February 10, 2016

Horse 2071 - "How Is This Considered A Lowly Paid Worker?" How Indeed?

On ABC1's QandA program (which has become part of what's known as Outrage Monday in some quarters), a question was put to the panel which I think is interesting.

I've got a lot of 18 year old staff members that earn up to $38 an hour on a Sunday in the hospitality sector. We've had to increase the costs of running weddings and events and saw us have a decrease of one third of our events last year. We lost 17 events because we had to put the price up on Sundays. Lower rates would mean more jobs, certainly in the wedding and events sector. I'm not saying to rip them off at all. Even on a Monday to Friday, they earn $23 an hour as a casual as an 18 year old, with a level 3 hospitality worker earning over $38 per hour on a Sunday as an 18 year old, how is this considered a lowly paid worker?
- Mary-Anne Lowe, on ABC1's Q and A, 8th Feb 2016.

Mary-Anne Lowe is a businesswoman in primarily the wedding and events planning sector. She is the owner and operator several businesses including Events with Style, Bridal Events Australia, The Riverstone Estate and the Linley Estate, Kilsyth, which are in Melbourne's North East.
She seems like a pretty driven sort of person because she is also a Councillor on Maroondah City Council in Melbourne's North East.

It probably seems incredible to this lady that her staff are paid $23 an hour and as much as $38 an hour on Sundays. As an employer, she is motivated to reduce input costs and for most businesses, the biggest input cost are labour; naturally as a businesswoman, as that's the largest input cost, then logically that's the one that deserves the most attention. Scratch the surface though and even the most rudimentary of calculations tell a pretty telling tale.

Let's just assume for a second that one of her members of staff is employed at $38 an hour and that their entire working week is crammed into Sunday. At $38 an hour for 40 hours, and yes I know that there aren't forty hours in a Sunday but clearly this lady is living in a fantasy land, so that's what we're up against, that's $79,040 per year. Average Weekly Ordinary Time Earnings or AWOTE is $X and so that's what we're up against.
If we assume that they are on $23 an hour and working 40 hours a week, which is still a fantasy since she herself said that these people were "casual staff", then that's $47,840; which is way lower than AWOTE and still lower than the median wage in Australia.

A more reasonable assumption is that her staff as casual labour, are on far less hours than forty a week and so even the estimate of $47,840 per year for each and every one of her staff seems optimistic at best. If they are on $20 hours per week, which might be more likely, they're probably on an effective yearly wage somewhere in the region of about $32,000 a year.

If they happen to be living in the cheapest possible accommodation in the region of Kilsyth, in Melbourne's outer eastern suburbs, where train and tram dare not tread, then the absolute scummiest place that I could find was still charging $340 per week. If you take away $17,680 from the wage that this lady is paying out, then you're going to be left with $14,320 a year or just $276 per week and from that tax, petrol (because public transport in that part of the world doesn't exist), electricity, water, gas, telephone and internet has to be taken out and that's before you even think about groceries and going out.
This is before you even consider the fact that the sorts of people who are likely to be employed in this line of work are either those people who aren't particularly well educated and that this is all that their skill set will allow, those who are looking to make a little bit extra because their budget was already tight, and students who are looking to compliment what meager funds might already be available to them or worse, they are working to pay their own way through university. All three wish that they were paid more and perhaps if life was a little bit friendlier, none of them would even find themselves needing to work in such circumstances.

Ms Lowe probably looks at the realm of casual staff and thinks to herself that there are people flipping burgers who are being paid far less than she is paying for her staff and has come to the conclusion that she must be some sort of uber generous saint. Given that her turnover is more than $2 million a year (or so she boasts on one of her myriad of websites) then it's probably reasonable to also assume that she herself is on a multiple of at least five times and possibly ten times the average wage of her employees.
The Hospitality General Award 2010³ says that for a Casual worker, they should be paid 125% of the base rate which is $19.10 an hour, which works out to be $23.88 an hour. I don't know how "generous" you are being if you're only prepared to pay what the award says. Ms Lowe kind of implies that she would like to pay her employees less if the law allowed.
She also doesn't go on to qualify why exactly she "had to put the price up on Sundays". The award has been in place for 5 whole years now; and hasn't had any modifications to it. That means that the price of wages also hasn't risen in that period. This remains a mystery.

It must be said that humans are both selfish and incredibly egocentric creatures. We tend to have a very high view of our contribution to the world and think of ourselves as being wonderfully virtuous, such as being kind or generous or competent, when the demonstrated reality might be far from that indeed. For instance, if you ask people how charitable they are, most people will proclaim that they are immensely so but probe into their tax returns and the truth often dissolves their claims in the same way that a furnace does to a piece of tissue paper. The actual charitable rate across the nation is closer to 1% and statistics show that it tends to fall as income rises.

Again, I would suggest that Ms Lowe probably looks at her group of friends and because they're all leading wonderful lives, then the inference must be that her employees are also leading wonderful lives because she is so generous with her wages. Her question on QandA almost seems to come from a place of smugness. "How dare you accuse me of paying low wages!" she might say. I will confess though, that while it isn't fair to put words into someone else's mouth, I have seen exactly this attitude from other business owners before, even in circumstances where they weren't even paying the award wage. Admittedly I do not have the advantage of looking at this books of the business and it's safe to assume that everything is totally above board but attitude is important and often attitudes accidentally spill out of the well of people's hearts through that smallest of openings, their mouth.
The right to free speech exists; as does the right (and responsibility) of those listening to judge what has been said.

So no, I can not reliably say that this lady does pay her employees a low wage definitively but the inference that I draw shows that it might be likely. For her to stand up on national television and declare that she'd like to pay her employees less, in spite of the fact that they are being hired on days which is already inconvenient and that they are probably the sort of people who would appreciate every dollar they have more than she does, indicates to me that there might already be attitudes on display.

In answer to the original question of "how is this considered a lowly paid worker?", well I would have thought that someone on 40% of AWOTE or just 60% of the median wage would statistically be considered to be at the lower end of the income scale but obviously I simply don't know. I'm only basing my conclusions on statistics.

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