The Unsolved Riddle of Poverty Reduction

“What makes one poor is not the lack of means. The poor person, sociologically speaking, is the individual who receives assistance because of the lack of means.” – Georg Simmel

“A tight labor market is important for all workers, but especially for historically disadvantaged groups.” – Janelle Jones, Economic Policy Institute

EXECUTIVE SUMMARY

Forty percent of the 678,000 British Columbians living below the poverty line are working adults. This submission focuses on the reduction of poverty among employed adults.

“What do you think are the best ways to reduce poverty in British Columbia?” (p. 3)

Poverty is not simply a problem of insufficient wherewithal but more fundamentally a problem of disparities of political and social power grounded in grossly disproportionate wealth. Reduction of the hours of work is an economic solidarity strategy whose greatest benefit is the enhancement of the collective bargaining strength of employees relative to that of employers.

An unsound economic theory of “leisure choice” has obscured the crucial role that work time reduction plays in mitigating social, economic and political inequality. Although this theory has been systematically refuted, it continues to dominate economic thinking and consequently public policy through sheer institutional and intellectual inertia. This obstacle to social justice must be repudiated.

“What can we do as a province, a community or as individuals to reduce poverty and contribute to economic and social inclusion?” (p. 6)

Historically, reductions in working time have resulted from mass popular movements and collective action, not from well-meaning administrative fiat. What the provincial government can do, though, is to promote cultural change and collective action by setting an example in its own employment practices, sponsoring research, data collection and education, and by directly challenging the economic malpractice that promotes social inequality in the name of “choice.”

“What does success look like in a BC Poverty Reduction Strategy?” (p. 6)

An analysis is presented based on S. J. Chapman’s authoritative theory of the hours of labour. Hours of work that aim at maximizing total output are shown to be detrimental to workers’ welfare. This analysis estimates that a 25% reduction in standard, full-time hours would result in a net benefit to the worker of 23%, when the value of leisure, increased productivity and decreased physical and psychological “wear and tear” are taken into account. A reduction in the standard work week of 10 hours a week would, conservatively, yield an estimated 2.5 to 3.3 hours of new employment.

“What if a poverty reduction strategy could also, incidentally, reduce greenhouse gas emissions and thus constitute a climate change mitigation strategy?” (p. 12)

Prosperity without Growth, the 2009 report of the U.K. Sustainable Development Commission, featured “sharing the available work and improving the work-life balance” as one of its “12 steps to a sustainable economy.” The Commission argued that work time reduction was essential “to achieve macro-economic stability” and “to protect people’s jobs and livelihoods” in a non-growing economy. To date there have been only a few empirical studies done but these suggest that a reduction of working time by 1% is associated with a reduction of carbon emissions of between 0.8% and 1.3%.

Download a .PDF file of the full submission (17 pages): The Unsolved Riddle of Poverty Reduction