Responding to the Crisis of Profitability: The Function of the Minimum Wage in the Neoliberal Era by Jason Edwards B.A., University of New Brunswick, 2008 A Thesis Submitted in Partial Fulfillment of the Requirements for the Degree of Master of Arts in the Graduate Academic Unit of Political Science Supervisor: Thom Workman, PhD, Political Science Examiners: David Bedford, PhD, Political Science William Parenteau, PhD, History This thesis is accepted by the Dean of Graduate Studies THE UNIVERSITY OF NEW BRUNSWICK May, 2011 ©Jason Edwards, 2011 Library and Archives Bibliotheque et Canada Archives Canada Published Heritage Direction du 1+1Branch Patrimoine de I'edition 395 Wellington Street 395, rue Wellington Ottawa ON K1A0N4 Ottawa ON K1A 0N4 Canada Canada Your file Votre reference ISBN: 978-0-494-91812-8 Our file Notre reference ISBN: 978-0-494-91812-8 NOTICE: AVIS: The author has granted a non­ L'auteur a accorde une licence non exclusive exclusive license allowing Library and permettant a la Bibliotheque et Archives Archives Canada to reproduce, Canada de reproduire, publier, archiver, publish, archive, preserve, conserve, sauvegarder, conserver, transmettre au public communicate to the public by par telecommunication ou par I'lnternet, preter, telecommunication or on the Internet, distribuer et vendre des theses partout dans le loan, distrbute and sell theses monde, a des fins commerciales ou autres, sur worldwide, for commercial or non­ support microforme, papier, electronique et/ou commercial purposes, in microform, autres formats. paper, electronic and/or any other formats. The author retains copyright L'auteur conserve la propriete du droit d'auteur ownership and moral rights in this et des droits moraux qui protege cette these. Ni thesis. Neither the thesis nor la these ni des extraits substantiels de celle-ci substantial extracts from it may be ne doivent etre imprimes ou autrement printed or otherwise reproduced reproduits sans son autorisation. without the author's permission. In compliance with the Canadian Conformement a la loi canadienne sur la Privacy Act some supporting forms protection de la vie privee, quelques may have been removed from this formulaires secondaires ont ete enleves de thesis. cette these. While these forms may be included Bien que ces formulaires aient inclus dans in the document page count, their la pagination, il n'y aura aucun contenu removal does not represent any loss manquant. of content from the thesis. Canada Abstract This work seeks to account for the erosion of the real value of minimum wages in Canada during the neoliberal era. It surveys state theory and finds that the logic of capital theorists, primarily Joachim Hirsch and James O’Connor, provide a framework that is able to account for this change as their work explains from where the interests of capital and the state are derived. It explains the minimum wage, indeed all of the state’s economic policy, as fulfilling two primary functions: legitimating capital accumulation and optimizing the conditions for accumulation. Early minimum wages performed these two functions by stabilizing the low-wage sphere of employment and warding off labour militancy. Neoliberal minimum wages responded to the profitability crisis in the late 1960s and were adopted more aggressively by capital and the state as a means of promoting overall wage austerity. Table of Contents A bstract.......................................................................................................................... ii Table of Contents ............................................................................................................ iii List of Figures..................................................................................................................v Prologue...........................................................................................................................vi Chapter 1: Conceptualizing the State Introduction ..........................................................................................................8 Pluralist State Theory...........................................................................................11 Antonion Gramsci and the Social Consciousness State Theory .......................... 13 Structuralist and instrumentalist State Theory .....................................................19 Ralph Miliband ........................................................................................20 Nicos Poulantzas ..................................................................................... 22 The Logic of Capital State Theory...................................................................... 28 Joachim Hirsch........................................................................................ 27 James O'Connor .......................................................................................32 Conclusion ...........................................................................................................37 Notes................................................................................................................... 38 Chapter 2:The Minimum Wage in Canadian History Introduction ......................................................................................................... 40 The Historic Setting.............................................................................................41 Early Minimum Wage Legislation ...................................................................... 50 The Minimum Wage into the Fordist Era ............................................................54 Discussion from the Standpoint of the Logic of Capital and the State ................68 Notes................................................................................................................... 60 Chapter 3: Neoliberalism and the Shifting Function of Minimum Wage Policy Introduction ......................................................................................................... 63 iii Neoliberalism and the Logic of Capital ............................................................... 66 Minimum Wages in the Neoliberal Era ............................................................... 76 The Minimum Wage and the Low-Wage Sphere ................................................ 83 Discussion: The Minimum Wage from the Standpoint of the Logic of Capital..93 Notes...................................................................................................................99 Conclusion ..................................................................................................................... 102 Bibliography.................................................................................................................. 104 Curriculum Vitae List of Figures and Tables Figure 1- Federal Program Expenditures as a Percentage of GDP........................72 Figure 2- National Average Hourly Wages (2005 Dollars)...................................73 Figure 3- Percent Change in Average Annual Wages per Decade ........................74 Figure 4- The Minimum Wage in Alberta ............................................................ 77 Figure 5- The Minimum Wage in British Columbia..............................................77 Figure 6- The Minimum Wage in Manitoba ......................................................... 78 Figure 7- The Minimum Wage in New Brunswick .............................................. 79 Figure 8- The Minimum Wage in Newfoundland and Labrador ...........................79 Figure 9- The Minimum Wage in Nova Scotia ..................................................... 80 Figure 10- The Minimum Wage in Ontario .......................................................... 80 Figure 11- The Minimum Wage in Prince Edward Island .....................................81 Figure 12- The Minimum Wage in Quebec .......................................................... 82 Figure 13- The Minimum Wage in Saskatchewan .................................................82 Figure 14- Sex Difference in Lower-Quartile Wages ............................................87 Figure 15- Percent Change in Average Canadian Minimum Wages .....................96 Figure 16- Segmented Minimum Wages .............................................................. 96 Table 1- Proximity of Quartile Wage Groups to Minimum Wages .......................85 Table 2- Minimum Wage Declines by Province ................................................... 95 v Prologue On April 27,2010, the Canadian city of New Westminster became the first Canadian city to enact "living wage" legislation. New Westminster joined the more that 140 U.S. municipalities that have enacted similar laws in recent years. Such policies respond to the ugly fact that so much work in Canada falls well below the threshold of a living wage, and that these brutal wage realities have worsened in recent decades. Before 1976, the majority of minimum wages in Canada were sufficient to keep a fulltime worker out of poverty in a marginal way. For example, an urban British Columbian, working fulltime for minimum wage in 1976 would earn 5 percent more than poverty-level wages.1 A similar individual in 2002 would be earning 14 percent less than the amount needed to cross the poverty threshold. At the other end of Canada, a 1976 rural four-member family in New Brunswick, earning minimum wage, would have been 6 percent above the poverty line, whereas their 2002 counterparts would actually