Wage Labor, Choice, and Power

A recent article in The New York Times highlighted a bourgeoning trend in payroll management – employers paying their employees by means of a prepaid card rather than issuing a paper check or direct deposit. The idea is that employees can use it as a debit or ATM card to withdraw their pay. The problem, however, is that “in the overwhelming majority of cases, using the card involves a fee.” In some cases, the fees bring the pay of some employees below minimum wage.

The cards make plenty of sense for the employers, and are popular among food service and retail companies like Wal-Mart, Walgreens, and Taco Bell. By some estimates, a company with 500 employees could save $21,000 a year by switching from paper issued checks to the new cards. They could presumably save just as much by paying employees through direct deposit, but the minimum balance requirements of many banks most likely prevent a number of employees in these low-wage jobs from maintaining an account. At any rate, employers would probably prefer the cards to direct deposit anyway, since the card issuers (including Bank of America, Wells Fargo, and Citigroup) offer cash incentives to the employers for using this method.

The article characterizes these practices negatively as the result of greed, and possibly illegal labor practices. Yet, such a characterization is informed by a number of assumptions. It assumes certain conditions: that under normal circumstances wage labor relations are fair and employers and employees meet each other under equal terms in the labor market. The actions of participants in the labor market are simply the result of choices with little or no regard as to the limitations of what choices are available in the first place. More broadly, working for cash compensation, turning your labor power into a commodity to be bought and sold, is regarded as so natural that it escapes scrutiny altogether.

One of the hallmarks of capitalist social and economic organization is the presence of wage labor as the dominant means by which people earn a “living” (or more accurately, the means by which they meet their needs). In the twenty-first century it may seem self-evident that people work for cash to attain the necessities and niceties of life. That has not always been the case, though. Household production, barter, trade, and kinship relations all greatly influenced where, how, and for whom most Americans worked before the mid-nineteenth century.

Wage labor’s emergence as our dominate form of work relations was intricately linked, and in some ways aided by the existence of slave labor. Many criticized the rising dependence on wage income as “wage slavery.” Yet, the existence of black chattel slavery as a social reality allowed proponents of the wage system in Northern manufacturing to dub it “free labor,” a rhetorical contrivance carrying the moral force of American ideals about freedom and liberty.[1] However, according to historian Seth Rockman, that rhetorical contrivance masked the “ability of those purchasing labor to economically and physically coerce those performing it–and to do so under the social fiction of a self-regulating market that purportedly doled out its rewards to the deserving in accordance with the laws of nature.”[2] Underpinning this “social fiction” were categories of people who could hardly have been called “free” in their choices of what type of work was available to them, or what compensation might come with that work: women, free blacks, children, debtors, the landless poor, and immigrants. To a great extent, the early growth of American industry and manufacturing relied on such groups of unfree labor.

The origins of American economic growth and capitalism should give us pause when we encounter assumptions about the “choices” of employers and employees in the marketplace. In a time of weak economic recovery following on the heels of an historically significant recession, do employees scrambling for an inadequate number of jobs meet on equal terms in the labor market with the employers offering those jobs? And if job-seekers “choose” to work for less than the currently employed, how does that affect the “choice” of everyone else whose wages are driven down in the process?  More importantly, in a global economy where capital can merely pick up stakes and chase cheap labor around the world, how are any workers secure in their livelihood? Without the intervention of the state, what power does an assembly line worker in a tire plant have to prevent his employer from moving production overseas when it becomes cost effective?

[1] For treatments of the historical relationship between categories of slavery and “free labor,” see Seth Rockman, Scraping By: Wage Labor, Slavery, and Survival in Early Baltimore (Baltimore: Johns Hopkins University Press, 2009); Robert J. Steinfeld, The Invention of Free Labor: The Employment Relation in English and American Law and Culture, 1350-1870, Studies in Legal History (Chapel Hill: University of North Carolina Press, 1991); Eric Foner, The Story of American Freedom (New York: W.W. Norton, 1999).

[2] Rockman, Scraping By, 11.