough to have food, shelter, transportation, healthcare etc. and then personally cover their children’s school fees as well, you might feel that this has the greatest potential to break someone out of the cycle of poverty. Someone else might feel that is paternalistic, and prefer to give the money directly to the person in their wages, which gives their employee more freedom to make choices. It’s a tension and something you’ll have to wrestle through yourself. (Of course, you could always avoid moral dilemmas and pay a living wage and then personally pay for the child’s school fees on top of that! 🙂 )

Poverty is more than just lack of money. It’s holistic- lack of education, lack of social, spiritual, and physical resources. Just giving someone more money can’t really break them out of poverty. Paying someone a living wage is not the be-all-end-all-get-out-of-jail-free card for acting morally and justly in our society. It would be great to have a holistic approach and see if there is anything you can do to help your employees get out (and stay out) of poverty. For example, the poor are prey to slick advertisers who push people into consumer debt, saving is difficult when you’ve been living hand-to-mouth for so long. I don’t think this means you shouldn’t pay someone a living wage. But maybe it means that you also can help with practical things like money management skills (my US friends might call me paternalistic, but many of us pay other people to be our financial planners because we haven’t a clue—how much more for someone just getting out of poverty?).

  • Help your employee set up a savings/investment account. Give them the option to have you direct deposit into that account before paying out their salary.
  • Help your employee set up a Fundisa account if they have a child who needs to be educated. This is saving for the future and specifically for education.
  • Find out if there are any other direct-deposits your employee would like you to set up- perhaps they would like you to directly pay their UNISA fees or school fees for a child.
  • What this means, though, is having a conversation with your employee and getting to the point that your employee feels comfortable sharing these things with you. Something else to work on. 🙂

How can I pay someone more when I know for a fact that money is not going towards education or anything that will break them out of poverty, but rather consumer debt which will drive them further into poverty? The short answer is when you pay someone you have no control over what they do with that. Freedom is a double-edged sword. However, some research is showing directly giving people cash can still help people break out of poverty and basing whole charitable models around it (check out GiveDirectly). Many people I’ve spoken with, though, have personal experiences of seeing employees get buried in consumer debt or clamped down with vices such as alcoholism, and are therefore reluctant to take such an uninvolved approach. If our argument so far has been a moral one and not a straight-up economics one, then surely these other moral components should be taken into consideration? (Answer: I don’t know. Freedom is messy. At least think about it).

Questions? Answers to some of the questions posed here? Share your thoughts with us! 

 

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6 thoughts on “The Living Wage Project: Questions and complications

  1. Pingback: The Living Wage Project #3 | bridginghope

  2. The fact that people can use spare money to develop bad habits is not a justification to pay them unfairly. In fact, I would say it means that one of our responsibilities as we break out of our culture of paying people unfairly is to do our utmost to educate people to use their money wisely. I’m sure the idea of saving is foreign to most let alone considering a child’s tertiary education.

    • I agree, James, thanks for sharing your thoughts! Another thing that Ann (the co-author) shared is that if we have the view of breaking people out of the cycle of poverty, it may take a few generations. So for example, your employee might earn a living wage, and completely blow it every month, get into debt, waste it on addictions etc. But then maybe their children will see that, will see that if the parents had done something different they’d have more, and so maybe they’d be better spenders?! Of course, that’s totally hypothetical and it would be interesting to see if there is research on that– your point about helping people see the importance of money management as part of being a just employer is a good one. People need access to information about these things to counteract what they’re hearing everyday (on 5fm today there was a string of 6 adverts all advertising personal loans or “pay later” products- nothing on how to actually SAVE money!)

  3. Maybe there’s a difference between fair wage and living wage, but I won’t go into that. Question is though – if you don’t give a beggar at the street corner cash cause you think he might use it for substance abuse, why would you pay your employee more when you know that it will be used for substance abuse?? Bear in mind that the pay determination here is not based on work or performance (as in a normal employer employee relationship), but just on living cost and requirements, when approaching it in this way… So if the substance abuse is more important than the living costs, then surely the pay is higher than the living pay?:P Am aware it’s not that simple – just a thought – and would only apply to very specific circumstances where certainty exists.

    • I see your point, JK, thanks so much for commenting!! A few thoughts I had:
      – Even if you don’t pay your employee a living wage, you don’t have control over how they spend their money. So even if you only pay them R1000 a month, a lot of that might go towards an addiction, and because they’re addicted, they’re happy to starve/for their family to starve. You want to know that you’re paying someone enough to live (if they chose to manage their money well) rather than no matter how well managed, they really can’t afford to make it. Anecdotally, if your employee has an addiction, it might be that if they earned more, a higher amount of money would actually go home to their family at the end of the day (for things like food) than towards their addiction. But equally, they could still completely waste it all. So if you’re worried about someone spending their money poorly (and that’s keeping you from paying a living wage) then no matter what you pay them, you’ll still have that same worry. I’d love to see if there are some studies on this– like as people get paid more, does more money go towards stupid things etc? You should check out the GiveDirectly site, they have some good research on giving money directly to people (link in the main blog article).
      – Ann pointed out to me that our perceptions on how other classes of people spend their money can be very warped. Research shows that middle class people think the poor mismanage their money (why do you spend it on DSTV?!) , and rich/upper class people think that middle class people mismanage their money (Why did you buy a new car?! Why not invest it in XyZ?!).
      – Also, in terms of the number we came up with (e.g., if you think it’s quite high, and you’d rather just pay “basic survival wage” rather than adding in the amount that makes it a living wage) — something to bear in mind is this is a very conservative living wage estimate (especially regarding transport, as many people have double the transport costs every month). So guess what I’m saying is I don’t think you need to be wracked with guilt about how your employee spends their money- because really what you are concerned about is if you are exploiting your workers or not.

      Anyone else have comments or feedback on that? I’d love to hear other views/ideas!

  4. Thanks for the response. First things first – I have absolutely no issue with the number, and don’t think it’s high for a living wage at all.

    In terms of other points, a few random thoughts that are bound to be attacked from every angle:
    – I think the intention of a living wage is to assist the employee, and is not to address one’s guilty conscience or feeling. If one then pays living wage to assist an employee, surely one should also assist such person in handling that limited money wisely. Otherwise it’s sort of like paying someone an amount, then washing your hands off it, saying “I’ve done my bit and that’s it.
    – In terms of different income groups and their judgement of the spending habits of other income groups, I totally agree with this. This does however not mean that we should just not care about the other income groups. A lot of spending in the world is done without a person having any specific control over it – we pay rates and get services that someone else believes we need, we pay tax and get services that someone else believes we need, we work for an employer and get pension/medical/a free holiday, based on what they believe we need, not necessarily what we choose, yet it’s part of our pay packet. To assist someone (by for example getting him nappies for his baby rather than supporting his addiction) is surely not such a terrible thing?
    – The debate might go to a case of a person’s free will. That can however start to clash with the fact that the employer I guess could exercise his free will by employing someone for a salary that such person at their free will would take, possibly less than the living wage. Obviously ideally everyone would be free entirely, but sometimes a bit of assistance is necessary. A parent doesn’t give a child money for school fees, but rather pays it directly to the school. When a garnishee order is issued, by law the employer has to deduct the debt repayment and pay it over on your behalf while you as employee have no say in the matter. Similarly, your employer deducts tax directly from your salary and pays it to the Taxman, rather than leaving it over to you to pay. Yes, it’s the law there, but similar thinking applies. Yes, there’s no parent/child relationship, and someone could accuse me of underestimating someone, but there can be a case where someone is educated and someone isn’t, and hence a similar dependency exists in some way(?).

    The challenge however is huge – 67% of South African households earn under R6000 a month, and social grants account for more than half that income (in total, not for every single family). Rather frightening scale. (UCT Unilever Institute, Connecting with the Majority Report 2014, National Income Dynamic Survey 2013).

    Anyway, enough of me, am logging off!:)

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