The genesis story of living wages and incomes: An ALIGN series

You may know ALIGN as a guidance tool to help you achieve living wages and incomes in your agri-food supply chain. Making such a contemporary tool a reality required deep digging in the past and anticipation towards the future. And that journey for us has been nothing but an eye-opener. With such amazing insights at hand, we are beginning a new blog series with facts, ideas and thoughts that shape up the past, present and future of living wages and income! Now, are you ready to join this exciting journey? The first blog of ALIGN will take you through the history of the living wage movement around the world. Let’s travel through time and eras of society that moulded the concept of living wages and income as we know it today.

The tale of living wages and living income started way before the birth of ALIGN. But before we embark on this journey to discover their evolution through time, it may be helpful to understand exactly what a living wage or income is. 

In both cases “living” signifies a wage or income which allows its recipients to access decent conditions of life. This suggests the ability to cover basic needs including food, education, healthcare, transportation and a certain degree of resilience in the face of unexpected events.[1] And while ‘living wage’ refers to hired workers in factories, farms, etc., ‘living income’ applies to self-employed individuals, such as farmers.[2]

While this sounds fair and as the only reasonable way things should be, making living wages and incomes a reality has been a struggle – and still is. Wages and hours of labour bear a highly intimate relation to each other. From the time when the world was an ‘agrarian’ society, this intimacy has been unfavourable to the poor farm workers who lived at the behest of their lords. Unfortunately, most often this fate was also passed down to their children who began working at a very young age and for a reward much less than deserved, thus missing out on school and future prospects.[3]

The living wage through history

The rich-poor disparity actually already existed in one of the world’s first democracies: ancient Greece Athens, which led the great philosopher Plato to discuss the concept of a living wage. His arguments were grounded on the fact that acquisition of wealth needed to be moderated by concern for the communal good. Inequality in wages also made its way to the Classic period; the time when Greece presented the world to another great philosopher, Aristotle. As a student of Plato, Aristotle too believed in the need for households to take care of themselves and be self-sustaining. He also assigned the state the responsibility to provide the poor with the means to earn an income that would enable them to have a sustainable livelihood.[4]

Fast forwarding to an era where B.C turned to A.D and religion penetrated into human lives, the idea of a living wage became the preachers’ gospel. Medieval scholars who followed the path of Christianity, such as Saint Thomas Aquinas and St. Antonio, spread the word on the need for just prices that ensure that all members of society have access to necessities.[5]

While philosophers were rooting for a better tomorrow with fair wages for all though, the men with power had a different plan; the plan to turn the agrarian community into an industrial society.

The rise of industrialisation

Within a few centuries, specifically in the late 18th, industrialisation was introduced following the adoption of capitalist economic principles. Supply chains grew beyond borders and food too became susceptible to mass production. The role of food workers no longer ended on a farm or at a local market but expanded to factories where edibles were processed, prepared, preserved and packaged. As a result, any human force who engaged in this process, became a subject to the rule of the market – “buy cheap and sell dear”, like any other commodity.[6]

Nevertheless, even in a time like this, where capitalist values functioned as the motor of human existence, hints of light towards fair wages were present from unexpected sources. Surprisingly enough, the most avid supporter of the “free market” concept, Adam Smith, was such a voice. The father of economics and the begetter of capitalism himself believed that paying workers enough for them to maintain a decent standard of living would eventually benefit society. He argued that such a system through increased productivity would result in economic growth.[7]

As the Industrial Revolution concentrated labourers into mills and factories, the working class rallied to help advance their interests. Known as trade unions, their main purpose was to demand better wages and working conditions and if needed withdrawing all labour and causing the consequent cessation of production in order for their voices to be heard. This kind of bargaining also prevailed in agriculture. One noticeable effort was by the six men from Tolpuddle who founded the Friendly Society of Agricultural Labourers in 1832. As a protest against the gradual lowering of wages in the 1830s, the group refused to work for less than ten shillings a week. However, soon the group was oppressed, invoking an obscure law from 1797 prohibiting people from swearing oaths to each other, and the six men were transported to Australia.

The Long Depression 

The end of the 19th century brought in a retrogradation to the fast-moving industrial world. Starting with the Panic of 1873, the Long Depression stayed along for 26 years when the world encountered the collapse of a market that had been pumped up by a wave of speculative money. The hardships of this time shook the dogmatism which characterised the previous era concerning the free market and competition as the one and only rule. The result was social reforms and economic inquiries that supported the fact that wages should be independent of competition in the labour market.  

This was another huge step towards living wages, since public opinion now conceded that wages should be the first charge on production. The principal aim was to bring the backward districts up to the same wage level as the better-organised centres and protect the standard of life from the pressure of unemployment. Such settlements required collective bargaining, and this only happened with the establishment of joint committees of employers and employees with independent umpires, a key driver towards progress for fairer wages.

Following the uprising of factory workers and powerful protests from unions, liberal governments around the world had no option but to mandate measures that would ensure a standard amount of periodic pay. Known today as the minimum wage, but in most cases not sufficient to afford a decent living, was the first step towards a living wage. Pioneered from the ‘Down Under,’ legislative measures and attempts to implement minimum wages soon passed to powerful nations such as the UK, the US and most of Europe.[8]

At the same time however, the aforementioned progress towards a minimum wage also faced barriers like the rise of the Keynesian theory of wages. Followers of the theory argued that the unwillingness to reduce wages for employees could cause unemployment, which led to an ethical dilemma that served the delay of doing what is right; a secure wage independent of the market’s laws.[9]

The 20th century

It was not long after the end of the depression that the world faced two of its greatest trauma’s in history, the First and Second World War. The repercussions this time were not just hard-hitting on the economy but on every aspect of human life. As more men went to the battlefields, the female workforce started to dominate the factories. But industrialists denied considering the female workforce as a perfect substitute to the men, which was also reflected in their wages. The employers vindicated their actions by stating that women had ‘lesser strength and special health problems due to which their output would not be equal to that of men’.[10]

Learning from the atrocities of the war called for a better tomorrow. The Allies, now known as the United Nations, conceived an International Bill of Rights’ in 1948, which also included ‘the right to just and favourable remuneration’.Countries with liberal market economies and residual welfare states endorsed the idea of living wages. Winston Churchill, then prime minister of the UK, considered it ‘a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions’,[11] while President of the United States Franklin D. Roosevelt stated that ‘no business which depends for existence on paying less than living wages to its workers has any right to continue in this country’.[12]

Unfortunately, the pro-labour systems only stayed till the 1960’s when deindustrialisation took over the labour market, shifting from manufacturing to mostly service. As work now became more automated and the output became intangible, the baseline value of a large portion of the labour force plummeted compared to their pre-globalisation counterparts. As a result, wages for the bottom 80th percentile stagnated, or in some cases decreased, despite rising costs of living – inflation – and increases in GDP.[13]

Sacrificing the wellbeing of the labour force continued until the end of the 20th century with its peak being Reagan’s and Thatchers’ highly neoliberal economic policies, which shaped the neoliberal face of macroeconomics of that era. During this time the US witnessed a high concentration of wealth with the richest. At the same time the working class depended on credit to a great extent and workers’ rights for collective bargaining was highly suppressed.[14] The UK’s working classes suffered a similar fate with unemployment reaching record high levels, poverty and inequality going up and once again labour unions being suppressed. [15]

Working full-time with such low wages could not generate enough income to lift many labourers out of poverty. This called for a reactionary movement by the victims of structural inequity towards a fair wage, which we today know as the first steppingstone towards living wage movements. During the late ’90s, workers around the world called for living wage ordinances that forced employers who receive contracts or tax benefits from the locality to pay their workers a salary a few bucks above the minimum. The message and purpose were quite simple: if you as an employer have benefited from some form of incentive, then you ought to give a little something back to your workforce.[16] As a result, neoliberalism slowly fell from its throne in macroeconomics worldwide – a dethroning which the working class owes to no one but itself and its unrested call for a better future. 

The Living Wage Movement is thus not new at all; it is just a resurgence of the much older Labor Movement. Fortunately, the globalisation that once became the reason for such uprisings, today serves us with opportunities to better advocate for living wages and incomes. With better knowledge and experiences, we are raising our voices much higher so that farmers and workers are not left out. And let it be clear: our mission doesn’t end untill the time anyone who works full time shouldn’t have to do it to live in poverty.

Our next blog will continue to surprise you with living wage updates from the 21st century. From major movements to the establishment of methodologies to ensure living wages, we will tell you all about the present successes and setbacks in the field of living wages and incomes.

Text and research by Aswini Harinath and Kyriakos Mouskos.

Want to learn more about reaching living wages and incomes in your supply chains?

[1] Parker, J., Arrowsmith, J., Fells, R., & Prowse, P. The living wage: concepts, contexts and future concerns. Labour & Industry: a journal of the social and economic relations of work, 26:1, 1-7 ((2016). DOI: 10.1080/10301763.2016.1154671

[2] Global Living Wage Coalition. Living Income.  

[3] Woods, M. (2012). Rural geography III: Rural futures and the future of rural geography. Progress in Human Geography.

[4] Werner, A., Lim, M. The Ethics of the Living Wage: A Review and Research Agenda. J Bus Ethics 137, 433–447 (2016).

[5] Koehn, D., & Wilbratte, B. (2012). A Defense of a Thomistic Concept of the Just Price. Business Ethics Quarterly, 22, 501-526. 10.5840/beq201222332. 

[6] Kalfagianni, A., & Skordili, S. (2018). Localizing Global Food: An Introduction. In A. Kalfagianni & S. Skordili (Eds.), Localizing Global Food.

[7] Walraevens, B. (2021). Adam Smith’s view of economic inequality, Cambridge Journal of Economics, 45(1), 209–224.

[8] DeSimone, B. (2020). From the Serial Set: The History of the Minimum Wage. Law Library Blogs. September 3 2020.

[9] Perlman, R. (1960). A Reformulation of Keynesian Wage Theory. Southern Economic Journal. Vol. 26, No. 3, pp. 229-233. 

[10] Aldrich, M. (1989). The Gender Gap in Earnings during World War II: New Evidence. Industrial and Labor Relations Review, 42(3), 415-429. doi:10.2307/2523398.  

[11] The Times (2016). Named and Shamed.

[12] Trich, T. (2014). F.D.R. Makes the Case for the Minimum Wage. New York Times.

[13] Gravelle, J.G. (2020). Wage Inequality and the Stagnation of Earnings of Low-Wage Workers: Contributing Factors and Policy Options. Congressional Research Service. 

[14] Komlos, J. (2019). Reaganomics: A Watershed Moment on the Road to Trumpism. The Economists Voice 16(1). DOI: 10.1515/ev-2018-0032.   

[15] Cassidy, J. (2013). The Economic Case for and Against Thatcherism. The New Yorker.  

[16] Gertner, J. (2006). What Is a Living Wage?. New York Times Magazine.