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When a raise is actually a pay cut...

Updated: Mar 12


A "raise" less than the value of inflation is not a "raise" it is a PAY CUT.

 

Think back to your childhood...

 

When I was a kid, and at 43 years I’m not even that old, I remember walking into a grocery store in my hometown of Lockport and putting a penny into a gumball machine. You know what they look like with the twisty lever and the gumball pops out on the bottom. The days of penny gumballs have been gone for a long time. It was quarter gumballs for a long time, and now it seems to be no gumballs.  Perhaps it is no longer economically effective to sell a gumball for a quarter.

 

So, what happened?  Inflation happened.  Imagine you are holding a $5 dollar bill. 10 years ago, our $5 would buy Subway's daily special - the five-dollar-footlong.  Today our $5 can buy a bowl of basic pre-made chicken soup, or a basic egg bagel no cheese, we certainly can't buy a footlong sub for $5. We know where this is going - what happens 10 years in the future? The answer - $5 will buy a plain bagel with butter - certainly not cream cheese. In 10 years from now $5 will purchase virtually nothing from a restaurant.

 

So, what does that have to do with us? Everything.  For decades wage growth for the lowest income earners has not kept up with inflation. The poverty line for Toronto at the beginning of 2022 was 27,343.  The line for "deep poverty" at the beginning of 2022 was $20,508. This line is calculated in reflection of the costs of goods and services and moves with the consumer price index.  The rate of inflation for 2022 was 6.838%, and for 2023 was 4.168%. This means that the buying power for $100 dollars in January 2022 has dropped to less than $90 in just 2 years. It is simple to craft an estimate of where the deep poverty income line will be for 2024, as well as forecasting where it will be in 2025 and so on. This is done by multiplying a single year's poverty line by its inflation rate, which yields how much more additional income is required to stay out of poverty. That value gets added to the deep poverty line.  Rinse and repeat for each of the following years.  The table below demonstrates this process.

 

Year (January)

deep poverty income

poverty income

inflation rate, historical & projected

new income needed to stay out of poverty

2022

$20,508

$27,343

6.838%

$1,402

2023

$21,910

$29,213

4.168%

$913

2024

$22,824

$30,430

4.1% (forecasted)

$936

2025

$23,759

$31,678

3.8% (forecasted)

$903

2026

$24,662

$32,882

3.8% (forecasted)

$937

 

So the teaching assistants and various adjunct faculties at York University are on strike. I heard through the grapevine that the "offer" from the York University administration was $21,450 for the 3-year period of 2024-2026. The administration thinks it can avoid the negative press of offering a salary under the deep poverty line because the official figures of what that is are currently only at 2022. The poverty and deep poverty lines for 2023 don't exist yet, at least not in an official way, but this doesn't stop us from doing the work of forecasting these poverty lines ourselves for the coming years of 2024-2026, which will be covered by this round of York University's collective agreement. The strategy of "being above the 2022 deep poverty line" deployed by the administration of York University only works in the dark. I predict that in the light this strategy will recoil lest it disintegrate into ash. As a bargaining approach, one might call this the vampire strategy. What is the easiest way to protect against a vampire?  The light of day.

 

York University administration is "offering" to pay its teaching teams under the deep poverty line. Remember that is the Deep poverty line, as opposed to the poverty line, a line so distant and far above it is like having a near death experience and seeing the light at the end of a tunnel.

 

Let’s be very clear what this means. Educators at York University are in many cases being paid less than entry level incomes that their students will make upon graduation. The absurdity continues to grow when realizing that those same students call on us educators for letters of reference, which is just one of many types of unpaid work we are expected to do. York University pays educators that teach future teachers less than half the starting salary of 1st year teachers, regardless of province.  That's not me saying 1st year teachers make a lot - because they don't. That's me saying adjunct faculty and TA's make even less. The same goes on for many fields.  Educators teaching engineers, making less than their students. Educators teaching clinical psychologists, educators teaching business managers, educators teaching lawyers. In each of these cases and many more the educator makes far less than their students graduating into entry level positions.

 

York University is often said to be a "left leaning" campus. I don't identify as politically left or right, and don't much care how York University leans. What I will say is that paying a teacher less than entry level income their student will make is nonsense. The absurdity surpasses most SNL skits - yet despite its absurdity, it is also our reality. Offering a pay increase from 2019-2024 of 7% when inflation for the same time period is over 17% is a 10% pay cut. Calling it a raise is wrong, and a lie. It is not a pay increase it is a 10% pay cut.

 

Middle and lower layers of income earners are losing to inflation.  Day after day, year after year, decade after decade middle and lower income earners are losing to inflation.

 

So why did I write this? I wrote this for a moment of levity. I wrote this to say I am not your enemy. I wrote this to say I am your ally. I wrote this to say the truth, and the light of day is your ally. The word enemy, conjures a mysterious other to be blamed for all that is going wrong. There is no mysterious person to blame for these losses of income. It would be easy to paint the picture of highly paid administrators as the enemy. Certainly, if the enemy was a person, it would be found there - but even this is a highly incomplete picture. The enemy is inflation. The administrator is a cog in a machine, just as are you and I. The administrator's role in machine is to give us bad news. Sure if they were inspired they could try to figure out meaningful solutions and go to the ends of the Earth to execute that solution, but that is technically not their job, and many administrators lack the skill to catalyze that type of system-level change. No, the role of upper management in situations of pay gaps is to be paid more than others, and that pay to serve as an isolating barrier between themselves and those who they must supplicate. As a united force from above the executive's job is to extract the insight and labour of lower tiers while finding ways to get the grossly underpaid to work despite their poverty / deep poverty wages. As our resiliency to annual pay cuts year after year wanes, and the administrator’s job is getting harder and harder. How much longer will administrators be able to do it? University adjunct faculty, many of the people you call professor, are getting food from food banks. It is reaching a point where compensation is so inadequate is asks us the question, at least from an economic perspective, why choosing teach at York as a career at all? Why not just get a job outside of the University system? Perhaps York University should permanently close its doors if it cannot manage its own finances adequately to pay its teaching staff living wages.

 

What a poor essay this would be without a call to action. Well this won't be so much call to action as call to think, call to consider, and call to awareness. Either way, you be the judge.

 

My first suggestion is that we legislate maximum incomes. The idea that a person in our world should be allowed to have a salary over 500,000 (or in the business world over tens of millions) is an absurdity. What is so valuable at a single person's contribution that their contribution should entitle them to buy the loyalty and service of other human beings. York University's Dezso Horvath was compensated at the rate of $554,986.70 in 2022.  Mr. Horvath also served as the dean of business school. Did Mr. Horvath's salary require him to offer his adjunct faculty and TAs wages under the deep poverty line?  Yes.  The answer is yes, at least in part.


Some might say "who would do the management jobs if manager's didn't get paid more".  The answer is "a lot of people".  If I take a management position, I am happy to get paid close to the same amount as my staff, heck even the same amount is fine with me. Why not have a society where upper management is valued and given social capital.  Oh, that's right managers and executives are awarded social capital. Since we are paying administrators, executives, deans, presidents, etc. in social capital and reputation, we are definitely overpaying financially. I suggest that York University demonstrate their fairness in advance of legislation by applying a pay cap of 250,000 to the entirety of the university. So, that means a pay cut of $300,000 to Mr. Horvath. He'll still have more than plenty! Let us not cry about a dean who makes 250,000. His wages will still be 800% higher than the poverty line and more than 1000% higher than his employees. That $300K and the savings from other overpaid York University administrators can go to keep adjunct faculty and TAs out of deep poverty.

 

My second suggestion is that we must speak the truth. Getting a wage increase of 1% during a year with 3% inflation is not a wage increase. Looking at a neighbour who got a 1% increase while getting no increase and feeling "well he should be happy he got more than me" is a common infighting feeling that is stoked by union breakers. This feeling serves neither oneself nor one's neighbour, it serves the union breaker, it serves the management. The truth is both you and your neighbour are getting inflationary pay cuts. Both you and your neighbour are being screwed over by the system. It is black and white.  It is clear as day.  Any wage adjustment under inflation is a pay cut. A University that asks the Ford government to legislate its employees back to work with "annual 1% increases", is a university asking the Ford government to legislate its employees back to work with annual 2% pay cuts. Ford can talk about housing affordability all he wants. In 2019 the Ford government legislated 3000 people to move from the poverty line to the deep poverty line. This is a simple statement of factual numbers.

 

If you disagree with me, I welcome your disagreement, post on my LinkedIn profile. If you want to have a conversation, we can. If you think I, and others, should be happy with a 10% pay cut because you received a larger pay cut, sorry I can't be happy with that. Specifically, I can't be happy with the way in which you are being treated by your employer. I’m genuinely sorry for the mistreatment you have experienced. Virtually all mid-to-low-income earners are not getting pay increases to match inflation. To you I say, I am in solidarity with you.

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