Back in 2006, I recorded the personal reminiscences of my mother and youngest aunt. I never tire of reading their recollections of the Great Depression and World War II.
A few weeks ago, after releasing a paper I co-authored on the working poor in Toronto, I was asked to depute before the Toronto City Council committee that was dealing with the possibility of cutting the pay of cleaning and janitorial workers ‘in half’ in order to cut costs.
This was not long after Electro-Motive, owned by Caterpillar, called on its London, Ont., workers to OK a 50 per cent pay cut before leaving Canada entirely.
It got me thinking. I knew there was something about ‘pay being cut in half ‘in the family remembrances. I found it. Here is the excerpt:
“We had no sense of hard times except when Dad came home – it would have been 1932 – and he said to Mom, ‘My salary is cut is half’. He made something like 38 dollars a week – that’s the amount I have in my mind. He said we’re going to have to pinch the pennies. I remember Mom: “Cut in half? How will we ever manage?”
“Our money – the money in the family that was brought in by Dad; everybody knew about it. On Friday nights Dad came home with his little brown envelope with the cash in it. Cash.”
“Oh, no cheques! After we had our dinner, the money was spread out on the table. We were all there. Mom took it from there. She said, well I need such and such and so-and-so needs a new pair of shoes this week. My brother, Alfred, who had a problem, had to have a lift put on his shoe, that cost Two-fifty; two dollars and fifty cents. That maybe was the biggest item of the week, apart from groceries. Groceries were around seven dollars.”
Grace Elizabeth Young Stapleton
Age 10 in 1932
When we think of the Great Depression, we have this frame of unbelievable hardship – people doing without – ever focussed on tiny bits of money that got them through what we call 10 lost years. We think of these times as tragic.
But when we hear of wages being cut in half in the present day, it makes the news. But the sense of really tough times affecting all of us just don’t seem to be part of the imagination of our age.
What’s interesting is that the wage cuts of the thirties existed in the context of an economic malaise, similar to the one we are trying to prolong today.
On March 1, 2012, Jim Stanford and Robert Dryden inventoried[1] what else we lose when people get their wages chopped in half:
• Fiscal costs associated with changing who works for whom
• Lost government revenues as a result of a shrinkage of the tax base
• Higher social program costs resulting from the elimination of living-wage
• Potential public health and safety costs; and
• The broader costs associated with a decline in social cohesion.
Their point is that savings in wage costs are not dollar for dollar savings in any real sense. Lower wages simply cost us more and reduce revenues. Coming out of the Great Depression, our parents and grandparents discovered that hard lesson.
But there is something else going on here.
During the Great Depression, almost everyone suffered a cut in wages and 1932 marks a year in which Canada suffered net monetary deflation. That meant that our dollars bought more, not less.
In 2012, we are still experiencing some modest inflation meaning that cutting people’s pay in half is even more catastrophic than it was during the Great Depression.
The battle appears to be won for now as City Council has not gone through with the pay cuts. But we should all remember that every time a pay packet is cut in half, somewhere a Dad or Mom will come home and announce to their family that their pay has been cut in half.
A husband, wife or partner will ask “How will we ever manage?”
A family will sit around a table and divvy up small amounts of money for necessities and someone in the family with special needs will have their needs recognized first because that’s what families do.
And the parent with a job will go out the next week and do the exact same job for half the pay.
What a ‘textbook’ way in which to ensure we experience 10 lost years just like in the 1930’s.
Coming to an economy near you?
John Stapleton
April 15, 2012