KJIPUKTUK (Halifax) – A few weeks ago, members of the Nova Scotia Teachers Union voted overwhelmingly to ratify a settlement concluded with the government three weeks earlier. Seventy-three percent of teachers participated and 94% of them favoured the deal
To many, the new four-year agreement, from 2019 to 2023, looked attractive, and it certainly was much better than the previous settlement in 2017 in which the government, by legislative decree (Bill 75), imposed on teachers, without their approval, a punishing four years (2015 to 2019) of pay cuts.
Yet, despite outward appearances, the new agreement has actually kept teachers poorer than they were in 2014.
This article is not really about the teachers’ agreement. I wish them well. They have fought mightily, not only for themselves, but for all of us against the Nova Scotia government’s austerity agenda. Rather, this is a jumping-off point to discuss an even more important issue: how the media, and public discourse more generally, gets collective bargaining wrong and falls into the trap of mis-reporting wage settlements.
And there’s an even bigger point here: how most people working for wages and salaries (low and middle-income earners) have so drastically lowered our expectations that we now accept cuts to our incomes and becoming poorer as our lot in life. Even as the growing prosperity of our societies is being shoveled to the rich.
I have brought the problem of mis-reporting to public attention several times in the past few years. In November 2019, amid a strike by Crown Attorneys, I pointed out that “the government’s proposal of seven per cent would, if accepted, result in Crowns dropping even further, so that they would be making even less real pay than they did in 2008, which could once again make them the lowest paid in the country.”
In December 2017, as the labour movement announced that an arbitration award for provincial civil servants had “broken the government’s wage-restraint agenda” I regretfully rained on that parade by showing that the celebrated restraint-breaker was actually a real pay cut of between 3 and 6%.
This article is a call-out to journalists: would you please try to get it right?
Back to the teachers: their new four-year deal (2019-23) provides for the following salary increases:
- 1.5% (retroactively) to August 1, 2019
- 0.5% (retroactively) to July 31, 2020
- 1.5% (retroactively) to August 1, 2020
- 0.5% on July 31, 2021
- 1.5% on August 1, 2021
- 1.5% on August 1, 2022
Some of the media just added up these numbers (7%) because it’s easy (but inaccurate.) Others acknowledged that the total salary increase by the end of the agreement was 7.2%, because of compounding effects.
So did the teachers really get a 7.2% raise from 2019 to 2022? In nominal (actual dollars) terms they did. Most people are thinking “Gee, I’d like to get a 7.2% raise.”
But will teachers be 7.2% better-off on August 1, 2022 than they were on July 31, 2019?
No, they will not be better off.
Because we forgot one important thing: inflation. Left on its own, inflation erodes your pay.
Inflation has been running between 1 and 3% over the past ten years, which is low compared to the 1990s. But, over a number of years even this low rate has seriously eroded people’s incomes. For example, if you were making $40,000 in 2010, and that salary did not change, then inflation has reduced its value to $34,153 by 2020. In other words, you are 15% poorer just because of inflation over ten years. Even if your income went up to, say, $45,000, you would still have fallen 4% behind inflation. In other words, while your nominal income rose, your real (adjusted for inflation) income fell by 4%.
Because the real question is not: how much money is in my paycheque? The real question is: how much can I purchase with my paycheque?
Of course, how better or worse off you are depends on the date to which you are comparing your present income. Let’s go back to August 1, 2014. After the punishing wage cut imposed by the government from 2015 to 2019, has the new settlement given teachers back what they lost since then? No it has not. In order to catch up with what they lost in that period, they would have had to achieve about 8% cumulatively in the recent round.
Even with the nominal increases in the 2019-23 agreement, teachers are now poorer than they were in 2014. How much poorer? Let’s take a teacher making $70,000 on July 31, 2015, the last day of the 2011-2015 collective agreement. After the big hit of 2015-2019, the new 2019-23 agreement starts to bring her real salary back up. But it doesn’t succeed. By August 1, 2022, adjusted for inflation, she will be making about $68,878. So she will be $1,122, or 1.6% poorer than she was in 2014. There is a little guesswork in this. We have to guess what inflation will be in 2021 and 2022, but the banks and several economic agencies make that not so difficult. I’m assuming a 1.6% rate of inflation for 2021 and a 2% rate for 2022. If the coronavirus vaccine ends the pandemic and the economy bounces back, then that surge will probably mean higher inflation than that.
Using these numbers, we can see in the chart below that by 2022 teachers’ real salaries won’t have made it back to what they were in 2014.
This is not simple. But it is not rocket science.
And yet journalists get it wrong every time.
Even union members get confused. Teachers doubtless suspected that inflation would still be eating away at their pay. But they likely voted for the agreement for several good reasons:
- The new agreement included a 25% boost in preparation and marking time, a benefit that means a lot.
- They weren’t aware of the precise amount of the pay cut inherent in the agreement.
- They were tired of fighting against the government’s austerity agenda for five years and just wanted to get on with some semblance of normality.
- They were exhausted after three months of teaching under COVID-19 after schools re-opened, wearing masks, getting their students to wear masks and observe social distancing.
- The new settlement at least stopped the precipitous drop in their pay and helped erase most (but not all) of the loss since 2014.
- Because the settlement went back to August 2019, there would be a nice package of retroactive pay. For that teacher making $70,000 in 2014, that could be a bonus of about $1800 just before Christmas 2020.
We have to go back to the 1970s to see real gains in worker standard of living. I remember collective bargaining then. Keeping pace with inflation was just the beginning. We realized that merely doing so was just running in place or falling backward. We came to the negotiating table asking for a real increase in our pay. We wanted and expected to increase our standard of living. One argument was profitability. If the employer’s profits increased, we expected some part of that. Another was productivity. If our output per worker-hour had increased, we expected a raise in return. If productivity figures were hard to come by or we were in the public sector, then the national productivity numbers were a proxy. For example, in those days autoworkers would demand, as a matter of course, 3% over and above the rate of inflation. In summary, we demanded what we felt we were worth.
That is why, in the period from the end of WWII to the mid-70s the proportion of the economic pie going to wage and salary earners increased, while that going to owners of capital decreased.
But from then on, the situation reversed as capital regrouped and revanched.
By the 2000s, we had a situation, in Nova Scotia for example, where despite a rise in real prosperity by 60% over twenty years, average real pay for wage and salary-earners had shrunk. Our outlook changed. Merely keeping pace with inflation and not falling backward was now considered a big achievement.
Karl Marx had a very useful theoretical concept he called “the value of labour power” (VLP) which helps us understand what has been going on. VLP is the general or average cost of meeting the needs of workers so that they and their families can reproduce and restore themselves in order to continue working. But what workers need or believe they need alters. It is partly objective: workers and their families need to eat, have a place to live, be educated, have leisure activities. But it is also partly subjective: e.g. how much food, housing, education and fun they need.
VLP is not the pay that workers receive for their ability to work, although wages are one indicator. VLP is more a political/psychological representation of what workers think they are worth, their sense of entitlement and self-confidence, how much of the economic pie they believe they are entitled to, not just in pay from employment, but also in services and amenities from other sources, especially the State. VLP fluctuates depending on this political/psychological contract.
In the twenty-five post-WWII years, with business booming, with high rates of union density, with the Cold War scaring western governments and employers into sharing the bounty with workers, worker pay and the welfare state grew and working class self-confidence and fighting spirit grew apace.
In the late 70s, however, a counter-insurgency on VLP began. Since then, a combination of almost permanent economic crisis (inflation and stagnation), attacks on labour law and unions and a move of industry to lower-cost countries struck a mighty blow to the sense of entitlement and hence the self-confidence and fighting spirit of workers. This coincided with the socking-in of neo-liberalism. As Stephen Metcalf writes, neoliberalism is an ideology “ ,,,.that venerates the logic of the market and strips away the things that make us human.”
Starting from the 2013 election, the Nova Scotia Liberal government’s eight year reign of anti-labour terror has been focussed on the one group of workers that had thus far managed to resist the trend of downward incomes: credentialized and unionized “professionals” like nurses, crown attorneys, healthcare technologists, university professors and public school teachers. The government did this by removing the effective right to strike, by sabotaging arbitration, by dictating terms of settlement, and by publicly declaring workers greedy (as the Minister of Justice accused the prosecutors) if they demanded merely to keep pace with inflation. No matter that this whole spate of legislative activity was likely unconstitutional. It would take years to wend its way through the courts.
But the prime purpose would have been achieved: lowering expectations and turning groups of workers against one another. Moreover, they used inflation as a convenient lever with which to obfuscate. And the media has obliged.
How to fight back is a more complicated problem. But American labour activist and scholar Jane McAlevey hits the nail squarely on the head with the title of her 2012 book Raising Expectations (and Raising Hell). She uses her experiences in the labour movement to show, not only why it is necessary, but how it is done.
The two are inseparable. We raise expectations by raising hell and we raise hell by raising expectations.
Larry Haiven is professor emeritus at Saint Mary’s University, on the steering committee of Equity Watch.
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