Labor Leaders Furious After World Bank Recommends Ditching Minimum Wage

Bernie Sanders is preparing to release his version of the "jobs guarantee" that has become a fixture of the UK Labour Party's platform under leader Jeremy Corbyn.

And although his office admits it hasn't carried out a cost analysis for its visionary plan, Sanders says his goal is to guarantee a job (paying $15 an hour) in construction, health-care, education and a handful of other fields, to every American who wants one.

But while the socialist fervor unleashed by Sanders's 2016 primary run shows little sign of abating, a draft report released by the World Bank shows just how misguided a "jobs guarantee" would be.

Labor

In the report, the World Bank proposes lowering minimum wage and easing restrictions on hiring and firing for employers to help prepare countries for the onslaught of robot labor that consultancies including McKinsey believe will kill 800 million jobs by 2030, according to the Guardian.

The World Bank is proposing lower minimum wages and greater hiring and firing powers for employers as part of a wide-ranging deregulation of labour markets deemed necessary to prepare countries for the changing nature of work.

A working draft of the bank’s flagship World Development Report – which will urge policy action from governments when it comes out in the autumn – says less "burdensome" regulations are needed so that firms can hire workers at lower cost. The controversial recommendations, which are aimed mainly at developing countries, have alarmed groups representing labour, which say they have so far been frozen out of the Bank’s consultation process.

Of course, anybody who has followed our coverage of minimum wage hikes in Ontario, Seattle (as well as McDonald's workers' "Fight for $15) would know that these types of government-mandated wage hikes often destroy more jobs than their backers realize. Furthermore, studies have found that mandated wage hikes disproportionately harm female and minority workers.

MinWage

But despite all available empirical evidence, Labor organizations are slamming the World Bank for ignoring the harsh realities faced by workers every day.

Peter Bakvis, Washington representative for the International Trade Union Confederation, said the proposals were harmful, retrograde and out of synch with the shared-prosperity agenda put forward by the bank’s president Jim Yong Kim.

He added that the WDR’s vision of the future world of work would see firms relieved of the burden of contributing to social security, have the flexibility to pay wages as low as they wanted, and to fire at will. Unions would have a diminished role in new arrangements for "expanding workers’ voices."

The paper "almost completely ignores workers’ rights, asymmetric power in the labour market and phenomena such as declining labour share in national income," Bakvis said.

The International Labour Organisation has also expressed alarm at the proposals, which include the right for employers to opt out of paying minimum wages if they introduce profit-sharing schemes for their workers.

The WDR draft says: "High minimum wages, undue restrictions on hiring and firing, strict contract forms, all make workers more expensive vis-à-vis technology."

The World Bank doesn't focus solely on minimum wage. In addition to waiving the minimum wage, the NGO advocated loosening restrictions on hiring and firing employees to encourage companies to hire more Why? Because by making it more expensive to fire a worker, governments are making companies more risk-averse when hiring workers, too.

And while labor leaders are aghast at what they perceive as the World Bank arguing for labor-market deregulation, they're apparently ignoring the researchers' claim that labor market regulations - in their current form - only "protect the few who hold formal jobs while leaving out most workers."

And what's more, the World Bank is only advocating eliminating minimum wages for companies that agree to introduce profit-sharing arrangements for their employees - thereby better aligning the interests of labor with the interests of management.

The report is being prepared amid growing speculation about the impact of artificial intelligence and automation on employment and wages in future decades.

"Rapid changes to the nature of work put a premium on flexibility for firms to adjust their workforce, but also for those workers who benefit from more dynamic labor markets," the draft says.

Bakvis said the draft "puts forward a policy programme of extensive labour market deregulation, including lower minimum wages, flexible dismissal procedures and UK-style zero-hours contracts. The resulting decline of workers’ incomes would be compensated in part by a basic level of social insurance to be financed largely by regressive consumption taxes."

The paper says that labour regulations "protect the few who hold formal jobs while leaving out most workers" and the sort of social protection schemes that began with the German chancellor Otto von Bismarck in the late 19th century were not appropriate because they covered only a third of developing country populations.

...

A World Bank spokesman said: "To stimulate debate and draw attention to critical issues, the report will present a range of ideas for how governments can create the conditions for workers to benefit from huge shifts in technology, demographics, urbanisation and other factors."

"To end poverty and boost shared prosperity, it’s vital that we consider new initiatives to meet the disruption that will surely come from these structural changes. We encourage and look forward to comments and an evidence-driven discussion on this important topic."

Of course, this doesn't make the idea any less toxic to the labor movement - though if they would only continue reading for a few more sentences, instead of becoming overwhelmed by sanctimonious anger after reading the phrase "lower the minimum wage", maybe they'd understand that something is going to need to change in the labor market to accommodate the advent of the robot era.

And until we all agree on a solution, no proposal should be too profane to consider.

Comments

thisandthat Dsyno Wed, 04/25/2018 - 16:17 Permalink

Market is already deciding...

Why you think you have so many migrant workers taking all kinds of jobs, with so many jobless workers, and so many displaced jobs?

So go tell anti-open borders/globalization activists to let gov know they shouldn't interfere with freedom to hire at lowest cost possible...

Can't have the cake (free market) and keep it (securing jobs).

In reply to by Dsyno

sabaj49 kralizec Wed, 04/25/2018 - 09:25 Permalink

since NAFTA and WTO have now globalized u.s. wages(making us 3rd world country)

so many LOW PAID WORKERS can't afford even low end apartments

besides I NEED TO KEEP RAISING RENTS and lowering our min. wage will interfere - used to be $7.85 now $10.50(going up .50 cents year til it hits $12)

so are my rents going up $10 a month every year - won't stop when it hits $12

In reply to by kralizec

divingengineer Stu Elsample Wed, 04/25/2018 - 08:35 Permalink

Once there is a robot workforce what will they need the lower classes for?

Their only value will be their vote, will that be enough to sustain them?

When 70% of the country is unemployed, what share of this new robot wealth will they vote themselves?

At what point will the rich disenfranchise the poor from their ability to vote themselves a share of this robot wealth?

How well will we be taken care of when there is no such thing as a job? 

Sounds like we only have about 10 years to figure out some of these questions.

This is scary to me, I can see greedy rich causing massive social upheaval and suffering. I believe they will greedily hoard robot profits and it will be a huge problem for the country to come to the realization that they should be taxing profits not wages, thus no public services of any kind for lack of revenue.

 

 

In reply to by Stu Elsample

Endgame Napoleon divingengineer Wed, 04/25/2018 - 08:55 Permalink

They are not going to have a consumer base to keep up their wealth, either, so it is a Catch 22 for the rich. The welfare-consuming / womb-productive citizens and noncitizens are not a big enough consumer base to keep the rich afloat, no matter how many more layers of welfare for sex and reproduction in single-earner households that politicians add on. At this point, the rich also have other part-time, churn-able, temporary and 1099-gig workers with no unearned income from government buying from them. And they have the top 20% of dual-high-earner parents who spend a smaller portion of the salaried income from the few good-paying jobs, which are concentrated in fewer households due to assortative mating, on consumer goods and services. The welfare-consuming / womb-productive legal / illegal immigrants who send billions of their earned / unearned income out of America in remittances, and the dual-high-earner couples who babyvacation in Europe and other foreign countries a lot, do not spend their extra money in the USA to bolster this economy.

In reply to by divingengineer

BrownCoat divingengineer Wed, 04/25/2018 - 09:15 Permalink

"At what point will the rich disenfranchise the poor from their ability to vote themselves a share of this robot wealth?"

Not scary. A repeat of history. Robot wealth will be like other wealth. The greedy producers get rich, like the modern day robber barons. Greedy politicians react to the injustice, not by making a more fair playing field, but by stealing (I mean regulating, suing, and taxing) the wealth producers. To justify taking the wealth, the politicians give a little to the free stuff army.  

In reply to by divingengineer

Endgame Napoleon BennyBoy Wed, 04/25/2018 - 08:40 Permalink

Bernie’s plan is the only plan addressing the massive numbers of working-aged citizens out of the workforce in the USA. Sitting at 50 million in the conservative estimate, it is an historic high, and that does not count the equally massive underemployment of US citizens, including the fact that over 40 million employed-in-name-only citizens and noncitizens cannot even afford food on their pay, so the government feeds them when they are womb-productive. 

This plan is likely unaffordable-cubed, not to mention the fact that we already have a mountain of government workers in the USA without which there would be even more underemployment and uncounted unemployment, but this plan does, at least, acknowledge that the people employers hire are the ones who have unearned income for sex and reproduction. 

There is a reason why minimum-wage hikes hurt “women” and minorities, and it is the same reason why half of non-womb-productive men in their prime earning years — 18 to 34 — live at home with their parents due to rent that consumes more than half of their earned-only income. 

Low-paying employers prefer to hire the womb-productive women with spousal income, child support that covers rent or monthly welfare that covers the cost of rent, food and electricity, with monthly cash assistance and an up-to $6,431 EITC child tax credit on top to boost up their low wages, in addition to nearly free daycare so that the moms can work part time, staying below the income limits for the programs. The same thing is true for the legal / illegal immigrants with US-born kids in single-earner households, staying below the earned-income limits for welfare in [traceable] earnings.

This evil World Bank mentality has already caused tons of homelessness among American citizens who do not have the option to just have sex, produce a bunch of kids they cannot afford to feed and work part time for rock-bottom wages to stay within the income limits for womb-productivity-based monthly welfare and progressive-tax-code welfare. 

Funny how these companies manage to find the money to wantonly pay their crony-parent managers massive sums despite the fact that they, like their low-wage “voted-best-for-moms” underlings, are on a two-week vacation every two months, with other frequent  absenteeism also overlooked.

The turnover is much lower among the crony-backwatching parents who take frequent and lengthy babyvacations, in addition to mornings, afternoons and days off for their kids (so they say), beyond their PTO and pregnancy leaves, whereas the turnover among the non-culture-fit employees who come to work every day, stay all day and meet the account generation and account-retention numbers every month—but who lack unearned income from spouses or government for sex and reproduction—is sky high. Get the churn-able non culture fits to increase your bonus numbers and churn them upon return from your 12th vacation, highly paid crony parents.

The people who are hurt by this crony-corrupt, partially socialized system are most of the hard workers, especially those who must cover rent and all other household bills on one, earned-only income stream.

Robots have already reduced the workload. It is the reason why so much crony absenteeism is tolerated among the culture-fit crony parents at the top and the bottom of the pay food chain in workplaces. If computers were not doing a lot of their work, they would be needed more at work. 

In the fake-feminist era, governments have incentivized women to have a ton of babies, with all kinds of unearned income from monthly welfare programs and the progressive tax code. Incentives likewise include copious absenteeism privileges in workplaces that make moms nearly above firing, and so, we have a lot of extra humans who need jobs.

All of this carping about low births rates from economists is ridiculous, when the Millennial generation is BIGGER than the Boomer generation. Yet, tons of Millennials (and Xers), with no access to free money from welfare programs and the US Treasury Department for sex and reproduction, are underemployed or out-of-the-workforce, while government absurdly pays $9-per-hour daycare workers to raise the children of women so that they can stay single and work part time for low wages, providing employers with a workforce that has “somethin’ comin’ in,” as an employer told me, explaining why he did not hire women without spousal income, child support or monthly welfare and refundable EITC child tax credits up to $6,431.

It is typical, with another employer explaining that while her sister was in the same situation, needing a job with wages that actually covered all bills since she had no spousal income or pay from government for sex and reproduction, “there is just nothing like that out there.”

The few jobs with benefits, undergirded by a $260 billion employer tax exclusion, that pay enough cover all household bills with no need for unearned income, are almost 100% occupied by moms with spousal income that is ample enough to support their family in a middle-class lifestyle.

Such highly paid moms, including the ones who are constantly absentee from work and above firing, got a non-refundable tax cut of a few thousand this year to cover their 11th, yearly, lengthy and excused vacation. The rest of us who need jobs that enable us to confidentially sign 12-month lease agreements, but who, no matter how high our sales and account-retention numbers are, have only churn jobs at wage levels insufficient to cover rent between churn jobs, especially when frequently absentee crony moms churn non culture fits who are not part of the mom-absenteeism gangs without UC, got a tax cut that will cover a Costco membership.

In reply to by BennyBoy

Moving and Grooving Endgame Napoleon Wed, 04/25/2018 - 11:35 Permalink

I think I've gotten your story straight now. After seeing / reading hundreds of these posts I understand you're a guy who works with women who have children but no husbands, and take lots of unscheduled time off. You work harder than they do, and for more hours, and deeply resent them. Is that about it?

 

I am having a little trouble with one of your newer complaints 'crony-backwatching parents who take frequent and lengthy babyvacations'. It seems like a non-sequitur. Maybe you can add a sentence or two to your template file to make it easier to understand. Thanks!

 

.

In reply to by Endgame Napoleon

EuroPox Wed, 04/25/2018 - 04:24 Permalink

The best reason for scrapping all minimum wages is that they don't work as expected or intended.

As minimum wages rise, people whose output has a lower value than the 'miminum wage', find themselves out of work.  So let them work and let the market decide what their output is worth; solve poverty some other way.

The real world is a bitch! It just refuses to conform with what intellectual leftists 'can prove' is best.

NiggaPleeze EuroPox Wed, 04/25/2018 - 04:52 Permalink

Right.  So as automation increases, under your logic, in 30 years, when humans are no longer necessary to perform services, everyone should be paid $0, because that is their "market value".  Which means everyone should die, except for the robot owners.  Of course the robot owners will survive not because they are better than the starving folks who don't have robots, but because they inherited wealth.

So in a dramatic way, your proposal makes Stalinism seem like a jovial, friendly type of social system.  At least those in the gulag got some money and most got to survive.  Not so in the American post-industrial gulag.

The problem is the market is not an arbitrator of the objective value of someone's labor.  The market is the arbiter of negotiating power.  A perfect example:  if I put a gun to your head, I can get your possessions for free.  Why?  Because I have more negotiating power.  And people who inherit money, are born with a gun to everyone else's head:  they own this land or that robot and the guns of the State will be used to enforce their superior "birthright".

There is no justice in the market and inherited wealth, it is as brutal and callous as nobility and serfdom.

That's why to have this system work, that you seem to long after, the oligarchs are building their Big Brother Police State.  To avert justice from ever being imposed by the lowly "proletariat".

In reply to by EuroPox

EuroPox NiggaPleeze Wed, 04/25/2018 - 05:07 Permalink

Sorry but what you say is no argument at all - you can't think beyond what you believe is 'the market'.  The market is everything - it is people setting up their own small business on say, ebay; it is people setting up new delivery businesses and structures to adapt to the new economy; and it is EVERYTHING else you can think of (and things you can't think of).

Did you know there is now a 'parcel exchange' on the streets of Shanghai?  All the delivery workers get together and swap parcels so that they each deliver to a specific area - they get their job done faster and people get their parcels faster.  Nobody legislated to do it, there is no building or infrastructure required, no big corporation is involved.  It just happened, on the sidewalk, because someone thought it was a good idea.  That is the market!

Saying things like:"There is no justice in the market and inherited wealth, it is as brutal and callous as nobility and serfdom." is a losers argument.  That IS the system - no point whining about it!  You ain't gonna change that so go and do something useful.

In reply to by NiggaPleeze

EuroPox DontWorry Wed, 04/25/2018 - 05:50 Permalink

That's right.  But in whose interests are all those things done?  Every one of them intereferes with the 'free market' for political or other reasons.  The free market is just fine on its own, problem is, vested interests try to stop the market doing what it does best.

It is no coincidence that the US, UK, China and everwhere else, had their fastest periods of growth before governments started interferring, with lots of rules and other red tape.  

In reply to by DontWorry

divingengineer EuroPox Wed, 04/25/2018 - 08:48 Permalink

70% of the population cannot exist without a job or a welfare check, point blank, no skills to survive by their wits in your new loosey-goosey free market.

Hungry people don’t ask, they take. Consider it. That’s where we’re heading.

No jobs, no taxes paid by employees, no government services, no nothing.

I see this new robot utopia for the rich as the end of society as we know it.

In reply to by EuroPox

BrownCoat divingengineer Wed, 04/25/2018 - 09:55 Permalink

"I see this new robot utopia for the rich as the end of society as we know it."

Nothing new under the sun. Sure this society is doomed. Not because of robots, but because of the rulers.
Can you name other doomed societies? Of course, every other society in history! Those forerunners committed suicide just as Western societies are doing now. 

In Toynbee terminology, the 'creative minority' has become the 'dominate minority' in our society.

Oh well, it was fun while it lasted. Thing will improve at the end of the next Dark Age! (Which will be in about 4 or 5 centuries after this collapse - currently in progress - hits the bottom.)

In reply to by divingengineer

BrownCoat EuroPox Wed, 04/25/2018 - 09:40 Permalink

@ NiggaPleeze  &  EuroPox,

So as automation increases...
This is what economists call productivity improvements. Robots do change the status quo, but don't change the game.

fastest periods of growth before governments started interfering...
Government is the 'gun to the head.' The winners (either inherited or generated rich) change "the system's" rules (aka laws) to protect their franchise. 

In reply to by EuroPox

bluez EuroPox Wed, 04/25/2018 - 05:56 Permalink

Rich people and private corporations should not be allowed to own nuclear weapons and automated production facilities.

Pure tyranny is when the rich own everything. The rich tyrants solemnly address the masses about "regrettable necessities" and "shared sacrifices," then launch more drones and cut school lunch programs yet again. Why merely react to what they are perpetrating?

The very concept of rich people (and even of modestly affluent people) would be bleached into meaninglessness if the poor ones ceased to exist. That is, the rich need the poor and oppressed for the sake of their own self-definition. So therefor they "launch more drones and cut school lunch programs yet again." (Really only a neocon subset of the rich and powerful actively promote these pogroms; the others just jet-set and so on.)

No one should be allowed to own more that 20 times what they need to make a living and live comfortably. People should be required to register their substantial holdings, and if they exceed the 20 times limit, a random jury should force them to sell off the excess, and reduce their holdings to 15 times what they need. The proceeds should go to the commonwealth. Anything they fail to register should be confiscated, and those who willfully avoid registering assets should be punished. That is the only way to control economic royalism and protect freedom and human rights.

Most of our industry has been sold by the rich for profit and shipped down the river to other nations, and there is perhaps only one way to rebuild it. All large industry should be owned and completely controlled by democratic communities and towns. Each community would own an industry, which could only be sold to another community. Some communities would have to be larger than others. For example, an ironmaking operation would require a large community, or consortium of communities. There could be government sponsored research and development communities too. Employees would have to live in the communities, and thus there would be a powerful incentive to minimize pollution. Small businesses would be operated by ordinary companies.

There will be no more rich political parties. No more rich to be protected by vicious policing. No more rich capitalists selling our industrial facilities down the river to China. There must be some regulation, unless we want to be utterly ruled by ultra-rich tyrants. Wealth control would bring freedom and prosperity at last!

I have known about half a dozen billionaire's kids, due to my unusual background. About 2/3rds of them seem like nice people; they seemed friendly and decent. About 1/3rd seemed like exploitative creeps. Most of their family names appear on products that may be found in an average person's home. They were already rich. To me, rich today is having about $250,000,000.00 of relatively expendable money.

I think maybe 30% just live on trust funds and party. Maybe 60% have jobs of some sort, such as sitting in boardrooms from perhaps 10 to 50 hours a week. And maybe about 10% participate in fascistic political "foundations" which do vast harm to our nation and its people. So all in all, the rich screw us over, and thus bestow toxic negative benefits.

Average people do not envy these rich ones. "Envy" is universally defined as "resentful desire of something possessed by another or others." Ordinary folks, and activists also, do not possess energy to waste contemplating resentful desires — they are too preoccupied with dealing the latest toxic negative benefits being foisted on them by the fascistic elements among the rich.

We would all be happier and safer if the rich went away. For example, if no one was allowed to own more than 20 times what they need to live comfortably and to have a good income.

In reply to by EuroPox

EuroPox bluez Wed, 04/25/2018 - 06:15 Permalink

You see there you go - dragging the top down instead of lifting the bottom up!  Everyone loses under your system because you take away 'incentive'.

If I have reached my 20 times limit on Monday morning at 10:00am, I'll just take the rest of the week off and go and play some golf.  Instead I could work for a week, create 10 new jobs and make everyone better off!  But you don't want me to do that.

In reply to by bluez

bluez EuroPox Wed, 04/25/2018 - 07:06 Permalink

Individual localities that own production facilities have every bit as much "incentive" to succeed as do irresponsible fat-cat billionaire owners. What good does it do to allow individuals to own infinite wealth? How on earth does that help the rest of us? Are you psychopathic?

In reply to by EuroPox

EuroPox bluez Wed, 04/25/2018 - 07:38 Permalink

No, my clue is, you can't make poorer people better off by removing wealth from others.  It does not work, the wealthy will just leave and go somewhere where people are not envious of them - taking their wealth with them.

You don't try to kick someone who is successful - you try to become successful yourself, and if you can't do it where you live, then go somewhere else instead.

Find out what you are good at and then do that.  Don't expect anything for free and don't expect anything to be 'fair'.

Read this:
"How to rake in £17million a year without leaving your spare room: First-ever eBay rich list ranks the top 30 Brits who've made their fortunes on the site"
http://www.dailymail.co.uk/news/article-3170820/How-rake-17million-year…

 

In reply to by bluez

EuroPox ChiangMaiXPat Wed, 04/25/2018 - 08:27 Permalink

This is your 3rd inane comment and you are becoming rather annoying.  I already said below that you are confusing the current system with the free market.  

I don't like the current system any more than you do.

This comment section has been infested with rabid leftists who don't know their arse from their elbow but stand and scream wrongly believing they have something useful to say.

There is no free market left anywhere that is worth mentioning.  People who think that the problems we face are because of the free market, would be better off demanding their money back from what ever school they attended because they were clearly taught nothing.

In reply to by ChiangMaiXPat

EuroPox dark pools of soros Wed, 04/25/2018 - 08:42 Permalink

You see, when the system was backed by gold, you could not just create debt at will.  You don't need a debt jubilee (I'm not going to lend you anything if I think I won't get it back!) you just need to stop too much debt being issued.

Anyway what do you mean by debt?  When you deposit money in your bank, the bank is your debtor - you plan on writing all that off too?

In reply to by dark pools of soros

bluez EuroPox Wed, 04/25/2018 - 08:22 Permalink

"It does not work, the wealthy will just leave and go somewhere where people are not envious of them - taking their wealth with them."---^^

No they cannot take the real wealth with them, because the production facilities and farms (real wealth) are owned by and located within democratically controlled individual localities (such as, say, Lewiston, Maine). What exactly is so great about power-crazed, useless super-rich bums?

In reply to by EuroPox

bluez EuroPox Wed, 04/25/2018 - 09:33 Permalink

Any such mortgages need to be canceled, and all productional facilities must become owned free and clear by local communities. Obviously there is nothing to do except rebuild the industry that has been transferred abroad. We have passed far beyond stupid economic theories.

In reply to by EuroPox

iLLivaniLLi19 EuroPox Wed, 04/25/2018 - 10:13 Permalink

It's telling that communists/socialists have to insist that capital is only and always "the means of production" ie; factories and tools. In reality there is human/social capital, biological capital, intellectual capital, knowledge capital, and fiat capital (claims on labor).

 

If capital is employed differently by different people then distributing capital equally is a ridiculous argument (and not even possible with abstract forms of capital). If one guy can build a decent house with some hammer and nails and another guy can only build a shitty box with those same hammer and nails, then arguing that hammers and nails should be distributed equally is retarded.

In reply to by EuroPox

bluez iLLivaniLLi19 Wed, 04/25/2018 - 11:11 Permalink

I'm not a communist, and do not aim for "redistribution". I only ask that personal wealth must be limited, and that all major productional facilities must only be permitted to be owned by and contained within individual localities. Facilities are not the only elements of productional systems, of course. There must also be local workers with good health, knowledge, skills, and good initiative available.

In reply to by iLLivaniLLi19